The Private Attorneys General Act, or PAGA, enacted in 2004, lets employees sue their employers, individually or collectively, in the name of the state for violating laws such as those regulating minimum wages, overtime, and meal and rest breaks. If these suits succeed, the employees collect 25% of the penalties provided by labor law with the rest going to the state.
Until recently, PAGA allowed workers to sidestep increasingly common provisions in their employment contracts requiring all disputes to be heard individually by private arbitrators rather than in court. Arbitrators' decisions are virtually unappealable, and studies have found that they usually favor employers, their regular customers.
On June 15, however, the nation's high court ruled that PAGA violates employers' right under federal law to take disputes to arbitration when that is required by a work contract. Since the contract is signed by both the employer and the employee, allowing a worker to take the issue to court "unduly circumscribes the freedom of parties to determine the issues subject to arbitration and the rules by which they will arbitrate," Justice Samuel Alito wrote in an 8-1 decision.
But the California Supreme Court is the highest authority on the meaning of state law. And the court has now agreed to decide whether PAGA allows workers, who have consented to take their own disputes to arbitration, to file labor-law claims for other workers in the name of the state. That alternative was suggested by Justice Sonia Sotomayor in a separate opinion in the Supreme Court case.
" Justice Alito can say all he wants about federal law,' Aashish Desai, a lawyer for the Uber driver, said Monday. "But on a California statute, dealing with California citizens and California employees, the California Supreme Court will have the last word."
Desai said he was confident the court would allow workers who are forced into arbitration to maintain PAGA claims for their coworkers, citing the California court's unanimous 2020 ruling allowing an employee to proceed with a PAGA suit even after his employer had settled his individual claims. But just in case, he said, state lawmakers are discussing a possible amendment to PAGA that would clearly authorize employees to sue on behalf of other workers.
Uber's attorney, Theane Evangelis, said the company welcomed the court's decision to review the case and believed the recent U.S. Supreme Court decision would require dismissal of any such suits.
"After the plaintiff's claim is compelled to arbitration, there will be no aggrieved employee before the court," Evangelis said.
The case involves Erik Adolph, who began work in March 2019 as a driver for the food-delivery company Uber Eats in Orange County. His PAGA lawsuit accused the company of violating state law by refusing to pay work expenses for him and other drivers, payments that are required for employees but not for contractors. Those could include the costs of fuel, parking and repairs.
Uber said Adolph's contract required his claim to be heard in individual arbitration. Lower courts disagreed, citing previous California court rulings, but the company sought review in the state Supreme Court — a request joined by Adolph's attorneys last month after the U.S. Supreme Court's PAGA ruling.
The court agreed to take up the case last Wednesday and will schedule a hearing at a later date.
The case is under review while another potentially critical issue for Uber, other ride-hailing companies and their drivers is pending before a state appeals court in San Francisco.
After a state law, AB5, set workplace standards that appeared to classify the drivers as employees — with rights to minimum wages, overtime, work expenses and workers' compensation — the companies spent more than $200 million on a successful November 2020 ballot measure, Proposition 22, that classified them instead as independent contractors.
But an Alameda County Superior Court judge ruled last August that Prop. 22 violated the state Constitution in several ways, including interference with the Legislature's constitutional authority over workers' compensation. The appeals court ruling, expected later this year, is certain to be appealed to the state Supreme Court.
The PAGA case is Adolph v. Uber Technologies, S274671.
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