122 | 2024 Cal-Peculiarities ©2024 Seyfarth Shaw LLP www.seyfarth.com “The California Fair Pay and Employer Accountability Act” initiative. The California Fair Pay and Employer Accountability Act qualified for the 2024 ballot and, if passed, would do the following: (1) replace PAGA and instead give only the Labor Commissioner the right to issue penalties, including increasing penalties for willful violations, (2) provide 100% of the penalties to employees, and (3) create a Consultation and Publication Unit that employers can utilize for guidance on applying the Labor Code. 5.15.3 Further PAGA peculiarities Employees settling individual Labor Code claims can still pursue PAGA claims for themselves and other aggrieved employees for the same violations. One Court of Appeal decision upheld the dismissal of a PAGA claim when a Labor Code plaintiff, whose individual claims had been directed to arbitration, settled his individual claims and then sought to resume his PAGA claim that had been stayed in court pending the arbitration.444 The Court of Appeal held that the plaintiff, upon settling his individual claims, was no longer an “aggrieved employee” and thus lacked standing to pursue a PAGA claim.445 The California Supreme Court upset this sensible result by granting review of the case446 and then unanimously ruling for the plaintiff. The Supreme Court, focusing on the literal language of PAGA, reasoned that an “aggrieved employee” eligible to pursue a PAGA claim is anyone who has suffered a relevant Labor Code violation, and that a PAGA plaintiff remains “aggrieved” even if he has received individual relief for the violation.447 PAGA settlements resolve PAGA claims of other aggrieved employees, but only if the PAGA notice supports a conclusion that claims of other aggrieved employees are covered. The Court of Appeal so held in a case where a truck driver who was bringing a PAGA action against his employer for denying rest and meal breaks learned that another employee bringing a PAGA action and a class action on those claims was settling those claims. Although the truck driver opted out of the proposed class settlement, he could not opt out of the PAGA action and so the PAGA settlement and resulting judgment in the other employee’s case finally resolved all PAGA claims, including the truck driver’s. Although the truck driver sought to continue his own PAGA action beyond the period covered by the PAGA settlement, he lacked standing to do so because, by the time that period ended, he had not been employed by the employer for well more than a year.448 In 2022 the Ninth Circuit similarly held that an aggrieved employee, who was not a party to the PAGA lawsuit, could not appeal a PAGA settlement. The Ninth Circuit noted: “There is no individual component to a PAGA action because every PAGA action is a representative action on behalf of the state [and] [p]laintiffs may bring a PAGA claim only as the state’s designated proxy[.]”449 The Ninth Circuit further rejected the argument that an aggrieved employee could appeal a PAGA settlement on the grounds that he was entitled to some portion of the PAGA award: an aggrieved employee “does not receive a portion of the PAGA settlement because of any injury, but instead because the California legislature made a policy choice that the bounty that normally serves as the incentive for the plaintiff to bring the suit should instead be shared with all aggrieved employees.”450 In 2023, the Court of Appeal in LaCour v. Marshalls of California, LLC reversed dismissal of a PAGA action.451 The trial court had dismissed PAGA claims in an action alleging unreimbursed business expenses on grounds they had been released in settlement of a prior PAGA action. Though the PAGA notice in the prior action listed a variety of alleged violations, including Labor Code section 2802, the state court complaint factually alleged only off-the-clock claims. Nevertheless, the trial court found that the first-filed plaintiff had authority to settle the second-filed plaintiff’s expense reimbursement claims. The Court of Appeal reversed, noting that the dearth of factual allegations in the PAGA notice in the prior PAGA action could not support the conclusion that the prior settlement agreement released expense reimbursement claims alleged in the second action. The court further noted that res judicata did not bar the second action because the two actions did not assert the same primary rights and there was no privity between the two named plaintiffs despite a judicially accepted and broadly worded release in the first matter.
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