Last week, the California Supreme Court held that private litigants may not recover unpaid wages under the Labor Code Private Attorneys General Act (“PAGA”).  See ZB, N.A. v. Superior Court (Lawson) (Cal. S. Ct. Sept. 12, 2019).

In a rearguard effort to fight employment arbitration agreements, which usually include class action waivers, plaintiffs’ lawyers have been routinely filing PAGA representative actions in an effort to stay in court and out of arbitration.  Plaintiffs relied on Thurman v. Bayshore Transit Management, Inc., 203 Cal. App. 4th 1112 (2012), to argue that, in addition to obtaining the PAGA penalties, they also could recover underlying unpaid wages under Section 558 of the Labor Code.  Essentially, Plaintiffs have been seeking the same recovery they otherwise would have obtained through a class action.

By circumventing their class action waivers and seeking unpaid wages in the PAGA action, Plaintiffs have attempted to revive class action claims for unpaid wages and turned PAGA claims into “sloppy class actions.”  The result has been grossly inflated settlement demands—and higher potential verdicts.  Happily, Lawson forecloses this attempted end-run around class action waivers and the misinterpretation of Labor Code Section 558.

In last week’s ruling, the Supreme Court rejected Thurman’s conclusion and noted that “[d]eeming … unpaid wages … to be a civil penalty … cannot be squared with the understanding of that term under the PAGA.”  The Court held that “the civil penalties a plaintiff may seek under … [the Labor Code] through the PAGA do not include the ‘amount sufficient to recover underpaid wages.’”

Lawson therefore significantly reduces the amount of potential exposure employers face in lawsuits brought under the PAGA.  Although PAGA penalties often far eclipse the potential underlying wage liability, Lawson restricts recovery to actual civil penalties—not unpaid wages—and deprives plaintiffs’ lawyers of a workaround to class action waivers in arbitration agreements.

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Photo of Tony Oncidi Tony Oncidi

Anthony J. Oncidi is the co-chair of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law, including…

Anthony J. Oncidi is the co-chair of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law, including litigation and preventive counseling, wage and hour matters, including class actions, wrongful termination, employee discipline, Title VII and the California Fair Employment and Housing Act, executive employment contract disputes, sexual harassment training and investigations, workplace violence, drug testing and privacy issues, Sarbanes-Oxley claims and employee raiding and trade secret protection. A substantial portion of Tony’s practice involves the defense of employers in large class actions, employment discrimination, harassment and wrongful termination litigation in state and federal court as well as arbitration proceedings, including FINRA matters.

Tony is recognized as a leading lawyer by such highly respected publications and organizations as the Los Angeles Daily JournalThe Hollywood Reporter, and Chambers USA, which gives him the highest possible rating (“Band 1”) for Labor & Employment.  According to Chambers USA, clients say Tony is “brilliant at what he does… He is even keeled, has a high emotional IQ, is a great legal writer and orator, and never gives up.” Other clients report:  “Tony has an outstanding reputation” and he is “smart, cost effective and appropriately aggressive.” Tony is hailed as “outstanding,” particularly for his “ability to merge top-shelf lawyerly advice with pragmatic business acumen.” He is highly respected in the industry, with other commentators lauding him as a “phenomenal strategist” and “one of the top employment litigators in the country.”

“Tony is the author of the treatise titled Employment Discrimination Depositions (Juris Pub’g 2020; www.jurispub.com), co-author of Proskauer on Privacy (PLI 2020), and, since 1990, has been a regular columnist for the official publication of the Labor and Employment Law Section of the State Bar of California and the Los Angeles Daily Journal.

Tony has been a featured guest on Fox 11 News and CBS News in Los Angeles. He has been interviewed and quoted by leading national media outlets such as The National Law JournalBloomberg News, The New York Times, and Newsweek and Time magazines. Tony is a frequent speaker on employment law topics for large and small groups of employers and their counsel, including the Society for Human Resource Management (“SHRM”), PIHRA, the National CLE Conference, National Business Institute, the Employment Round Table of Southern California (Board Member), the Council on Education in Management, the Institute for Corporate Counsel, the State Bar of California, the California Continuing Education of the Bar Program and the Los Angeles and Beverly Hills Bar Associations. He has testified as an expert witness regarding wage and hour issues as well as the California Fair Employment and Housing Act and has served as a faculty member of the National Employment Law Institute. He has served as an arbitrator in an employment discrimination matter.

Tony is an appointed Hearing Examiner for the Los Angeles Police Commission Board of Rights and has served as an Adjunct Professor of Law and a guest lecturer at USC Law School and a guest lecturer at UCLA Law School.

Photo of Andrew Sherwood Andrew Sherwood

Andrew M. Sherwood is an associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration Group. His practice focuses on defending employers in state and federal court lawsuits and alternative dispute resolution forums against claims of…

Andrew M. Sherwood is an associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration Group. His practice focuses on defending employers in state and federal court lawsuits and alternative dispute resolution forums against claims of discrimination, retaliation, wrongful termination, defamation and breach of contract.

From 2010 through 2012, Andrew served as an honors trial attorney for the U.S. Equal Employment Opportunity Commission, where he litigated anti-discrimination claims against private employers and managed administrative investigations.

Photo of Philippe A. Lebel Philippe A. Lebel

Philippe (Phil) A. Lebel represents employers in all aspects of employment litigation, including wage and hour, wrongful termination, discrimination, harassment, retaliation, defamation, trade secrets, and breach of contract litigation, in both the single-plaintiff and class- and/or representative-action context, at both the trial and…

Philippe (Phil) A. Lebel represents employers in all aspects of employment litigation, including wage and hour, wrongful termination, discrimination, harassment, retaliation, defamation, trade secrets, and breach of contract litigation, in both the single-plaintiff and class- and/or representative-action context, at both the trial and appellate level, and before administrative agencies.

In addition to his litigation work, Phil regularly advises clients regarding compliance with federal, state and local employment laws, and assists a variety of companies and financial firms in evaluating labor and employment issues in connection with corporate transactions. Phil also has experience assisting employers with sensitive employee investigations and trainings.  Phil also represents employers in connection with labor law matters, such as labor arbitrations and proceedings before the National Labor Relations Board.

Phil has assisted clients in a wide array of sectors including in the biotech, education, entertainment, financial services, fitness, healthcare, high-tech, legal services, manufacturing, media, professional services, sports, and staffing industries, among others.

Phil regularly speaks on emerging issues for employers and has been published or quoted in Law360, the Daily JournalThe Hollywood ReporterBusiness Insurance, and SHRM.org regarding a variety of labor and employment law topics.

During college, Phil worked on political campaigns in Atlanta, Georgia and Birmingham, Alabama, and was an intern with the National Gay and Lesbian Task Force and the Gay and Lesbian Victory Fund. Phil is a former member of the Board of Directors of the AIDS Legal Referral Panel.