The sharks are starting to circle around PAGA (Private Attorney General Act), a law that many California employers find crazy-making for all the reasons outlined here. PAGA may finally be subject to challenge on two separate fronts in 2022.
First, several lobbying groups (including the California Chamber of Commerce, the California Restaurant Association, the California New Car Dealers Association and the Western Growers) sponsored a ballot initiative to effectively repeal PAGA by removing the ability to file a representative action in the shoes of the state and recover civil penalties (and hence related attorneys’ fees). The proposed ballot initiative entitled the Fair Pay and Employer Accountability Act of 2022, would place greater enforcement responsibilities on the DLSE (Division of Labor Standards Enforcement), and require sufficient funds for that purpose. Put simply, one goal of this initiative is to have more money recovered from employers go to the workers, and not the attorneys who file PAGA claims or the state. This initiative has a long road ahead, but if any employer would like to be proactive about PAGA, they can certainly support the lobbying effort or join the signature gathering effort that will be required to get on the ballot in 2022.
Second, the U.S. Supreme Court took up a case (Viking River Cruises, Inc. v. Moriana) that challenges the current untenable situation where a class action waiver in an arbitration agreement does not apply to PAGA. Since 2014, PAGA-only representative actions have flooded the courts and frustrated employers. The argument presented is that the Federal Arbitration Act (FAA) should have pre-empted the current situation, an argument that the California Supreme Court has rejected. It sure seems likely that a newly formulated conservative majority in the U.S. Supreme Court prompted this move. A decision is expected in mid-2022.
Your Fox Rothschild California Employment Law team will monitor these issues and provide more updates in the coming months.
Bottom-line, there may be some PAGA relief on the horizon in 2022. Employers can only hope….