Kim. V. Reins International California, Inc. Decision & Settling PAGA Claims

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What does the California Supreme Court decision in Kim v. Reins International California, Inc. (Case No. S246911) indicate about settling PAGA claims? The critical decision was given on March 12, 2020, but before discussing the decision and what it says about settling PAGA claims, consider the details of the case. 

In Kim v. Reins International California, Inc.:

The Plaintiff in the case, Justin Kim, settled his individual claims against his employer and then attempted to move forward with his PAGA (Private Attorneys General Act) against his employer (Reins). Reins employed Kim as a training manager classified as exempt. Kim filed suit against Reins in a putative class action alleging that Reins, the employer, misclassified training managers. Kim alleged multiple employment law violations including:

  • Failure to pay wages and overtime

  • Failure to provide meal and rest breaks

  • Failure to provide accurate wage statements

  • Waiting time penalties

  • Unfair competition

  • Civil penalties under the PAGA 

Reins Immediate Response to Allegations of Employment Law Violations:

Reins moved to compel arbitration of the individual claims and dismissed the class claims. Their action was based on an arbitration agreement and class action waiver that Kim signed at the time of hiring. The trial court ordered arbitration of all claims, except for the PAGA claim. The court also ordered the injunctive relief portion of the unfair competition claim and stayed the PAGA litigation until individual claims litigation was finished. When individual claims were settled, Reins moved for summary adjudication in the PAGA action based on the settlement agreement that resolved Kim’s individual claims, which meant Kim was no longer an “aggrieved employee” under the PAGA.

Does Settling Individual Claims Mean Kim is No Longer an Aggrieved Employee?

The trial court agreed that Kim was longer an “aggrieved employee” eligible under the PAGA, ruling that Kim’s decision to settle his individual claims with the employer precluded him from continuing forward with PAGA claims. (Under the PAGA statute, an individual must be an “aggrieved employee” to qualify.) Kim took the issue to the appeals court, where they agreed with the previous ruling of the trial court found that by accepting the settlement and dismissing his individual claims, Kim acknowledged he no longer maintained Labor-Code-based claims against the company.

The Supreme Court’s Decision & PAGA Claims:

But the California Supreme Court ruled that Kim, a PAGA plaintiff, can continue litigation of a PAGA action after settling individual claims. The case and the Supreme Court’s decision have some employers worried about how future allegations may be handled.

If you need to talk to someone about employment law violations or if you need to file a misclassification lawsuit, get in touch with Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Experienced employment law attorneys are ready to assist you in any one of various law firm offices located in San Diego, San Francisco, Sacramento, Los Angeles, Riverside, and Chicago.