PAGA Claims and Arbitration: Second District Rules that Courts May Not Split a Solitary PAGA Claim

The Second District Court of Appeal held yesterday that if an employee brings a solitary Private Attorneys General Act claim, a court cannot send the employee to arbitrate his individual damage claim and retain jurisdiction to award the additional, statutorily prescribed amounts. (See, Zakaryan v. The Men's Warehouse, Inc. - filed March 28, 2019, Second District, Div. - 2019 S.O.S. 1499.)

In its ruling, the Zakaryan court reinforced the fact that the Labor Code Private Attorneys General Act of 2004 (PAGA) deputizes individual employees to step into the shoes of the state’s labor enforcement agency and sue their employers for underpaid wages and additional, statutorily prescribed amounts on behalf of themselves and their aggrieved coworkers. (Lab. Code, § 2698 et seq.) In Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 382-392 (Iskanian), the California Supreme Court held that individual employees cannot contractually agree to arbitrate their potential PAGA claims, but may still contractually agree to arbitrate their “individual damages claims.” Thus, the question before the Zakaryan court was if an employee brings a solitary PAGA claim, may a trial court split that claim—that is, may the court send the employee to arbitration (when he has agreed to it) to recover his underpaid wages but retain jurisdiction to award the additional, statutorily prescribed amounts? Presently, the appellate courts are divided on the issue. (Esparza v. KS Indus., L.P. (2017) 13 Cal.App.5th 1228 (Esparza) has sanctioned such an order, while Lawson v. ZB, N.A. (2017) 18 Cal.App.5th 705 (Lawson) has not.) Although this issue is pending before the California Supreme Court in Lawson (Lawson, review granted Mar. 21, 2018, S246711), the Zakaryan court analyzed the issue differently than Esparza or Lawson but ultimately concluded that courts may not split a solitary PAGA claim and send it to two different fora.