PAGA Claim Is Not Subject to Arbitration Clause

Wednesday, January 4, 2017

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PAGA Claim Is Not Subject to Arbitration Clause—C.A.

By a MetNews Staff Writer

An employer cannot compel arbitration of a representative claim under the Private Attorney General Act, the Fourth District Court of Appeal has held.

Justice Douglas Miller of Div. Two wrote the opinion which was filed Dec. 7 and certified for publication which was filed Dec. 7 and certified for publication yesterday.

In May 2014, Martina Hernandez, a former employee of Ross Stores, Inc., filed a PAGA complaint against Ross on behalf of herself and all former and current nonexempt hourly employees, alleging numerous Labor Code violations.

As Hernandez signed an arbitration agreement upon her employment, Ross filed a motion to compel arbitration pursuant to the Federal Arbitration Act (FAA) and California Arbitration Act (CAA) in April 2015. The trial court denied the motion.

In announcing an affirmance, Miller said:

“[T]he dispute between Ross and Hernandez is not a dispute between the employer and employee. Rather, this is a representative action and Hernandez is acting on behalf of the state. This dispute does not involve an individual claim by Hernandez regarding the Labor Code violations but rather an action brought for civil penalties under PAGA for violating the Labor Code. There are no “disputes” between the employer and employee as stated in the arbitration policy. The trial court properly determined it had no authority to order arbitration of the PAGA claim.”

The case is Hernandez v. Ross Stores, Inc., E064026.

Neal J. Fialkow and James S. Cahill of the Law Offices of Neal J. Fialkow represented Hernandez. David B. Simpson and Gregory D. Wolflick of Wolflick & Simpson were attorneys for Ross.