Arbitration agreements can be an important tool for employers. In 2022, the United States Supreme Court decided in Viking River Cruises, Inc. v. Moriana that arbitration agreements could include waivers of claims under the California Private Attorneys General Act (“PAGA”). As a result, many employers adopted arbitration programs with the hope of avoiding PAGA actions. 

Unfortunately, a few months after the Viking River decision, the California Supreme Court ruled in Adolph v. Uber Technologies, Inc. that a plaintiff whose individual PAGA claims are compelled to arbitration does not lose their standing to litigate non-individual claims in court. Since then, California trial courts regularly have compelled plaintiffs to arbitrate their individual PAGA claims first, and stay (i.e., put on hold) their representative, non-individual PAGA claims pending the conclusion of the arbitration.

Many plaintiffs’ attorneys have tried to circumvent Adolph by asserting that their clients are not pursuing individual claims at all, but rather only bringing claims on behalf of others.  This argument, of course, belies the actual intent of PAGA.

In Leeper v. Shipt, Inc., the California Court of Appeal recently ruled that every PAGA case necessarily includes an individual PAGA action. In reaching this decision, the Court relied in part on the applicable statutory language, which describes PAGA as “a civil action brought by an aggrieved employee on behalf of the employee and [emphasis added] other current or former employees.” The Court then concluded that “any PAGA action necessarily includes both an individual PAGA claim and a representative PAGA claim.” As a result, the employee in Leeper was forced to arbitrate their individual claim, and the court stayed the representative portion of the action pending a resolution of the individual claim. 

The Leeper decision is good news for California employers, and yet another reason to consider implementing a workplace arbitration program if you have not already done so.