Court Will Not “Split” PAGA Claim to Send a Portion of It to Arbitration

Court Will Not “Split” PAGA Claim to Send a Portion of It to Arbitration

On August 13, 2019, a court of appeal in Mejia v. Merchants Building Maintenance affirmed a trial court’s order denying the defendants’ motion to compel arbitration. The plaintiff was a union member covered by a collective bargaining agreement that required employees to resolve their private wage and hour disputes on an “individual basis” by following a mediation and arbitration protocol in the CBA. In her lawsuit, Mejia alleged that the defendants had policies and practices that violated the Private Attorneys General Act of 2004 (PAGA) by not providing meal periods, rest periods and accurate itemized wage statements, and by not paying minimum wages, overtime, and all wages due upon an employee’s separation from employment.

The defendant-employers moved to compel arbitration of a portion of the plaintiff’s cause of action alleging various violations of the Labor Code under PAGA. The Mejia court acknowledged that appellate courts in California were divided over whether a court may “split” a single PAGA claim, and that the issue is pending before the California Supreme Court. The Mejia court refused to order arbitration of that aspect of the plaintiff’s claim that sought to recover a portion of the PAGA penalty that represents  “underpaid wages,” while permitting a court to adjudicate that portion that sought to recover the additional penalties for each violation of the wage requirements. Accordingly, unless the Supreme Court decides otherwise, PAGA permits a plaintiff to avoid the terms of a mandatory agreement to arbitrate wage-related claims, and the preemptive scope of the Federal Arbitration Act.