US Supreme Court Places Limits on California’s PAGA Law in New Landmark Decision Moriana v. Viking River Cruises, Inc.

The landmark decision in Viking River Cruises, Inc. v. Moriana is finally here – and it’s good news for employers!

On June 15, 2022, the U.S. Supreme Court (“SCOTUS”) ruled the Federal Arbitration Act (“FAA”) preempts a rule of California law that invalidates contractual waivers of the right to assert representative claims under the California’s Private Attorneys General Act (“PAGA”) to the extent that that rule precludes the division of PAGA actions into individual and non-individual claims through an agreement to arbitrate.

The question before SCOTUS was whether the FAA preempts a California law that makes contractual waivers of the right to assert representative claims under PAGA invalid. In short, the Court ruled that the FAA does preempt California law, at least in part. In an unusual opinion, the Court held that individual PAGA claims can be properly subjected to arbitration, and when that occurs, the plaintiff would no longer have standing to maintain representative PAGA claims as to other individuals.

This is significant because, as we have explained in past posts about PAGA, PAGA has historically allowed employees to bypass arbitration agreements employers have with their employees, by allowing an employee to still bring a lawsuit against the employer for alleged Labor Code violations, with the employee standing in the shoes of the state as a “proxy.”

In its decision in Viking the Court heavily focused on the differences between an individual PAGA claim, and representative claims on behalf of other employees. In doing so, it found that the PAGA mechanism requires that the plaintiff acting in a representative capacity have their own individual claim to have proper standing, and that by removing the individual claim to arbitration, that particular plaintiff would be left without standing to act as a representative. This in turn leaves no alternative but the dismissal of the remaining representative claims.

What all this means in the long-term is still unknown.  In the meantime, employers should take time to determine whether or not you should implement an arbitration program with your employees and/or ensure your current arbitration agreements are compliant with the current status of arbitration law. For more information, contact the Employer Lawyers at Chauvel & Glatt.

This material in this article, provided by Chauvel & Glatt, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute legal advice.  For information on your particular circumstances, please contact Chauvel & Glatt at 650-573-9500 for legal assistance near you. (Photo Credit depositphoto.com.)

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