The U.S. Supreme Court declined review of a California case that clears a path to keep some workers’ state Private Attorneys General Act (PAGA) claims out of arbitration, thereby increasing the likelihood of a rise in such actions, which allow for employees to pursue penalties against an employer on behalf of the state of California.
“I do think we will see more standalone PAGA cases,” said James Evans, partner in Alston & Bird’s Labor & Employment Group. “With the denial of cert., I think employers are going to be loath to bring a motion to compel arbitration that they can’t win. They will recognize that they are stuck with litigating the PAGA claim. And that reality will increase the number of filings.”
Other employment laws are slated to take effect in California this year, including a statute mandating employers to provide three days of paid sick leave to employees annually. The new laws could encourage the plaintiffs’ bar to bring new suits that include a PAGA claim.
“The new sick leave law needs to be integrated into employers’ existing paid time off policies and employment handbooks, but if there is not a careful integration, the potential result is an employer could deny a right that the Legislature has granted,” said Evans. “PAGA would be a natural statutory claim arising out of issues relating to the new sick leave law.”
“One of the benefits that could come out of the decision that PAGA claims are the only kind of representative actions that can go forward when there is a class action waiver is the likelihood that it will generate more case law as cases are brought and appeals are filed,” he said.