The Supreme Court Renders An Important Victory For Employers
By Swerdlow Florence Sanchez Swerdlow & Wimmer
June 18, 2022
On June 15, 2022, the United States Supreme Court, in the case of Viking River Cruises, Inc. v. Moriana, handed down a significant victory to employers with regard to the arbitration of claims brought by employees under California’s Private Attorney General Act (“PAGA”).
As background, PAGA is a sweeping mechanism that deputizes employees to sue employers for civil penalties due to Labor Code violations, on behalf of the State of California. Under PAGA, any employee who was subjected to a Labor Code violation can bring a PAGA claim to recover civil penalties due to violations of the Labor Code against them and other similarly aggrieved employees. As such, the number of PAGA claims has risen astronomically over the years, as even a minor Labor Code violation can give rise to significant penalties when the violation impacts a large number of employees.
Under the Court’s Viking River ruling, arbitration agreements that require employees to arbitrate their individual PAGA claims (i.e., PAGA claims predicated solely on violations of the Labor Code they personally sustained) are enforceable. And, under Viking River, once the employee is forced to arbitrate their individual PAGA claim, the employee no longer has legal standing to assert, in court or arbitration, a PAGA claim on behalf of others.
It is important to understand, however, that this ruling does not apply to most employers in the transportation industry or employers who are not engaged in interstate commerce.
In light of the Viking River decision, we recommend that California employers consider using well-crafted arbitration agreements requiring, among other things, arbitration of individual PAGA claims and a waiver of class-action claims. Employers who already use arbitration agreements and/or agreements waiving class-action claims should seek legal counsel to promptly update their existing arbitration agreements.
Contact your SFSS&W attorney if you have any questions regarding the Supreme Court decision and its impact on your workplace.
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