Private Attorneys General Act (PAGA): Employers fate to be decided in 2022

Private Attorneys General Act (PAGA): Employers fate to be decided in 2022

On December 15, 2021, the United States Supreme Court announced to review the most consequential PAGA case Viking River Cruises, Inc. v. Moriana, No. 20-1573 (Dec 15, 2021). The step has been taken after almost a decade. The Supreme Court repeatedly denied requests to decide the same issue and now finally agreed to review the rule prohibiting California Private Attorneys General Act (PAGA) waivers in individual arbitration agreements. In Viking River Cruises, Inc. v. Moriana, since 2014, the PAGA-only representative actions have flooded the courts and frustrated employers.  The argument presented was that the Federal Arbitration Act (FAA) should have pre-empted the current situation, an argument that the California Supreme Court has rejected. 

It sure seems likely that a newly formulated conservative majority in the U.S. Supreme Court prompted this move.  A decision is expected in mid-2022. In other words, the Court will decide whether employers may limit PAGA actions by way of employment arbitration agreements with representative action waivers, the same way they limit class actions through class action waivers.

PAGA allows a Court to award a penalty for each pay period that includes a wage-and-hour violation.  It does not include the damages for the underlying violation, just the discretionary penalty, which starts at $100 per employee per pay period, and increases to $200, and even $250 (or in extreme cases of knowing violations, $1000).

This change is also focused on various lobbying groups (including the California Chamber of Commerce, the California Restaurant Association, the California New Car Dealers Association, and the Western Growers) who had made all the efforts to repeal PAGA so that no one can file a representative action in the shoes of the state and recover civil penalties (and hence related attorneys’ fees). This initiative entitled the Fair Pay and Employer Accountability Act of 2022, would place greater enforcement responsibilities on the DLSE (Division of Labor Standards Enforcement), and require sufficient funds for that purpose. The only purpose of this initiative is the attorneys who file PAGA claims or the state cannot recover any money. This initiative has a long road ahead, but if any employer would like to be proactive about PAGA, they can certainly support the lobbying effort or join the signature-gathering effort that will be required to get on the ballot in 2022.

So, we can expect there may be some PAGA relief in 2022 and employers can only wish that this does not happen.

Research and Writing By: Team Draft n Craft

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