On September 12, 2019, the California Supreme Court  decided ZB, NA. and Zions Bancorporation v. Superior Court of San Diego County (Lawson) holding the Private Attorney General Act (PAGA) does not provide a private right of action for employees to seek unpaid wages under Labor Code section 588. 

Employees claiming underpayment of wages have routinely sought damages in the form of both 1) individual damages to compensate the employee for underpaid wages, and 2) civil penalties on behalf of the State as a private attorney general, which penalties are designed to penalize the employer.  For years, employees acting in a private attorney general capacity under PAGA have recovered two kinds of civil penalties under Labor Code 588: 1) penalties due to the State, and 2) penalties in the amount of underpaid wages due to the individual.  Many of the plaintiffs had signed arbitration agreements; the Court has previously held that PAGA claims cannot be compelled to arbitration.  The California Supreme Court took up ZB v. Superior Court ostensibly to resolve a split of appellate-level opinions about whether courts could send the individually payable PAGA penalties claim to arbitration while retaining the State-payable PAGA penalties claim in court, or if that procedure was impermissible claim-splitting.  The Supreme Court cut the Gordian knot.  Instead of ruling on the claims-splitting/arbitrability issue, it held that employees are not authorized to seek the individually payable section 588 penalties under PAGA.

The Court concluded, “that the civil penalties a plaintiff may seek under section 558 through the PAGA do not include the “amount sufficient to recover underpaid wages.” Although section 558 authorizes the Labor Commissioner to recover such an amount, this amount –– understood in context –– is not a civil penalty that a private citizen has authority to collect through the PAGA.   Plaintiffs in these cases may only sue for penalties.

The ruling scales back the scope of PAGA, which may result in fewer filings of PAGA cases.