Landmark Iskanian Decision’s Effect on Private Attorneys General Act (PAGA) Claims

Attorneys are predicting an uptick in PAGA claims that open up California employers to greater financial exposure as a result of the California Supreme Court’s landmark Iskanian decision. The decision strengthened the enforceability of class waivers in arbitration agreements, but also held that PAGA (Private Attorneys General Act) claims can’t be waived in employment arbitration deals.

The decision allows employees to sue on behalf of other workers to recover California Labor Code violation penalties. The issue of whether PAGA and other claims will be decided in a single forum or separately via bifurcation with individual claims going to arbitration and the PAGA claim to litigation has been remanded by the Court. If bifurcated, the lower court could decide to stay one of the matters. Employers would be likely to push for arbitration of individual claims to proceed first in bifurcated matters since the arbitrator’s findings could make a difference in whether or not plaintiffs were able to proceed with PAGA claims in the court system. The argument that employers could present to obtain their end would be that arbitration going first would be more quick and efficient and that putting the individual claims on hold while the PAGA claim is determined isn’t the best use of the courts’ or involved parties’ resources and time. Courts who are overseeing bifurcated cases could potentially choose not to stay the arbitration or litigation. Individual actions are not necessarily dispositive of the issues in the PAGA action – this is something to consider as the potential differences between the individual pursuing a claim in arbitration and the end result the class as a whole is pursuing in court could be notable.

If you have questions on California employment law and how recent landmark decisions could affect your workplace situation, please contact the experts at Blumenthal, Nordrehaug & Bhowmik immediately.