Employee May Settle His Individual Wage Claims and Still Sue Under PAGA

Employee May Settle His Individual Wage Claims and Still Sue Under PAGA

On March 12, 2020, the California Supreme Court in Kim v. Reins International California, Inc., held that employees may settle and dismiss their individual claims for Labor Code violations and not lose standing to pursue a claim under the Private Attorneys General Act of 2004 (PAGA).

Justin Kim worked as a training manager in the defendant’s restaurant. He later brought a class action lawsuit alleging that he and other training managers had been misclassified as “exempt” employees. He asserted claims for the failure to pay wages and overtime, the failure to provide meal and rest breaks, and accurate wage statements, and for waiting time penalties, unfair competition, and civil penalties under PAGA. Pursuant to the arbitration agreement Kim had signed, six of his claims alleging specific Labor Code violations were ordered to arbitration, and his PAGA claim and the injunctive relief portion of his unfair competition claim remained stayed in court. The parties later settled Kim’s individual claims, expressly leaving the PAGA claim for resolution. The defendant then moved to dismiss such in court, arguing that Kim had lost standing to maintain his PAGA claim because he was no longer an “aggrieved employee.”

The Kim Court noted that a PAGA claim is legally and conceptually different from an employee’s own suit for damages and statutory penalties because an employee suing under PAGA “does so as the proxy or agent of the state’s labor law enforcement agencies.” Accordingly, the Kim Court held unanimously that the settlement of individual claims does not strip an aggrieved employee of standing to pursue PAGA remedies.