Wage and Hour Defense Blog

Much has been made about the recent, hurried legislation to amend the Private Attorneys General Act (“PAGA”) in order to take the Fair Pay and Employer Accountability Act (“FPEAA”) off the California ballot this November.  

If passed by California voters, the FPEAA would have repealed PAGA and replaced it with a new statute and a new process that were more employer-friendly -- and more employee friendly. 

(The idea of a ballot initiative to repeal or create laws may sound very unusual to anyone outside of California.  But California permits this kind of mob rule, for better or worse, so long as enough signatures are gathered and verified to qualify to be placed on the ballot.)

For all of the celebration about how these PAGA amendments will benefit employers, the PAGA amendments remind me of nothing so much as New Coke. 

You don’t know about New Coke, do you? 

You see, back in 1985, Coca-Cola announced that it was changing the longtime formula for its soda and replacing it with a new formula that everyone would love even more. There was much excitement about it.  (Keep in mind that this was before the internet, smartphones, texting, streaming, etc.)  The launch of the new version of the soda was covered in the mainstream media, and people just couldn’t wait. They actually lined up outside stores to be the first to get their hands on it.

And then New Coke was launched.

In Elijah Baer, et al. v. Tesla Motors, Inc., fifteen plaintiffs filed a putative class and Private Attorneys General Act (“PAGA”) representative action lawsuit against Tesla, Inc. (“Tesla”) alleging wage-hour violations of California law. Two of the plaintiffs were employed by Staffmark Investment LLC (“Staffmark”) – a non-party staffing agency – and assigned to work at Tesla for a period in 2020. The other plaintiffs were direct former or current employees of Tesla going back to 2017. After Tesla removed the action to federal court, it moved to compel arbitration.

The plaintiffs signed various arbitration agreements throughout their employment. From the fall of 2018 to May 2022, Tesla utilized a recruiting software called Averture. According to Tesla, Averture required applicants to create a secure online profile with their own personal information. Eight of the plaintiffs signed offer letters with Tesla through Averture containing an arbitration provision. These plaintiffs did not dispute that they signed, and Tesla countersigned, the offer letters.

At some point in 2022, Tesla stopped using Averture and started using a system called Inside Tesla. The security measures applicable to Averture were largely the same as those employed by Inside Tesla; however, applicants who were offered employment under Inside Tesla signed an offer letter and a standalone arbitration agreement. Four of the plaintiffs signed arbitration agreements through the Inside Tesla system.

Here’s a question you likely have never considered: Are hackers overseas infiltrating employers’ computer systems just to sign arbitration agreements with class action waivers for random employees?

While there is no evidence that this has ever happened anywhere, and no logical reason why it would, plaintiffs’ lawyers and even some courts seem to believe this could happen. And that is at the heart of the latest battleground over arbitration agreements with class actions waivers.

Since the United States Supreme Court’s decision in Epic Systems v. Lewis, more and more ...

On January 18, 2024, the California Supreme Court issued its much-anticipated decision in Estrada v. Royalty Carpet Mills, resolving a dispute among the appellate courts and concluding that Private Attorneys General Act (“PAGA”) claims may not be stricken as unmanageable. 

While some have read the decision as a resounding victory for the plaintiffs’ bar that will force every PAGA case to settle for large amounts, the decision does no such thing.

It may challenge employers and their lawyers to be more creative, but it does not mean that every PAGA action now warrants an outsized ...

Employers with operations both large and small in California are all too familiar with California’s Private Attorneys General Act (“PAGA”), the controversial 2004 statute that permits a single employee to stand in the shoes of the state’s attorney general and file suit on behalf of other employees to seek to recover penalties for alleged Labor Code violations.

PAGA lawsuits are filed with great regularity by members of the plaintiffs’ bar.

And the in terrorem effect of PAGA lawsuits, in which a plaintiff need not satisfy class certification criteria to represent an entire workforce, has led many employers to pay large settlements just to avoid legal fees and the possibility of larger awards -- even when the evidence of unlawful conduct is spotty or entirely absent.

The California Supreme Court has issued its highly anticipated decision in Adolph v. Uber Technologies, Inc., concluding that plaintiffs who must arbitrate their “individual” PAGA claims are not deprived of standing to pursue “non-individual” PAGA claims in court on behalf of others.

