Key takeaways
- Compelling an individual PAGA claim to arbitration does not eliminate a plaintiff's standing to litigate non-individual claims in court.
- The California Supreme Court explicitly rejected contrary reasoning from the U.S. Supreme Court's Viking River Cruises decision.
- PAGA standing requires only that the plaintiff was employed by the alleged violator and suffered at least one Labor Code violation.
- Trial courts may stay representative PAGA claims pending the outcome of individual arbitration, and the arbitrator's status determination can bind the parties.
The Decision
On July 17, 2023, the California Supreme Court decided Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, holding that compelling a plaintiff's individual claims to arbitration does not strip the plaintiff of standing to litigate non-individual, representative claims in court under the Labor Code Private Attorneys General Act (PAGA).
The case centered on Erik Adolph, an Uber Eats driver who alleged that the company misclassified drivers as independent contractors. As a condition of his work, Adolph had signed an agreement to arbitrate work-related claims on an individual basis. When he filed a lawsuit seeking civil penalties on behalf of himself and other workers, the central legal question became whether enforcing his individual arbitration agreement would extinguish his ability to act as a representative plaintiff for his peers.
The California Supreme Court answered in the negative. The court ruled that an employee retains standing to pursue representative PAGA claims in state court even while their individual PAGA claims are sent to a private arbitrator.
Why It Matters
This ruling preserves the basic architecture of representative employment litigation in California. If sending an individual claim to arbitration stripped a plaintiff of standing to pursue non-individual claims, employers could effectively neutralize PAGA entirely by mandating arbitration agreements as a standard condition of employment.
By decoupling the physical forum of the individual claim from the legal standing required for the representative claim, the state high court ensured that private enforcement of the Labor Code remains viable. Employers can still enforce their arbitration agreements for individual grievances, but they cannot use those agreements as a shield against broader representative actions seeking civil penalties on behalf of the State of California.
Who Should Care
For lawyers
Defense counsel and plaintiffs' attorneys must adjust their litigation strategies regarding motions to compel arbitration. Securing an order to arbitrate an individual PAGA claim will no longer result in the automatic dismissal of the non-individual claims. Instead, attorneys must prepare to litigate the threshold issue of "aggrieved employee" status before an arbitrator, knowing that the arbitrator's factual findings will likely bind the subsequent court proceedings.
For consumers and parties
California workers who sign arbitration agreements still have a pathway to bring broad claims on behalf of their coworkers. Even if a worker must resolve their specific grievance in a private arbitration setting, they can still serve as a representative plaintiff in a public lawsuit to recover civil penalties for the state, provided they prove they suffered a labor violation.
Legal Background
PAGA, codified at Labor Code section 2698 et seq., authorizes "aggrieved employees" to recover civil penalties on behalf of the State of California for Labor Code violations.
In Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, decided June 23, 2014, the California Supreme Court established that wholesale pre-dispute waivers of representative PAGA actions are unenforceable under California public policy. The court reasoned that the Federal Arbitration Act (FAA) does not preempt this rule because a PAGA claim functions as a dispute between the employer and the State.
The U.S. Supreme Court altered this procedural framework in Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, decided June 15, 2022. The federal court held that the FAA preempts Iskanian to the extent Iskanian barred dividing a PAGA action into individual and non-individual components. This meant a plaintiff's individual PAGA claim could be compelled to arbitration. Writing for the majority, Justice Samuel Alito reasoned in dicta that once the individual claim is sent to arbitration, the plaintiff would lack standing to maintain the non-individual claims in court.
However, standing under PAGA is strictly a question of state law. In Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, decided March 12, 2020, the California Supreme Court held that settling individual Labor Code claims does not defeat PAGA standing. The court determined that standing turns on having suffered a Labor Code violation, not on having an ongoing or unredressed injury.
What the Court Did
In Adolph, the California Supreme Court explicitly rejected the standing analysis suggested in the U.S. Supreme Court's Viking River Cruises decision.
Relying on its prior holding in Kim v. Reins, the court ruled that PAGA standing requires only two factual elements: the plaintiff must have been employed by the alleged violator, and the plaintiff must have suffered at least one alleged Labor Code violation. Because an ongoing or unredressed injury is not required under Kim, moving the individual claim to a different forum—arbitration—does not erase the plaintiff's historical status as an aggrieved employee.
The court also clarified the procedural mechanics for managing these divided cases. A trial court may stay the non-individual PAGA claims while the plaintiff's individual claims proceed in arbitration. Furthermore, the arbitrator's determination of "aggrieved employee" status can bind the parties in the later court proceeding.
How It May Be Applied
The decision sets up a bifurcated process for many California employment disputes. Employers will likely continue to enforce arbitration agreements for individual claims to move that portion of the dispute out of state court. Simultaneously, they will face stayed representative actions in superior court awaiting the arbitration's outcome.
The primary battleground now shifts to the arbitration itself. Because the arbitrator's determination of "aggrieved employee" status can bind the parties in the later court proceeding, the stakes of the individual arbitration are exceptionally high. Employers who successfully defeat the individual claims in arbitration can use that victory to extinguish the representative court claims, as the plaintiff would legally fail to qualify as an aggrieved employee. Conversely, a plaintiff who proves a violation in arbitration will return to court with their standing confirmed, ready to litigate the non-individual claims.
Shifting PAGA Standing Rules
| Case | Court | Holding on PAGA Standing |
|---|---|---|
| Kim v. Reins (2020) | California Supreme Court | Settling individual claims does not defeat standing; standing requires only employment and a violation. |
| Viking River (2022) | U.S. Supreme Court | Dicta suggested sending individual claims to arbitration strips standing for non-individual claims. |
| Adolph v. Uber (2023) | California Supreme Court | Rejected Viking River dicta; arbitrating individual claims does not strip standing for non-individual claims. |
The Plain-English Callout
What is an "aggrieved employee"? Under the Labor Code Private Attorneys General Act, an aggrieved employee is simply someone who worked for the company being sued and experienced at least one labor law violation. Once a worker meets these two basic requirements, they have standing to sue their employer on behalf of the State of California to recover civil penalties for violations suffered by other workers. The Adolph decision confirms that this status does not disappear just because the worker's personal dispute is handled by a private arbitrator instead of a judge.
This article is general legal information and commentary about developments in California law. It is not legal advice, does not address your specific situation, and is not a substitute for advice from a licensed attorney. Reading this article and contacting us through this website do not create an attorney-client relationship.
Sources & authorities
- Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639 — source
- Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 — source
- Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73 — source
Further reading
Additional perspectives (a link is not an endorsement):
- Seyfarth Shaw LLP: Adolph v. Uber: California Supreme Court Holds That PAGA Plaintiffs Retain Standing to Pursue Representative Claims After Individual Claims Compelled to Arbitration
- Arnold & Porter: California Supreme Court Holds Employees Do Not Lose Standing To Pursue Representative, Non-Individual PAGA Claims Even After Individual PAGA Claims Are Compelled To Arbitration
- Orrick: Adolph v. Uber: Sending Individual PAGA Claims to Arbitration Does Not Affect Plaintiffs' Standing to Pursue a Representative PAGA Claim