PAGA Lawsuit vs Class Action

PAGA enables wronged employees to act as “private attorney generals” acting on behalf of the California Labor Commissioner file lawsuits against their employers for Labor Code violations.

Updated: 05/19/2023

By: Brad Nakase, Attorney

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The class action is a procedural device for resolving the claims of absent parties on a representative basis, Fed. R. Civ. P. 23. By contrast, a Private Attorneys General (PAGA) action is a statutory action in which the penalties available are measured by the number of Labor Code violations committed by the employer.

An employee bringing a PAGA lawsuit does so as the proxy or agent of the state’s labor law enforcement agencies, who are the real parties in interest. As the state’s proxy, an employee-plaintiff may obtain civil penalties for violations committed against absent employees, Cal. Lab. Code § 2699(g)(1), just as the state could if it brought an enforcement action directly. However, by obtaining such penalties, the employee-plaintiff does not vindicate absent employees’ claims, for the PAGA lawsuit does not give absent employees any substantive right to bring their “own” PAGA claims. An agreement to waive “representative” PAGA claims—that is, claims for penalties arising out of violations against other employees—is effectively an agreement to limit the penalties an employee-plaintiff may recover on behalf of the state.

PAGA Penalties Recovered Goes to State of California

Civil penalties are distinguishable from statutory damages because civil penalties recovered in a Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.) representative action must be allocated 75 percent to the enforcement agency and 25 percent to the aggrieved employee. Civil penalties are paid largely into the state treasury. Thus, the state receives [*1231] proceeds when civil penalties are imposed. In contrast, civil penalties do not include recoveries that could have been obtained by individual employees suing in their individual capacities—that is, victim-specific relief. Esparza v. KS Industries, L.P., 13 Cal. App. 5th 1228.

Where the California Labor Code has not specified a monetary penalty for a particular violation, the Private Attorneys General Act of 2004 (PAGA), Lab. Code, § 2698 et seq., imposes penalties for each aggrieved employee of $100 per pay period for the initial violation and $200 per pay period for each subsequent violation. Lab. Code, § 2699, subd. (f)(2). The Legislature has dealt with the lack of resources for labor law enforcement by authorizing aggrieved employees, acting as private attorneys general, to recover civil penalties for Labor Code violations, provided that the Labor and Workforce Development Agency is notified of the alleged violations and does not take action within 33 days. Lab. Code, § 2699.3, subd. (a). Esparza v. KS Industries, L.P., 13 Cal. App. 5th 1228.

Accordingly, the PAGA states that any civil penalty under the Labor Code that may be collected by the Labor and Workforce Development Agency or any agency may, as an alternative, be recovered through a civil action brought by an aggrieved employee on behalf of himself or herself and other current or former employees pursuant to the procedures specified in the PAGA. § 2699, subd. (a). When these civil penalties are recovered, 75 percent goes to the Labor and Workforce Development Agency and the remaining 25 percent goes to the aggrieved employees. § 2699, subd. (i). Esparza v. KS Industries, L.P., 13 Cal. App. 5th 1228.

PAGA Does not Require Class Certification Elements

Class action requirements need not be met when an employee’s representative action against an employer is seeking civil penalties under the Private Attorneys General Act of 2004, Lab C §§ 2698 et seq. Accordingly, in a case in which an employee sought, among other things, civil penalties under the Act for himself and other employees of his former employer, a court of appeal did not err in holding that the representative claims under the Act were not subject to class action requirements and should not have been stricken by a trial court. Arias v. Superior Court (Cal. 2009), 46 Cal. 4th 969, 95 Cal. Rptr. 3d 588, 209 P.3d 923, 2009 Cal. LEXIS 6017.

PAGA Does Not Require Fair and Adequate Representation

In a PAGA action, the court does not inquire into the named plaintiff’s and class counsel’s ability to fairly and adequately represent unnamed employees—critical requirements in federal class actions under Fed. R. Civ. P. 23(a)(4) and (g).” Baumann v. Chase Inv. Servs. Corp., 747 F.3d 1117

PAGA is a Claim by the State

Because a Private Attorneys General Act (PAGA) action is a statutory action for penalties brought as a proxy for the state, rather than a procedure for resolving the claims of other employees, there is no need to protect absent employees’ due process rights in PAGA arbitrations. PAGA arbitrations therefore do not require the formal procedures of class arbitrations.

PAGA No Notice Requirement

Unlike Fed. R. Civ. P. 23(c)(2), PAGA has no notice requirements for unnamed aggrieved employees, nor may such employees opt out of a PAGA action. In a PAGA action, the court does not inquire into the named plaintiff’s and class counsel’s ability to fairly and adequately represent unnamed employees—critical requirements in federal class actions under Rules 23(a)(4) and (g). Moreover, unlike Rule 23(a), PAGA contains no requirements of numerosity, commonality, or typicality. Because representative PAGA claims do not require any special procedures, prohibiting waiver of such claims does not diminish parties’ freedom to select the arbitration procedures that best suit their needs. Nothing prevents parties from agreeing to use informal procedures to arbitrate representative PAGA claims.

Federal: Class Action Elements

In federal actions, the relevant requirements are set forth in Rule 23, subdivisions (a) and (b) of the Federal Rules of Civil Procedure (“FRCP”) (emphasis added):

(a) Prerequisites. One or more members of a class may sue or be sued as representative parties on behalf of all members only if:

(1) the class is so numerous that joinder of all members is impracticable;

(2) there are questions of law or fact common to the class;

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and

(4) the representative parties will fairly and adequately protect the interests of the class.

(b) Types of Class Actions. A class action may be maintained if Rule 23(a) is satisfied and if:

(1) prosecuting separate actions by or against individual class members would create a risk of:

(A) inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class; or

(B) adjudications with respect to individual class members that, as a practical matter, would be dispositive of the interests of the other members not parties to the individual adjudications or would substantially impair or impede their ability to protect their interests;

(2) the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole; or

(3) the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. The matters pertinent to these findings include:

(A) the class members’ interests in individually controlling the prosecution or defense of separate actions;

(B) the extent and nature of any litigation concerning the controversy already begun by or against class members;

(D) the likely difficulties in managing a class action.

Administrative Exhaustion

In a suit by an employee alleging a failure to provide accurate wage statements required by Lab C § 226(a), although the employee’s initial pre-filing notice of her suit to the Labor and Workforce Development Agency (LWDA) did not comply with the administrative procedures of the Private Attorney General Act, the employee cured the administrative default by waiting the appropriate amount of time from her notice letter before filing her amended complaint, and the notice did not preclude LWDA from performing its administrative function. Garnett v. ADT, LLC (E.D. Cal. 2015), 139 F. Supp. 3d 1121.

PAGA Class Action Waiver

In a former employee’s putative class action alleging violations of Lab C §§ 201 and 202, the employer was entitled to compel arbitration under the Federal Arbitration Act; the employee’s claim under Lab C § 2699 of the Private Attorneys General Act was arbitrable, and the arbitration agreement’s provision barring the employee from bringing that claim on behalf of other employees was enforceable. Quevedo v. Macy’s, Inc. (C.D. Cal. 2011), 798 F. Supp. 2d 1122, 2011 U.S. Dist. LEXIS 83046.

Class Actions Settlement Allocation for PAGA

Trial court did not abuse its discretion in approving a settlement of two class action lawsuits against an employer that did not allocate any damages to the class’s civil penalty claims under the Private Attorneys General Act of 2004. Such claims were resolved as a part of the overall settlement of the case. Nordstrom Com. Cases (Cal. App. 4th Dist. 2010), 186 Cal. App. 4th 576.

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