Wednesday’s ruling by the U.S. Supreme Court in Viking River is expected to chill California’s cottage industry of representative wage-and-hour cases, which have long driven huge damages against employers.

The decision offers California employers a significant opportunity to require employees to pursue these types of claims individually. Employers should now at least feel confident in defending actions under California’s Private Attorneys General Act (PAGA), where the individual PAGA plaintiff has signed an enforceable arbitration agreement.

Employers with arbitration agreements should consult with experienced employment attorneys to determine what, if any, updates should be made to these agreements.

California Private Attorneys General Act

California employers have long been forced to litigate wage-and-hour cases on a representative basis. Even when employers had arbitration agreements with class action waivers, a long line of California cases required that representative actions under PAGA had to be resolved in Court and on a representative basis.

PAGA allows any “aggrieved employee” to step into the shoes of the California Labor and Workforce Development Agency (LWDA) to initiate an action against an employer. The employee is empowered to seek damages individually in addition to being able to seek damages with all other employees. While PAGA was initially drafted to help the LWDA enforce labor laws, the statute has long been a sword wielded by employee attorneys to...

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