Driver Adolph sued Uber Technologies, Inc., claiming employee status, not independent contractor. The issue was whether an employee who was compelled to arbitrate his or her individual claims also maintains under PAGA the right ("standing") to pursue Private Attorney General Action claims ("PAGA" – like a class action on behalf of the government/other employees for employee claims) "claims arising out of events involving other employees" in court. On July 17th, the California Supreme Court issued a landmark ruling that held the representative employee that signed an arbitration agreement with the employer cannot be compelled to arbitration of that PAGA employment matter.
Now, for PAGA standing, an employee only needs to establish two factors: (1) employment with the violator, and (2) the occurrence of one or more Labor Code violations.
And now, once an individual employee's claim is compelled to arbitration, the trial court may "stay the trial of the [PAGA] action until such arbitration has been had in accordance with the terms of the [arbitration] agreement." In such cases, the trial court would be bound by the arbitrator's ruling as to whether the plaintiff had suffered one or more labor code violations, and thus whether such employee plaintiff had standing to pursue claims on behalf of others.
This brings a lot of questions to the table, including, for instance conflicting arbitration ruling about the Labor Code violation(s). Or, what happens if in different arbitrations, one employee's Labor Code claim is denied but another's is validated? Likely, only the one who's claim is validated may pursue the PAGA claims as the representative then. There are a host of additional procedural and legal questions left open by this Supreme Court Uber ruling.
The complexities of PAGA and the current legal questions left open by the Uber case make it seem beneficial for both employees and employers to consider avoiding being the new test case for open issues, and to mediate, settle or address all employee related PAGA claims, not just the representative's claim(s). Mediation does put the parties (both sides) of risks of adverse rulings and conflicting outcomes. But each case is different and requires strategic planning from the outset.
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