California employees can now seek representative (non-individual) Private Attorneys General Act (PAGA) penalties in court even when their individual PAGA claims are compelled to arbitration, thanks to a highly anticipated state Supreme Court decision. In Adolph v. Uber Technologies, Inc., a disappointing decision for California employers, the California Supreme Court held “an order compelling arbitration of the individual claims does not strip the plaintiff of standing as an aggrieved employee to litigate claims on behalf of other employees under PAGA.”

The Adolph decision resolves the conflict between the U.S. Supreme Court’s decision last summer in Viking River Cruises, Inc. v. Moriana and California’s previous interpretations of PAGA’s standing requirements in cases such as Kim v. Reins International California, Inc.. In Viking River, the U.S. Supreme Court held that the Federal Arbitration Act (FAA) preempted California’s “Iskanian” rule, which prohibited dividing PAGA claims into individual and representative claims. However, the Court upheld Iskanian’s ban on wholesale employee waivers of representative claims under PAGA. In a short-term win for employers, Viking River had also held that representative PAGA claims are not viable in court when uncoupled from a plaintiff’s individual PAGA claim in arbitration. While the California Supreme Court did not disturb Viking River’s primary mandate, which held arbitration agreements for individual PAGA claims covered by the...

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