Supreme Court deals a blow to unique California labor law

On Behalf of | Jul 4, 2022 | Employment Law

With all the controversial decisions handed down by the U.S. Supreme Court in the final weeks of its term, an 8-1 decision on a California labor law case got comparatively little attention. The high court ruled that private lawsuits representing a group of employees could not be brought against employers if those employees had signed arbitration agreements.

That’s the norm in other states. However, California has been an exception.

What is PAGA?

The decision asserted that the Federal Arbitration Act of 1925 overrules California’s Private Attorneys General Act (PAGA) of 2004. It allows such lawsuits for violations of state labor law even when those included in the group signed arbitration agreements. The vast majority of labor law cases involve wage violations. 

The law came about in large part because lawmakers saw that overtime and other wage theft cases weren’t being dealt with because the state didn’t have the resources to deal with them. This tended to disadvantage those in lower-wage industries.

The Viking River Cruises case

The case that made it to the Supreme Court started as a lawsuit by a former employee of Viking River Cruises over a final paycheck. The suit evolved into one involving multiple Viking employees.

The Supreme Court has a history of ruling in favor of employers over employees. The few liberal justices indicated by their statements and questions while hearing the case that they supported the state’s right to “enforce its own labor laws in a particular kind of way,” as Justice Elena Kagan put it. However, in the end, it was conservative Justice Clarence Thomas who was the sole justice to vote in favor of state courts being able to follow their labor laws.

While business organizations throughout the state hailed the ruling as a victory, California Attorney General Rob Bonta California said that “key aspects” of the PAGA “remain in effect and the law of our state.” He noted that the ruling has no effect on those who didn’t sign arbitration agreements.

No employee should have to put up with illegal actions by their employer. It’s crucial for anyone with a wage or any other type of dispute with an employer to explore all of their potential legal options.