The U.S. Supreme Court dealt a blow to a controversial California law that makes it easier for employees to sue their employers for labor law violations, but the implications of the ruling aren’t as broad as some employers may have hoped.
The Supreme Court on Wednesday issued a ruling in a lawsuit dealing with the Private Attorneys General Act, and how it applies to employees who have signed employment contracts that include mandatory arbitration agreements and waived their right to bring class-action suits against their employer.
The Supreme Court ruling overrides a previous California Supreme Court ruling, which found that mandatory arbitration agreements between employers and employees did not apply to PAGA, and employees could still file PAGA suits even if they had agreed to settle disputes in arbitration as part of an employment contract.
That means that California employers are now able to force individual employees into arbitration to settle labor rights claims, and don’t have to go through the court process, if that was part of their employment contract to begin with.
“As the Court pointed out, California’s PAGA law unduly circumscribes the freedom of parties to determine the issues subject to arbitration and the rules by which they will arbitrate,” the California Chamber of Commerce said, in a statement. “Businesses, workers and consumers will benefit from this ruling going forward.”
PAGA was put in place in 2004, in an effort to aid workers and state regulators —...
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