More precisely, Justice Goodwin H. Liu wrote that “an order compelling arbitration of the individual claims does not strip the plaintiff of standing as an aggrieved employee to litigate claims on behalf of other employees under PAGA.”

California plaintiffs’ lawyers typically bring every type of wage-hour claim they can.  Increasingly, however, they have focused on one type of claim – wage statement violations.

As we have previously written about, bringing class and representative actions under California’s Private Attorneys General Act (“PAGA”) alleging that employers did not fully comply with California’s onerous wage statement laws has become a lucrative practice for the plaintiffs’ bar.  Given the flurry of litigation, it is beneficial for employers that do business in California to review their wage statements to best ensure compliance.

Our colleague Michael S. Kun at Epstein Becker Green was recently quoted in SHRM, in “Distinctions Among Class, Collective and Representative Actions Make a Difference,” by Allen Smith.

Following is an excerpt:

The terms “class,” “collective” and “representative” actions sometimes are bandied about as though they were the same thing, but they have distinct meanings that employers benefit from understanding. This article, the second in a series, examines the differences among these types of lawsuits and practical ramifications, such as how an employer might seek early resolution, as well as how certification of a class or collective action affects whether an employer’s attorney may speak with plaintiffs.

The U.S. Supreme Court’s June 15, 2022 decision in Viking River Cruises v. Moriana could have a tremendous impact upon pending and future litigation, as well as employment practices in the state.

For some California employers, it will impact pending Private Attorneys General Act (“PAGA”) litigation where the named plaintiff has an arbitration agreement with a class and representative action waiver.

In a recent post addressing the U.S. Supreme Court oral argument in Viking River Cruises v. Moriana, we mentioned that employers in California will want to consider the “pros and cons” of arbitration agreements should an employer-friendly decision be issued in that case, rather than rush to implement them.

In response, more than a few people have asked the same or similar questions -- What are the “cons” of arbitration agreements? Why wouldn’t an employer want to use arbitration agreements, particularly if they will foreclose Private Attorney General Act (“PAGA”) actions in California?

There are “cons” to these agreements -- and they are not insignificant.

Employers with operations both large and small in California are all too familiar with California’s Private Attorneys General Act (“PAGA”), the controversial statute that permits a single employee to stand in the shoes of the state’s attorney general and file suit on behalf of other employees to seek to recover penalties for alleged Labor Code violations.

The in terrorem effect of PAGA lawsuits, in which a plaintiff need not satisfy class certification criteria to represent an entire workforce, has led many employers to pay large settlements just to avoid legal fees and the possibility of larger awards, even when the evidence of unlawful conduct is spotty or entirely absent.

Will 2022 be the year that PAGA is repealed?

More than three years after its landmark decision in Epic Systems Corp. v. Lewis, the United States Supreme Court has granted certiorari in Viking River Cruises, Inc. v. Moriana to determine whether Epic Systems extends to arbitration agreements that include waivers of representative actions brought under the California Private Attorneys General Act (PAGA).

Employers with operations in California, who have been plagued by the filing of boilerplate PAGA actions, could be heard to breathe a sigh of relief.

It is no secret that the Private Attorneys General Act (“PAGA”) has been a cash cow for plaintiffs’ counsel in California.

PAGA allows a single employee (and their counsel) to file suit on behalf of other employees for alleged Labor Code violations, without having to go through the class action mechanism.  In other words, a PAGA plaintiff can file suit seeking penalties for hundreds or thousands of employees, yet never need to show that there are common issues susceptible to common proof – or even that their own claims are typical of those of other employees.

As a result, there has been little to prevent plaintiffs and their counsel from filing massive PAGA actions on behalf of all of an employer’s employees, even without having any basis to believe that many those employees suffered any violation at all.

On May 28, 2021, the Ninth Circuit Court of Appeals delivered a win to Walmart in a lawsuit brought by Roderick Magadia (“Magadia”) alleging violations of California’s wage statement and meal break laws.

The Ninth Circuit overturned a $102 million dollar judgment issued by United States District Judge Lucy H. Koh – comprised of $48 million in statutory damages and $54 million in civil penalties under California’s Private Attorneys General Act (“PAGA”).  It did so because it found that Magadia lacked Article III standing because he could not establish that he suffered ...

We have frequently written about California’s Private Attorneys General Act (“PAGA”), a unique statute that allows private individuals to file suit seeking “civil penalties” on behalf of themselves and other “aggrieved employees.”

