In a Win for Companies, Supreme Court Holds PAGA Does Not Permit the Recovery of Unpaid Wages

In a Win for Companies, Supreme Court Holds PAGA Does Not Permit the Recovery of Unpaid Wages

On September 12, 2019, the California Supreme Court in ZB, N.A., and Zions Bancorporation v. Superior Court settled an issue on which several courts of appeal had differed and held that an employee’s claims for unpaid wages are not recoverable under the Private Attorney Generals Act (PAGA).

While employed by the defendants, Ms. Lawson signed an agreement to arbitrate all employment claims and forego class arbitration. In an attempt to avoid the arbitration agreement she had signed, Lawson filed a Complaint in court setting forth a single cause of action under PAGA. (The California Supreme Court in Iskanian had held that a court may not enforce an employee’s alleged predispute waiver of the right to bring a PAGA claim in any forum). In her Complaint, Lawson alleged that ZB failed to provide overtime, minimum wages, meal and rest periods, timely wage payments, complete and accurate wage statements and payroll records, and reimbursement of business-related expenses, and she sought “civil penalties, including unpaid wages and premium wages per California Labor Code section 558.”

After undertaking “a close, contextual analysis of the statutory scheme,” the ZB, N.A. court unanimously concluded that “the amount for unpaid wages referenced in section 558 is not part of that section’s civil penalty and is not recoverable through a PAGA action.” Accordingly, the Supreme Court remanded the case to the trial court to consider striking the unpaid wages allegations from the Complaint, permitting Lawson to amend her Complaint, and other measures.