On September 12, 2019, the California Supreme Court issued its decision in ZB, N.A. v. Superior Court, which resolved a split of authority regarding whether an employer may compel arbitration of an employee’s Private Attorneys General Act (“PAGA”) claim seeking unpaid wages under Labor Code section 558. In reaching its conclusion, the Court first answered the “more fundamental question” of whether a plaintiff may seek unpaid wages under PAGA: to which the answer is no. Therefore, ZB’s motion to compel arbitration should have been denied. READ MORE
From the time of its enactment, the California Private Attorneys General Act of 2004 (“PAGA”) has been a thorn in the side of employers. For example, the California Supreme Court insists PAGA actions are not class actions, but that hasn’t stopped aggrieved employees from seeking class-wide discovery. And because PAGA permits employees to seek penalties for unconventional causes of action previously off-limits to private plaintiffs (such as the California Wage Order’s suitable seating requirement), employers must grapple with new uncertainties.
But one aspect of PAGA that provides some relief to employers is the requirement that plaintiffs exhaust administrative remedies before filing a lawsuit. To satisfy this this requirement, a plaintiff is required to send a notice to her employer and the Labor Workforce Development Agency (“LWDA”) setting forth the “specific provisions” of the Labor Code allegedly violated and explaining the “facts and theories to support the alleged violation” and then wait 65 days before filing suit. This notice requirement has two purposes: (1) to give the LWDA sufficient information to determine whether the alleged violation justifies an investigation and/ or citation and (2) to put the employer on notice so that it may voluntarily cure the alleged violation. Oftentimes, however, plaintiffs’ notice letters are deficient because they fail to include sufficient facts and theories to inform the employer or the LWDA of the nature of the claims. In such cases, plaintiffs have failed to exhaust administrative remedies.
Judge Gonzalo Curiel’s recent decision in Gunn v. Family Dollar Stores, Inc., Case No.: 3:14-cv-1916-GPC-BGS (S.D. Cal. Dec. 2, 2016), reminds us of the standard that notice letters must meet. Plaintiff Gunn’s notice letter advised the LWDA of his intent to file a PAGA action for violations of Wage Order 7-2001, Section 14, and “[s]pecifically . . . allege[d] that Family Dollar failed to provide suitable seats to Plaintiff and other current and former employees when the nature of their work reasonably permits the use of seats, in violation of California Labor Code section 1198 and Wage Order 7-2001, section 14.” Judge Curiel held that such an allegation was insufficient to meet PAGA’s standards. As he noted, plaintiffs must detail the “facts and theories” supporting their alleged violations. But here, the plaintiff’s allegations simply parroted the language of the underlying regulation, amounting to nothing more than a “string of legal conclusions” devoid of any of the facts or theories required by the Labor Code. The court rejected the plaintiff’s contention that facts could be implied by his allegations (i.e., that the class of employees at issue would not include office employees because they have seats).
The most notable aspect of Judge Curiel’s opinion, however, was his denial of the plaintiff’s request for leave to amend. Although the court recognized leave to amend tends to be granted freely, he disagreed that applied to defective PAGA notices. The court stated that “courts have granted PAGA claimants leave to amend only when the plaintiff’s complaint failed to adequately plead exhaustion, not when Plaintiff provided defective notice to the LWDA” (emphasis added). Indeed, granting the plaintiff leave here would tacitly endorse a strategy that precludes the LWDA from receiving the information necessary “to intelligently assess the seriousness of the alleged violation,” thereby frustrating the purpose of PAGA’s statutory notice requirement.
While the unpublished opinion in Gunn will not likely mark a sea change in how courts treat PAGA actions, it is nevertheless a victory for California employers. Those facing suitable seats claims, which are based on a notoriously ambiguous statute, may have the most to gain.
This past March, we blogged about the U.S. Supreme Court’s decision in Bouaphakeo v. Tyson Foods, Inc., 136 S. Ct. 1036 (2016), a case in which the plaintiffs alleged that Tyson Foods improperly denied compensation for time spent putting on and taking off required protective gear at a pork processing facility. At trial, the plaintiffs presented experts who, based on sample data, determined the average number of minutes employees likely spent donning and doffing and the aggregate damages that would be owed to the class as a result.
The Private Attorneys General Act of 2004 (“PAGA”) authorizes aggrieved employees to file lawsuits to recover civil penalties on behalf of themselves, other employees and the state of California for Labor Code violations. In January, Governor Brown submitted a budget proposal that sought greater oversight of PAGA claims and amendments to the PAGA statute. On June 15, 2016, the California Legislature approved Governor Brown’s budget proposal which included significant amendments to PAGA (Labor Sections 2698-2699.5). SB 836 went into effect on June 27, 2016 and provides:
- The Labor and Workforce Development Agency (“LWDA”), the agency which coordinates workforce programs by overseeing seven major departments that serve California businesses and workers now has 60 days to review a notice under Labor Code § 2699.3(a). Prior to the amendments, the LWDA had 30 days to review. Additionally, the time for the LWDA to investigate a claim is extended to 180 days (it was 120 days);
- A Plaintiff cannot file a civil action until 65 days after sending notice to the LWDA (previously 33 days);
- The LWDA must be provided with a copy of any proposed settlement of a PAGA action at the time it is submitted to the court;
- A copy of the court’s judgment and any other order that awards or denies PAGA penalties must be provided to LWDA;
- All items that are required to be provided to the LWDA must be submitted online, including PAGA claim notices and employer cure notices or other responses;
- A $75 filing fee is required for a new PAGA claim notice and also for any initial employer response to a new PAGA claim notice. The filing fee may be waived if the party on whose behalf the notice or response is filed is entitled to in forma pauperis status; and
- When a plaintiff files a new PAGA lawsuit in court, a filed-stamped copy of the complaint must be provided to LWDA. This requirement only applies to cases in which the initial PAGA claim notice was filed on or after July 1, 2016.
California Governor Jerry Brown’s administration recently submitted a budget proposal to the California Legislature that would increase State oversight of Private Attorneys General Act (PAGA) claims and amend the PAGA statute accordingly. The proposal has significant implications for the administration of PAGA claims going forward.
Joining the ever growing list of opinions on the arbitrability of class claims, an NLRB Administrative Law Judge recently ruled that an arbitration agreement that did not expressly bar workers from bringing class or collective actions still violated federal labor law because the employer’s steps taken to enforce the agreement in court had the practical effect of doing so. READ MORE