The US Supreme Court limited the reach of a unique California law allowing employees to sue over workplace violations in place of the state, while leaving the door open for state courts or lawmakers to restore it.
The Federal Arbitration Act, which governs private dispute resolution contracts, requires that an arbitration agreement can apply to an individual worker’s claims under California’s Private Attorneys General Act, separating them from claims the worker was litigating on behalf of others, the justices ruled Wednesday.
The decision overturned the prohibition on dividing PAGA claims that stemmed from a 2014 California Supreme Court ruling that class-action waivers in employees’ arbitration contracts don’t apply to PAGA claims. But the justices left in place the state court’s ban on wholesale waivers of rights under the law.
PAGA doesn’t have a mechanism for courts to hear group claims when the individual who sued is forced into arbitration, so those claims should be dismissed, the high court said in an opinion penned by Justice Samuel Alito.
“Of course, if this Court’s understanding of state law is wrong, California courts, in an appropriate case, will have the last word,” Justice Sonia Sotomayor said in her concurring opinion. “Alternatively, if this Court’s understanding is right, the California Legislature is free to modify the scope of...
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