Every month we cover timely California legislative and regulatory employment updates. Check out what you need to know and gain compliance tips to help you stay on top of HR the right way.
California Employer Protections Expanded With New Limit on Employees Seeking Back Pay
Who: California employers
When: Effective Immediately
What: The California Supreme Court ruled that employees can’t collect back pay through the California Private Attorneys General Act (PAGA). Employees must seek their back pay through a separate action.
PAGA is a part of the state Labor Code that allows employees to take on the role of the state to file lawsuits on behalf of themselves and coworkers in similar situations to recover civil penalties from labor code violations. PAGA claims can’t be arbitrated, even if the employed signed an arbitration agreement.
The Court’s decision was to clarify PAGA and California Labor Code 558, which allows the labor commission to collect certain penalties for underpaid employees. The Court stated that the PAGA doesn’t give employees the ability to use Labor Code 558 to step in as the labor commissioner to collect those wages. A separate action would need to be filed.
- This decision has the biggest impact on companies with arbitration agreements. When employees are seeking civil penalties or attempting to recover unpaid wages, be clear on when you can and can’t seek arbitration.
- Be mindful that employees can still seek civil penalties under PAGA.
Supreme Court of California’s Opinion