In June 2022, we reported on the Viking River case, in which the U.S. Supreme Court addressed the question of whether claims brought under the California Private Attorney General Act (PAGA) could be compelled to arbitration on an individual basis. As many California employers are aware, PAGA allows employees to bring claims on behalf of the state to recover civil penalties for violations of the California Labor Code. In a successful PAGA action, the California Labor and Workforce Development Agency is entitled to 75% of the recovered penalties, and the remaining 25% goes to the “aggrieved employees.”

In its Viking River opinion, the Court issued a complicated ruling. In essence, the Court held that employees could be compelled to arbitrate their “individual” PAGA claims in arbitration, and, once that happened, the employee would no longer have standing to pursue a collective PAGA action in court. This pro-employer holding meant, for all intents and purposes, that California employers could enforce “PAGA waivers” in arbitration agreements, just like California employers are able to enforce class action waivers in arbitration agreements.

However, in a concurring opinion at the time, Justice Sotomayor instructed that the question of whether an individual who is compelled to arbitrate a PAGA claim has standing (or the legal ability) to pursue a collective PAGA action in such cases is a matter of state law. This concurrence was widely understood as an invitation to California...

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