Paga Waiver in Arbitration Agreement

The employer-employee contract in Kec v. Orange County Superior Court, G058119 (4/3 7/9/20) (Ikola, Thompson, Goethals) contained a class action waiver and other representative actions broad enough to cover a PAGA claim. The arbitration agreement also provided that the waiver was not modifiable or divisible, and that if the agent`s waiver was found invalid, "the agreement would become null and void for the employees who are parties to that particular dispute" – a so-called "explosion" provision. The plaintiff brought individual, class and PAGA actions against the defendants. Since Iskanian v. CLS Transportation Los Angeles, LLC, an employee`s right to sue for PAGA is no longer feasible. In an unpublished statement released this month, a California appeals court ruled Uber`s arbitration provision unenforceable, which requires drivers to waive the right to bring a class action under the Private Attorneys General Act (PAGA). It was an Uber deal that requires drivers to be entered into before using the Uber app to pick up passengers, and an arbitration clause in the agreement that requires drivers to waive any right to file a representative PAGA action. Although paga only applies to "injured employees," the plaintiff claimed that he and other drivers were workers who had been falsely classified as independent contractors. Baker also argued that the parties` arbitration agreement should be interpreted to mean that even if the waiver of the representative action was unenforceable, the PAGA claim should be submitted to arbitration.

The Court of Appeal rejected this argument. Instead, the Court of Appeal relied on Iskanian`s view that the State is the actual party interested in a PAGA claim. Following other decisions of the California State Court, the Court of Appeals agreed that the state must have accepted any agreement that effectively waived the right to take the PAGA lawsuit to court. Recent decisions of the Court of Appeal in Olabi v. Neutron Holdings, Inc., the plaintiff Olabi Neutron Holdings, Inc., which operates as Lime, has filed a lawsuit in San Francisco Superior Court for various wage and hourly violations in the context of pagA and unfair commercial competition. Olabi claimed that Lime deliberately misclassified him and others as independent contractors rather than employees, which led to violations of the Labor Code. Lime filed a motion to enforce the arbitration on the basis of an arbitration agreement entered into by the parties. However, before hearing the court of first instance`s motion, Olabi rejected the allegation of unfair competition, leaving only one legal remedy – a representative PAGA action for civil penalties. Similarly, in Kec v.J.

Reynolds Tobacco Company, the California Court of Appeals ruled that the employer, R.J. Reynolds, should take a former employee`s misclassification claims to court, based on the wording of the arbitration agreement between the parties. Plaintiff Kec filed individual, class and PAGA actions against employer R.J. Reynolds and claimed that she and others had been falsely classified as exempt workers. R.J. Reynolds attempted to apply arbitration to individual claims – misclassified claims – on the basis of an arbitration agreement between the parties. However, the agreement purported to waive representative actions brought under the PAGA. The agreement further provided that the provision containing the class action and the representative`s waiver was not separable or separable from the arbitration agreement. Relying on this provision, the Court of Appeal concluded that R.J.

Reynolds could not separate individual claims from the PAGA lawsuit because the agreement expressly prohibited changes such as the negotiation of individual claims in arbitration and a representative action in court. As a result, the Court of Appeal ordered the trial court to issue a new order dismissing R.J. Reynolds` request to force arbitration, requiring that PAGA claims and misclassification claims be heard by the court. As a result, if an employer has taken active steps to inform an employee of his or her rights, or if the employee is aware of potential violations of the Labour Code when severance pay is offered, an employee may find it difficult to argue that a duty not to sue should not be enforced. On the basis of some constructive knowledge doctrines, it could even be argued that the obligation not to sue an employer in court is enforceable whether or not an employee has been aware of violations, provided that the employee has been informed based on his or her personal experience or documents received (p.B. by means of pay slips received regularly showing his or her salary calculations). This is especially true if the employee has been paid from a settlement agreement to induce them not to bring claims of any kind to the courts. If an employee has already gone through the LWDA notification process at the time of the offer to leave, they would have full authority to enter into a binding waiver of the AMAP included in a termination agreement. The plaintiff/complainant argued that the arbitrator had violated inalienable legal rights – which would in fact constitute a basis for setting aside an arbitrator`s award. However, the Court of Appeal disagreed, stating that the plaintiff "wrongly equates the violation of imperceptible legal rights – which may support the setting aside of an arbitral award – with an adverse resolution of a claim relating to a non-waiveable statutory right – which is not the case." Even after the Supreme Court`s positive decision in epic Systems Corp. v.

Lewis ("Epic"), California courts will not enforce a PAGA arbitration request. The Court of Appeal rejected the trial court`s finding that the arbitration agreement was unscrupulous because it lacked reciprocity, (a) because it had not been signed by the defendants; and (b) because it required only workers to settle their claims. In general, an agreement can be executed if it is signed by the parties against whom enforcement is sought. As regards the allegation that the agreement was not reciprocal in nature, the Court clarified that, according to existing case-law, the employee`s arbitration agreement is considered reciprocal. The Court added two reservations: first, some of the provisions on the transfer of costs, which were not scrupulous, should be deleted; second, the arbitration agreement does not apply to PAGA claims made on behalf of the state. PAGA`s uniqueness has, at least for now, immunized paga arbitration claims, and it looks like that will be the case for the foreseeable future, much to the chagrin of California employers. In the two cases above, it should also be noted that a waiver of California Civil Code Section 1542 could fundamentally alter the analysis. These waivers are the cornerstone of departure and settlement agreements in California.

Essentially, they are intended to allow employees to waive an employer`s liability for claims that employees are not aware of at the time the agreement is executed. Neither Kim v. Reins, Iskanian v. CLS Transport, nor Julien v. Glenair has not addressed this particular type of legal waiver, the impact of these waivers on an employee`s right to act as an APA representative remains to be seen. The Claimant worked for the employer from November 2014 to August 2015. When he took office, he signed an agreement that accepted the settlement of employment-related claims through arbitration and provided that the Federal Arbitration Act (FAA) would govern the interpretation and enforcement of the agreement. No, says the Zakaryan court, the claim cannot be divided. This position is consistent with Lawson v. ZB, N.A., 18 Cal.App.5th (2017), a case currently pending in the California Supreme Court.

However, the holding company disagrees with Esparza v. KS Indus., L.P., 13 Cal.App.5th 1228 (2017), which allowed the wage claim to initiate arbitration while retaining jurisdiction over legal sanctions. In this case, it was an interesting PAGA waiver and salvatorical questions under a very specific fact, which is fraught with pitfalls. ARBITRATE PAGA Claims" (2) the agreement reflects such an agreement, (3) "the Federal Arbitration Act (FAA) requires the performance of the alleged agreement to arbitrate PAGA claims, and (4) all unenforceable provisions of the agreement must be separate and the other provisions enforced." In addition, the employer argued that the issue of arbitrability was a matter for the arbitrator and not for the trial court [...].