The U.S. Supreme Court has sharply limited a California labor law that has authorized private lawsuits on behalf of groups of workers even if they had agreed to resolve their disputes through arbitration. According to a report in the Los Angeles Times, in the 8-1 decision, the high court ruled the Federal Arbitration Act preempts or overrides state law.
Arbitration Versus Lawsuits
California is the only state to authorize such private lawsuits to enforce its labor laws. In doing so, the state allows employees to escape the binding arbitration agreements they signed or were required to sign when hired.
The justices ruled for Viking River Cruises, which sought to block a broad private lawsuit brought in Los Angeles by one of its former sales agents.
The case before the court arose when Angie Moriana quit her job at Viking River Cruises in 2017 and alleged she did not get her final paycheck on time. She became the lead plaintiff in a class action lawsuit alleging multiple violations on behalf of a large group of Viking employees.
Viking objected saying she and other employees had signed an arbitration agreement and had waived their right to any “class, collective or private attorney general action.” A Los Angeles Superior Court judge and state appeals court refused to block the lawsuit.
Viking then appealed to the Supreme Court. Justice Clarence Thomas was the sole dissenter and maintained that federal law does not apply to proceedings in state court.
A Blow for Workers’ Rights
California Attorney General Rob Bonta told the LA Times that the decision is disappointing, but that “key aspects of PAGA remain in effect.” This means workers can continue to bring claims on behalf of others if they do not agree to individual arbitration. The state Legislature adopted the Private Attorneys General Act or PAGA in 2004 and said the state did not have sufficient staff to protect workers’ rights.
As a result, lawmakers said, the state’s labor laws were not being enforced even when employers stole employees’ wages or didn’t pay workers for overtime work. Lawmakers pointed to industries where wage theft is rampant, including restaurants, garments, agriculture, car wash, and construction.
This law incentivized attorneys to bring claims seeking penalties for labor code violations even if a plaintiff had signed an arbitration agreement.
While this is a serious blow for California employees, and the Supreme Court’s decision is highly disappointing, the state still has strong labor laws that protect workers’ rights. Wage theft still remains a huge problem in California.
Numerous workers are cheated by employers who fail to pay them hard-earned wages. Our California employment lawyers remain passionate about pursuing justice for California workers. If you believe your employer hasn’t paid you wages due, we are here to fight for your rights.