When
a worker stands in the shoes of the State of California, prosecuting wage
violations under the Labor Code Private Attorneys’ General Act (PAGA), that
representative plaintiff cannot be forced into arbitration, because the State
did not agree to arbitrate. See Iskanian
v. CLS Transportation of Los Angeles, LLC,
59 Cal.4th 348 (2014).
In Lawson v. ZB, N.A., 18 Cal. App. 5th 705
(Cal. Ct. App. 4th Dist. Dec. 19, 2017, as modified Dec. 21, 2017), the Court
of Appeal rejected the attempt by the defendant Bank to force a PAGA plaintiff
into arbitration as to the PAGA penalty requiring restitution of underpaid
wages, under Labor Code §558. On March 23, 2018, the California Supreme Court
granted review. On August 29, 2018, Bryan Schwartz Law, on behalf of the
California Employment Lawyers Association (CELA), submitted an amicus brief supporting affirmance of the
Court of Appeal decision.
PAGA
civil-enforcement claims invoking Labor Code §558 include both the default
civil penalty plus the penalty concerning underpaid wages. Lawson created a split with Esparza
v. KS Industries, 13 Cal.App.5th 1228 (5th Dist. Aug. 2, 2017), which held
that Labor Code §558(a)’s reference to a penalty including “an amount
sufficient to recover underpaid wages” created a “private dispute,” to which
the Iskanian rule does not apply.
Bryan Schwartz
Law’s brief on CELA’s behalf demonstrates that Lawson was correctly decided, and Esparza was wrong, because all PAGA actions are representative
actions, not individual actions. The amicus brief illuminates the breadth of
the State’s police power, which cannot be limited by a mandatory, pre-dispute
arbitration agreement with an individual worker. The language, legislative
history, and purposes of PAGA and Labor Code §558 demonstrate the Legislature’s
clear intent to permit PAGA plaintiffs to recover the full measure of relief
that would be available to the State in a public enforcement action. Defendant
ZB Bank’s contention that PAGA and Labor Code §558 would be preempted by the
Federal Arbitration Act (FAA), 9 U.S.C. §§1, et seq., clearly contravenes the Supreme Court’s analysis in Iskanian and McGill v. Citibank, N.A.
(2017) 2 Cal. 5th 945. The FAA does not strip the State of its enforcement
authority, or strip employees of their non-waivable, substantive state law
right to pursue vital workplace protections.
CELA is an
organization of approximately 1400 California attorneys whose members primarily
represent workers in a wide range of employment cases, including wage and hour
actions and PAGA actions. CELA and its members have taken a leading role in
protecting the rights of California workers, including by submitting amicus
briefs and oral argument in such groundbreaking employment rights cases such as
Iskanian, Murphy v. Kenneth Cole
Productions, Inc. (2007) 40 Cal.4th 1094, Gentry v. Superior Court (2007) 42 Cal.4th 443, Brinker Restaurant Corp. v. Superior Court (2012)
53 Cal.4th 1004, Ayala v. Antelope Valley
Newspapers, Inc. (2014) 59 Cal.4th 522, and Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903. Bryan
Schwartz Law has been instrumental to CELA’s amicus briefing in a host of key
California cases.
The California
Supreme Court’s decision in Lawson will
have widespread ramifications for California workers. If the State’s PAGA
penalty provisions forcing restitution to victims of wage theft can be shunted
to individual arbitration, it will deeply undermine PAGA’s goal to strengthen
the State’s enforcement power against wage law violators who steal from workers
and unfairly compete against law-abiding businesses.
If you are seeking
to assert wage claims representing your co-workers and are facing an employer
who seeks to force you into individual arbitration, contact Bryan Schwartz Law.
