CA Supreme Court holds individual settlements don't bar pursuit of PAGA claims

The California Supreme Court recently held that employees who settle and release their individual wage and hour claims may still have standing (i.e., the right or authority) to pursue a representative action for civil penalties based on the same legal violations under the California Private Attorneys General Act (PAGA). The PAGA permits aggrieved employees to seek civil penalties on behalf of similarly aggrieved current and former employees.

Background

Justin Kim worked as an exempt training manager for Reins International California, Inc., which operates restaurants throughout California. Kim sued Reins, alleging that he and other training managers had been misclassified. His complaint included claims for failure to pay minimum wages and overtime, failure to provide meal and rest breaks, failure to provide accurate wage statements, unfair competition, waiting time penalties, and civil penalties under the PAGA.

Relying on an arbitration agreement, Reins asked the court to compel arbitration of Kim's "individual claims" for damages and to delay the PAGA claim until arbitration was complete. The court granted the employer's request. Reins subsequently offered to settle all of Kim's "individual claims" for $20,000, attorneys' fees, and costs. Kim accepted the offer and dismissed his individual claims so that only the PAGA claim remained.