On June 15, 2022, the U.S. Supreme Court ruled in Viking River Cruises, Inc. v. Moriana that bilateral arbitration agreements governed by the Federal Arbitration Act (FAA) may require arbitration of California Private Attorneys General Act (PAGA) claims on an individual basis only.

However, Justice Sotomayor’s concurring opinion in Viking River Cruises also seemingly included an invitation for California’s legislature and courts to clarify standing issues related to PAGA actions when an employee is required to arbitrate their individual PAGA claims in accordance with an enforceable arbitration agreement.

The California Supreme Court has accepted this invitation and agreed to review several cases on the issue, including Wing v. Chico Healthcare & Wellness Centre (Wing) and Sanchez v. MC Painting (Sanchez).  The specific question presented in these cases is: whether an aggrieved employee who has been compelled to arbitrate claims under PAGA that are premised on Labor Code violations actually sustained by the aggrieved employee maintains statutory standing to pursue PAGA claims arising out of events involving other employees in court or in any other forum the parties agree is suitable.

In Wing, the employee agreed to an alternative dispute resolution policy as a condition of her employment. The policy included a waiver of class or representative actions. The employee then filed a complaint that included PAGA claims. The employer asked for the PAGA claims to be stayed while the individual claims proceeded to arbitration, but the employee refused. The trial court subsequently denied the employer’s motion to compel arbitration of the PAGA claims, and the California Court of Appeal upheld the denial based on California Supreme Court precedent in Iskanian v. CLS Transportation Los Angeles LLC, which held that an employee’s right to pursue a representative PAGA action cannot be waived, and this conclusion was not preempted or foreclosed by the FAA.

In Sanchez, the employee signed an arbitration agreement at the time of hire, which included language that all issues of validity, enforcement, and interpretation of the agreement would be governed by the FAA and that the employee waived the right to bring representative actions. As in Wing, the employer appealed the trial court’s denial of a petition to compel arbitration of a PAGA claim based on the California Supreme Court’s reasoning in Iskanain.

The California Supreme Court has clearly signaled its intention to clarify Iskanian’s status in light of the U.S. Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana. In the meantime, we also await the high court’s decision regarding a potential rehearing in Viking River Cruises.

Jackson Lewis will continue to track cases regarding arbitration agreements and PAGA. If you have questions about employment arbitration agreements in California or related issues, contact a Jackson Lewis attorney to discuss.