United States Supreme Court Permits Arbitration of Individual PAGA Claims

On June 15, 2022, the United States Supreme Court issued its decision in the much-anticipated Viking River Cruises, Inc. v. Moriana, which holds that if an employee has signed an arbitration agreement with an employer that includes a representative-action waiver and/or a representative California Labor Code Private Attorneys General Act (“PAGA”) claim waiver, the employee can only prosecute the individual PAGA claims in arbitration. In this scenario, if there is a pending lawsuit in court asserting PAGA claims, then the PAGA claims of the other aggrieved employees must be dismissed since PAGA itself does not currently have any mechanism to allow the non-individual PAGA claims to continue in court while the individual PAGA claims are arbitrated in a separate proceeding. Employers consider the Viking River Cruises a big win. However, as Justice Sotomayor hinted in her dissent, the California Legislature can either revise PAGA to address the standing issue, or a California state court could rule, even without an amendment to PAGA, that PAGA already allows standing to continue to pursue non-individual PAGA claims in court. It is also important to note that if there is no arbitration agreement between the employee and employer in the first place, or if the arbitration agreement does not include a representative-action waiver, then the employee cannot be compelled to arbitrate their individual PAGA claims.