Stacking PAGA Penalties: Can PAGA Penalties be Stack?
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Our PAGA attorneys represent companies, businesses, and employers – exclusively.
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Our PAGA attorneys represent companies, businesses, and employers – exclusively.
We pay up to 30% referral fees to lawyers, and per CA Bar rules.
Yes – PAGA penalties may be stacked. PAGA statute under Civil Code section 2698 et seq is unclear whether stacking PAGA penalties is allowed, stacking PAGA penalties were assessed in two California court cases:
These cases are discussed below.
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Stacking PAGA penalties means multiple civil penalties can be recovered in the same pay period for different Labor Code violations.
Employee often cites Labor Code section 2699, subdivision (f) establishes “a civil penalty for a violation” (emphasis added), implying a separate civil penalty for each violation.
Employers often argue against PAGA stacking by citing Labor Code section 2699, subdivision (g)(1), which states that “an aggrieved employee may recover the civil penalty described in subdivision (f)…on behalf of himself or herself and other current or former employees against whom one or more of the alleged violations was committed” (emphasis added).
In Dunlap v. Superior Court (2006) 142 Cal. App. 4th 330, petitioner former employee, who sued real party in interest bank for alleged violations of California’s Labor Code, sought a writ of mandate directing respondent, the Los Angeles County Superior Court, California, to vacate its order granting the bank’s motion to strike certain portions of the former employee’s first amended class action complaint and to enter an order denying the motion to strike.
In ruling the stacking issue, the court held:
An employer is potentially liable for unpaid wages and interest, statutory penalties and civil penalties for many violations of California’s Labor Code wage-and-hour provisions. For example, an employee not fully paid upon discharge or layoff as required by Lab. Code, § 201, may be entitled to recover not only unpaid wages but also the statutory penalty provided by Lab. Code, § 203, and the civil penalty provided by Lab. Code, § 256.
An action seeking the first two categories of damages, although requesting statutory penalties, is not subject to the prefiling notice and exhaustion requirements of the California Labor Code Private Attorneys General Act of 2004 (PAG Act), Lab. Code, § 2698 et seq. An action seeking the third category of recoverable damages, whether alone or in combination with a prayer for other remedies, is. Under Lab. Code, § 2699.3, subd. (a), to be subject to the PAG Act, the employee’s cause of action must allege a violation of one of the provisions listed in Lab. Code, § 2699.5, and seek recovery of a civil penalty assessable by California’s Labor and Workforce Development Agency. Lab. Code, § 2699, subds. (a) & (f).
In Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal. App. 4th 365, employer brought original proceedings in mandate to challenge an order from respondent, the Superior Court of Los Angeles County (California), which overruled the employer’s demurrer to a wage-and-hour action brought by real parties in interest, former employees, who sought, among other remedies, civil penalties for violations of several of the provisions specified in Lab. Code, § 2699.5.
The employees could, however, maintain causes of action for unpaid wages, statutory penalties, and unfair and unlawful business practices, which were not subject to the notice and exhaustion requirements.
While no California appellate court has addressed this issue direcly, multiple federal district courts have found that “stacking” of PAGA civil penalties may be permitted.
In Schiller v. David’s Bridal, Inc. (E.D. Cal. July 14, 2010, 2010 WL 2793650 at *6, 2010 U.S. Dist. LEXIS 81128, (in order denying motion for remand, court observed “Plaintiff cites no authority establishing that PAGA penalties could not be awarded for every cause of action under which they are alleged”) the plaintiff employee alleges eight (8) causes of action:
Plaintiff also seeks penalties under the Private Attorney General Act of 2004 (“PAGA”) for each cause of action one through seven. In general, PAGA is intended to authorize aggrieved employees, acting as private attorneys general, to assess and collect civil penalties for violations of the Labor Code. Under PAGA, Plaintiff may seek penalties in the sum of one hundred dollars ($100) per [*3] aggrieved employee, per pay period for an initial Labor Code violation, and two hundred dollars ($200) for each subsequent violation per aggrieved employee, per pay period. Cal. Lab. Code § 2699(f)(2).
The Schiller court wrote:
In her FAC, Plaintiff alleges [*16] that Defendant’s business practices violate seven (7) separate sections of the California Labor Code (“Labor Code”) as set forth in seven (7) separate causes of action. As to each cause of action, Plaintiff prays that civil penalties be assessed under PAGA. FAC ¶¶ 48, 62, 68, 75, 82, 89, 97. In the “Prayer for Relief” section of the FAC, Plaintiff reiterates her request for PAGA penalties as to each separate cause of action. FAC ¶¶ 111, 118, 124, 132, 138, 143, 149.
Plaintiff asserts that even though she has asked that PAGA penalties be assessed for each cause of action (i.e., multiple PAGA penalties assessed for different types of Labor Code violations in a single pay period), it is unknown whether multiple PAGA penalties can actually be assessed multiple times within the same pay period for each separate Labor Code violation.
Plaintiff refers to tabulating all the potential PAGA penalties alleged as to each cause of action and aggregating them as “stacking.” Plaintiff maintains that while she may request that PAGA penalties be awarded as to each cause of action, Defendant may not “stack” the PAGA penalties for purposes of calculating the amount in controversy. The Court disagrees.
First, [*17] Plaintiff cites no authority establishing that PAGA penalties could not be awarded for every cause of action under which they are alleged. Therefore, it is conceivable that Plaintiff could recover PAGA penalties for each separate type of Labor Code violation. Cf. Simmons v. PCR Technology, 209 F.Supp. 2d 1029, 1033 (N.D. Cal. 2002) (finding punitive damages available under California Fair Employment Housing Act; thus, punitive damages could be considered for amount in controversy calculation).
Second, while not explicitly addressing this issue, at least two other courts have allowed the amount in controversy to be tabulated by aggregating all potential PAGA penalties alleged as to each cause of action – in other words, stacking the penalties. See Pulera v. F & B, Inc., No. 2:08-cv-00275-MCE-DAD, 2008 U.S. Dist. LEXIS 72659, 2008 WL 3863489, at * 2-3 (E.D. Cal. Aug. 19, 2008) (even despite aggregating 25% of all PAGA penalties alleged, court concluded amount in controversy not met); Smith v. Brinker Intern, Inc., No. C 10-0213 VRW, 2010 U.S. Dist. LEXIS 54110, 2010 WL 1838726, at * 2-6 (N.D. Cal. May 5, 2010).
Finally, in Plaintiff’s FAC she requests that PAGA penalties be awarded for each cause of action one through seven. Thus, Plaintiff [*18] has put multiple PAGA penalties in controversy for purposes of the FAC. Korn v. Polo Ralph Lauren Corp., 536 F.Supp. 2d 1199, 1205 (E.D. Cal. 2008 (citing Kenneth Rothschild Trust v. Morgan Stanley Dean Witter, 199 F.Supp.2d 993, 1001 (C.D. Cal. 2002) (amount in controversy is determined by universe of what the plaintiff puts at-issue in the complaint). Plaintiff cannot use PAGA civil penalties as both a sword and a shield by requesting in her FAC that PAGA penalties be awarded for each of seven (7) causes of action, and then arguing that Defendant cannot aggregate PAGA penalties alleged for each cause of action for purposes of calculating the amount in controversy.For these reasons, the Court concludes that Defendant may aggregate all alleged PAGA penalties asserted as to each cause of action for purposes of establishing the amount in controversy.