California Supreme Court ruling makes changes to PAGA

| Apr 28, 2020 | Wage and Hour |

California workers can now stand up for their colleagues in court. That’s due to the recent outcome of the Kim v. Reins International California, Inc. case, which clarified provisions of the 2004’s Private Attorney’s General Act (PAGA). PAGA is a California law that allows workers to act as the state when suing for penalties for alleged violation of the enumerated California Labor Code set forth in the PAGA statute.

Under PAGA, an aggrieved employee can file a PAGA representative action alleging various Labor Code violations. Prior to the decision from the California Supreme Court, the courts had held that if an employee settled his individual labor code claims he/she was no longer an aggrieved employee and therefore could not pursue a PAGA representative action.  The California Supreme Court in Kim held that an employee who settles his/her individual labor code claims does not lose standing to file a PAGA representative action in court.  This is a victory for all California employees!!!

Ruling stems from worker classification lawsuit

The issue came about when Justin Kim, an exempt training manager at Reins, a California based restaurant operator, sued the company. Mr. Kim claims they misclassified his and other training managers’ employment status. He said the company failed to provide him and others in his position with overtime hours, meals and rest breaks. Not meeting these standards violates California labor code. Mr. Kim had signed an arbitration agreement with Reins agreeing to submit all of the employment disputes to arbitration and further agreed to a class waiver clause which prevented him from filing a class action against his employer.  Reins successfully compelled Mr. Kim’s individual labor code claims to arbitration and the court stayed the PAGA representative action pending the outcome of Mr. Kim’s arbitration of his individual labor code claims.  Before the arbitration proceedings could commence, Reins’ counsel submitted an Offer of Compromise under California Code of Civil Procedure 998 in an attempt to settle Mr. Kim’s individual labor code claims.  Mr. Kim decided to accept the Offer of Compromise and settled his individual labor code claims but carved out his PAGA claims.  Upon returning to court, Reins’ counsel filed a motion for summary judgment arguing that once Mr. Kim settled out his individual labor code claims he is no longer an aggrieved employee and therefore he no longer has standing to proceed with the PAGA representative action.  Sadly, the trial court agreed with Reins and granted the motion for summary judgment.  Kim’s counsel appealed the trial court’s ruling with the California Court of Appeal who agreed with the trial court’s ruling. Mr. Kim did not give up and filed a petition for review with the California Supreme Court who granted review and reversed the ruling of the Court of Appeal and trial court.

Workers can take power back under the new ruling

It’s no surprise the Golden State is a great place for workers. As California sees more new labor protections every year, the state continues to set the standard for the rest of the country. However, that doesn’t mean greedy employers won’t try to retaliate. If that’s the case, workers can have reliable representation on their side.