PAGA Claim Will Not be Compelled to Arbitration

PAGA Claim Will Not be Compelled to Arbitration

On February 25, 2019, a California court of appeal in Correia v. NB Baker Electric, Inc. affirmed a trial court’s order denying an employer’s petition to compel arbitration of a claim brought under the Private Attorney General Act of 2004 (PAGA). The trial court had granted the arbitration petition on all wage and hour causes of action except for the PAGA claim, even though the plaintiffs had signed Arbitration Agreements wherein they had agreed to “bring all employment-related claims to arbitration” and to “waive their rights to maintain any representative action in arbitration or any court.”

Acknowledging that “the federal courts have reached a different conclusion regarding the arbitrability of a PAGA representative claim,” the Correia court found those decisions “unpersuasive” and held that the employees’ pre-dispute arbitration agreements did not subject their PAGA claim to arbitration because the state never agreed to arbitration and a PAGA claim is brought on behalf of the government. It further held that the plaintiffs’ individual PAGA claims would not be compelled to arbitration because “a single representative claim cannot be split into an arbitrable individual claim and a nonarbitrable representative claim.”