California: Settlement of Individual Claim Does Not Prohibit Class Representation

The Private Attorneys General Act (PAGA) continues to prove a thorn in employers’ sides, as a recent California Supreme Court decision determined that an employee-plaintiff can still represent other employees and sue an employer on their behalf, even if the individual’s own claim is settled.

In Kim v. Reins International, the employee-plaintiff sued Reins International for alleged wage and hour violations.  Kim also filed a representative claim under PAGA, which allows employees to seek civil penalties on behalf of all aggrieved employees for violations of the Labor Code.  Reins made a settlement offer to Kim to dismiss his individual wage and hour claims, which the employee-plaintiff accepted.  However, when Reins sought for the representative PAGA claim to likewise by dismissed, the Supreme Court said that a plaintiff does not losing “standing” to maintain the representative claim, even if his individual claim was already resolved.  PAGA claims are considered an action between “the state” – represented by the employee-plaintiff – and the employer.  As such, settlement of Kim’s claim did not impact the viability of the representative PAGA claim.

This decision follows in the footsteps of two 2018 cases, Huff v. Securitas Security Services USA, Inc. and Raines v. Coastal Pacific Food Distributors, which likewise expanded the landscape for employees and plaintiff’s attorneys to pursue PAGA claims. Employers will need to continue to be cautious managing even minor technical violations of the California Labor Code that result in potential exposure.

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