The U.S. Supreme Court will consider buttressing the power of businesses to funnel employee disputes into individual arbitration proceedings, agreeing to hear a case over a California law that authorizes workers to press group suits.
The justices said Wednesday they will hear an appeal from Viking River Cruises Inc., which contends California courts are letting people circumvent earlier Supreme Court rulings that require arbitration agreements to be honored even if they preclude class actions. Business groups including the U.S. Chamber of Commerce are backing the appeal.
The disputed law, the California Private Attorneys General Act, lets employees file cases that a government official might have pursued, but chose not to. Individuals can sue on behalf of similarly situated people who work for the same employer. Aggrieved workers keep 25% of any penalties collected, with the state getting the other 75%.
The California Supreme Court ruled in 2014 that workers can press a so-called PAGA case even if they previously agreed to send any employment disputes to individual arbitration proceedings.
Viking and other companies say that ruling can’t be squared with U.S. Supreme Court decisions from 2011 and 2018 that said companies can enforce arbitration accords with consumers and employees. Those rulings relied on the 1925 Federal Arbitration Act, which says arbitration agreements must be enforced like any other contract.
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