10.15.2021 | Newsletters

FINALLY! Good News for California Employers

As many of you know from personal experience, California’s Private Attorney General Act (PAGA) permits employees who have allegedly suffered a Labor Code violation to bring a lawsuit on behalf of themselves and other “aggrieved” employees to recover civil penalties as a “private attorney general” for the State of California. The penalties recovered are shared – 25% to the employee bringing the suit and 75% to the State.

The law permits an employee to seek civil penalties for any purported violations, even if the employee bringing the lawsuit was not affected by all of the alleged violations. As a result, employers can be faced with PAGA litigation involving every employee on a wide variety of Labor Code provisions. A recent decision from a California Court of Appeal is the first published authority on the long-simmering question of whether or not a court can require a PAGA lawsuit to be manageable or face dismissal.

In Wesson v. Staples the Office Superstore (2021) 68 Cal.App.5th 746, the appellate court held that a trial court has the inherent authority to ensure that PAGA claims can be fairly and efficiently tried and to strike PAGA claims that cannot be made manageable. Importantly, the appellate court determined that the employer’s due process rights to litigate affirmative defenses must be considered when determining if a claim is manageable.

In Wesson, the plaintiff alleged that Staples had misclassified its 345 general managers as exempt employees. The general managers worked in stores and with staffs of various sizes, and each general manager’s duties varied depending on the store and staff size, as well as other factors. The trial court found that Staples had a right to present evidence as to each general manager’s classification and that, as such, a trial of the PAGA claim was unmanageable. The court of appeal agreed and the PAGA claim was dismissed.

Related practice team: Labor and Employment

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