On July 17, 2023, The California Supreme Court ruled that employees can still proceed with parts of their lawsuits against employers even if the PAGA portions of their claims are compelled to arbitration. PAGA is the Private Attorneys General Act, a state law that allows workers to sue businesses on behalf of themselves, other workers, and the state itself when they believe there has been a violation of the law. This ruling adds yet another hurdle for employers struggling to abide with California’s many compliance responsibilities.
The decision comes after months of debate and the California Supreme Court’s choice to ignore guidance from the U.S. Supreme Court on the issue. However, some speculate that this ruling could lead to the dismantling of PAGA altogether, due to the U.S. Supreme Courts opposition to the ruling and a proposed ballot measure that has qualified for the November 2024 general election – The “California Fair Pay and Employer Accountability Act of 2024” which would eliminate PAGA and replace it with increased authority within Department of Labor Standards Enforcement (DLSE).
In the meantime, our labor and employment law firm Fisher Philips suggest employers review wage/ hour compliance and arbitration agreements. You can read a more detailed summary about this ruling from Fisher Philips here.
As a reminder, all CCM members are entitled to one hour of free legal advice from a Fisher Philips attorney. If interested, contact the CCM office at email@example.com or (559) 592-3790.
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