Gary McLaughlin Quoted in Daily Journal, SHRM on California Supreme Court PAGA Ruling

Daily Journal has quoted Akin Gump labor and employment partner Gary McLaughlin in the article “Unpaid wage claims not recoverable through PAGA,” which reports on a ruling by the California Supreme Court that unpaid wage awards are not civil penalties. As a result, the court said, they are not recoverable through Private Attorney General Act (PAGA) claims.

According to the article, the ruling significantly puts a limit on the legal options of employees seeking to recover unpaid wages, who had previously signed class action waivers or binding arbitration agreements.

One practical effect of the ruling, McLaughlin stated, is to limit PAGA claims, which he said can be attractive alternatives to class actions for plaintiffs who may not be able to achieve class certification. “A PAGA plaintiff can sue for violations of the labor code even if he or she didn’t experience it themselves…this will limit that.”

McLaughlin also discussed the ruling with the Society for Human Resource Management’s article “California Employees Can’t Seek Back Pay Under PAGA.” He said the decision reinforces that any representative claim for unpaid wages is going to have to meet the requirements of class certification.

From a compliance perspective, McLaughlin added, the ruling will have an impact on companies with arbitration agreements and class waivers. For those without individual arbitration agreements, though, the effect will be somewhat limited, he said, because employees can still pursue unpaid wages through class claims. McLaughlin also warned that employers should keep in mind that workers can still pursue civil penalties under PAGA, which can be very substantial.

McLaughlin co-authored an Akin Gump client alert on the ruling, which can be found by clicking here.