The only remedy available to employees in actions brought under PAGA is a civil penalty.  That is significant because civil penalties are unlike the remedies available in conventional lawsuits that are not brought under PAGA; such non-PAGA remedies can include allegedly unpaid overtime, vacation pay, or meal and rest period ...

A number of years ago – 20 perhaps – someone shared with me a study that was conducted by a major university where participants were asked which professions they most distrust.

My recollection is that it was conducted at Duke University, but I could be wrong.  (I do remember distinctly that there were 998 participants in the survey, which still seems like a peculiar number to me.  They couldn’t find two more people?)

In any event, one spot from the top of the list of most distrusted professions (or the bottom, depending on your perspective) was used car salespersons.  Yes, I know, a ...

While it may be true that employees rarely even look at their wage statements, there is one group of persons who certainly do – plaintiffs’ lawyers.  Or, more precisely, California plaintiffs’ lawyers.

And after a stunning $102 million award against Wal-Mart for wage statements that the court concluded did not fully comply with California’s onerous wage statement laws, California plaintiffs’ lawyers are likely to look at their clients’ wage statements even more closely – and to file even more class action lawsuits alleging that employers’ wage statements failed ...

In Bernstein v. Virgin America, Inc., a district court in California has ordered Virgin America to pay more than $77,000,000 in damages, restitution, interest and penalties for a variety of violations of the California Labor Code. The award is the latest example of the tremendous amount of damages and penalties that can be awarded for non-compliance with California’s complex wage and hour laws.

In 2016, the Bernstein Court granted the plaintiffs’ motion for class certification, certifying a class of California-based flight attendants who had been employed since March 2011.

The question whether an individual may be held liable for alleged wage-hour violations is one that occasionally arises in class action litigation – and, for obvious reasons, it is one that is particularly important to individuals who own entities or who are responsible for overseeing wage-hour compliance.

In Atempa v. Pedrazzani, the California Court of Appeal held that persons responsible for overtime and/or minimum wage violations in fact can be held personally liable for civil penalties, regardless of whether they were the employer or the employer is a limited liability ...

More than 7 months after hearing oral argument on an issue that will affect countless employers across the country – whether employers may implement arbitration agreements with class action waivers -- the United States Supreme Court has issued what is bound to be considered a landmark decision in Epic Systems Corp. v. Lewis (a companion case to National Labor Relations Board v. Murphy Oil USA and Ernst & Young LLP v. Morris), approving the use of such agreements.

The decision will certainly have a tremendous impact upon pending wage-hour class and collective actions, many of which ...

Persons who live and work outside of California, including employment attorneys and the most seasoned of human resources personnel, are often confounded when they first learn about California’s Private Attorneys General Act (“PAGA”).  And, for many, the first they learn about PAGA is when a PAGA lawsuit has been filed against their company.

The same series of questions and answers often follow:

A single individual can file a lawsuit against an employer alleging that all employees were subjected to certain violations of the California Labor Code?

Yes.

Even if there are ...

by Michael Kun

As we have mentioned previously on thisblog, the latest wave of wage-hour class actions to hit California employers is based on a claim that employees were not provided "suitable seating" under an obscure provision of California's Wage Orders.  To avoid having these cases removed to federal court,and to avoid the burden of establishing the elements for class certification, many plaintiffs' counsel have taken to filing these lawsuits not as class actions, but as representative actions under California's Private Attorneys General Act ("PAGA").

PAGA -- sometimes ...

By Michael Kun and Matthew A. Goodin

California employers are celebrating a new California Supreme Court decision that effectively prevents unions from filing suit under the Labor Code Private Attorneys General Act ("PAGA") and the Unfair Competition Law ("UCL").

 There is no reason to celebrate.

What appears to be a major victory for employers is, in fact, no victory at all once one considers the practicalities of litigation.

On June 29, 2009, the same day that it issued its highly anticipated opinion in Arias v. Supreme Court, holding that employees need not bring representative ...

By Michael S. Kun and Aaron Olsen

You probably remember the scene in Jaws when Roy Scheider's character first sees the shark that he and his crew have been pursuing.

And you probably remember what he says: "We need a bigger boat."

Well, after the California Supreme Court's latest ruling, California employers may need a bigger boat.

Already besieged by wage-and-hour class actions, California employers now need to brace themselves for a new wave of representative actions under California’s Private Attorneys General Act ("PAGA") after the California Supreme Court has made it ...