Private Attorneys General Act Review – 2025

California Private Attorneys General Act As with previous years, claims filed under the California Private Attorneys General Act (PAGA), Cal. Lab. Code, § 2698, et seq., continue to be one of the most popular claims filed in California, allowing plaintiffs to bring claims on behalf of their co-workers with no class certification requirements and minimal barriers to legal standing. By all accounts, 2024 was a very active year on the PAGA litigation front. The PAGA creates a scheme to “deputize” private citizens - “aggrieved employees” - to sue their employers for violations of the California Labor Code on behalf of their co-workers as well as the State. If successful, aggrieved employees receive 25% of any recovered civil penalties and pass the other 75% to the California Labor and Workforce Development Agency (LWDA). The PAGA authorizes the attorneys who pursue the action to collect their attorneys’ fees and costs in addition to the civil penalties. In 2009, the California Supreme Court held in Arias v. Superior Court , 46 Cal. 4th 969 (2009), that PAGA actions need not satisfy class action requirements. This has allowed employees to bring large-scale claims on behalf of all non-exempt employees against employers on a state-wide basis with no concern as to whether or not a Court would approve that scope. In 2014, the California Supreme Court ruled in Iskanian, et al. v. CLS Transportation Los Angeles, 59 Cal. 4th 348 (2014), that the Federal Arbitration Act (FAA) does not preclude the California Legislature from deputizing employees to prosecute violations of the California Labor Code on behalf of the state and, therefore, does not preempt a state law that prohibits waiver of PAGA representative actions. Along with Arias , this ruling led to a significant increase in the filing of PAGA actions, which were generally unimpeded until 2022. However, in 2022, PAGA actions suffered a setback. In June 2022, the U.S. Supreme Court held in Viking River Cruises v. Moriana, et al., 142 S.Ct. 1906 (2022), that the FAA preempts California law to the extent it precludes a PAGA action from being divided into individual and non-individual components, and that individual PAGA claims are thus subject to arbitration. The U.S. Supreme Court ruled that once an employer compels an employee to arbitrate the employee’s individual PAGA claim, the representative, or non-individual PAGA claim on behalf of other employees should be dismissed. The U.S. Supreme Court reasoned that, having been compelled to arbitrate his or her individual claim, the plaintiff no longer had standing to maintain a non-individual PAGA action in court. This was obviously a favorable ruling for employers, but Justice Sotomayor’s concurrence in Viking River complicated matters. She noted that, if the Supreme Court’s analysis of state law was wrong regarding a plaintiff’s lack of standing to maintain a non-individual PAGA action if the individual PAGA action was compelled to arbitration, then California state courts would have the last word. Taking Justice Sotomayor’s cue, the California Supreme Court took up this standing issue in Adolph v. Uber Technologies , 14 Cal. 5th 1104 (2023). It ruled that PAGA plaintiffs can first pursue individual claims in arbitration and then can pursue non-individual claims in court as long as they are aggrieved employees. If the plaintiffs lose in arbitration, they are not aggrieved and therefore lack standing. However, if the plaintiffs prevail or settle their individual claims in arbitration, they can then return to court to prosecute their non-individual PAGA claims. For companies facing PAGA claims, Adolph has ushered in a new period of workplace litigation in California. This Appendix offers an overview of the most significant trends and developments that shaped the PAGA landscape in 2024, as well as the key PAGA-related decisions on issues such as arbitration, preemption, manageability, and the interplay of PAGA and class and collective action theories of liability.

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