California: Another Interpretation of Headless PAGA Cases

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February 26, 2025

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  • When a representative claim rather than an individual PAGA claim is made in a lawsuit, a court cannot insert an individual claim in order to enforce an arbitration agreement that only covers individual claims.

Discussion:

The California Private Attorney General Act (PAGA) continues to be at the center of wage and hour lawsuits. As recently reported, on December 30, 2024, in Leeper v. Shipt, Inc., the California Court of Appeal, District Two, said that PAGA actions necessarily include an individual component. The court said that the employee’s individual PAGA claim must be ordered to arbitration and the litigation is stayed pending arbitration.

 

More recently, on February 26, 2025, in Rodriguez v. Packers Sanitation Services LTD., LLC, the California Court of Appeal, District Four, disagreed with the ruling in Leeper which said that “any PAGA action” “necessarily includes . . . an individual PAGA claim.” Rather, this court said that even though an individual PAGA claim may be a necessary component of a PAGA action, it does not automatically mean that an individual claim exists where none was alleged.

 

Here, the plaintiff brought wage and hour claims acting “in a Representative Capacity only” and the defendant employer sought to enforce arbitration of the plaintiff’s individual claims, which were intentionally not asserted in the Complaint. The court said that because the plaintiff is not asserting individual PAGA claims, and the arbitration agreement does not cover representative actions, the trial court could not have compelled individual PAGA claims to arbitration. The court said the focus should be on the interpretation of the arbitration agreement and what a plaintiff has alleged in a Complaint. The court should not be inserting claims into the Complaint that do not exist. The burden is on the plaintiff to properly allege claims against a defendant.

 

The court specifically does not address whether it is permissible for a plaintiff to file a complaint that asserts only non-individual PAGA claims because it wasn’t brought up on appeal. “[T]his is an appeal from an order resolving a motion to compel arbitration, not a motion challenging the sufficiency of the complaint.” Because of the split in authority, these issues will likely end up before the California Supreme Court. Employers should continue to look for updates on PAGA and arbitration enforcement.

 

Action Items

  1. Review arbitration agreements with legal counsel.

 

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2025 ManagEase