(2019) 8 Cal.5th 175
Supreme Court of California · Decided September 12, 2019
01. Facts
Kalethia Lawson brought a PAGA action against her employer, ZB, N.A., and its parent, Zions Bancorporation (collectively ZB), seeking penalties under Labor Code section 558 (8 Cal.5th at p. 181). Lawson had agreed with ZB to arbitrate all employment claims and to forgo class arbitration (id. at p. 181). Section 558, enacted before PAGA, authorized the Labor Commissioner to issue overtime citations for a civil penalty of $50 or $100 per underpaid employee per pay period, “in addition to an amount sufficient to recover underpaid wages” (id. at p. 181).
02. Procedural posture
The question was whether the “amount sufficient to recover underpaid wages” component of section 558 may be sought through a PAGA action (and thus whether that component could be compelled to arbitration). The Supreme Court held it cannot be recovered via PAGA (8 Cal.5th at p. 181).
03. Issue
Whether the “amount sufficient to recover underpaid wages” described in Labor Code section 558 is a “civil penalty” that a plaintiff may seek through a PAGA representative action.
Holding
The unpaid-wages component of section 558 is not a civil penalty recoverable through PAGA; only the fixed civil penalties ($50/$100 per employee per pay period) are PAGA penalties. Because the unpaid wages are not part of the PAGA claim, the trial court could not compel that portion to arbitration as if it were.
05. Reasoning
The court parsed section 558 to distinguish its fixed civil penalties from the separate “amount sufficient to recover underpaid wages,” concluding the latter is a wage recovery, not a civil penalty, and therefore lies outside PAGA’s authorization to recover “civil penalties.” Since PAGA does not encompass the unpaid-wages amount, the arbitration analysis directed at a PAGA “victim-specific” wage recovery was misdirected, and the matter was remanded.
Practice Pointer
ZB narrows what a PAGA plaintiff can collect: the section 558 unpaid-wages amount is not available through PAGA — only the fixed per-pay-period penalties are. Plaintiff’s counsel should pursue unpaid wages through direct Labor Code claims (or class claims) rather than expecting to recover them as PAGA penalties, and should plan the case structure accordingly.
06. Open questions
ZB clarified the scope of section 558 PAGA penalties but the broader interaction between PAGA penalties and victim-specific relief — and how arbitration agreements reach each — continued to develop in Viking River Cruises v. Moriana and Adolph v. Uber.
Cite this entry
ZB, N.A. v. Superior Court (2019) 8 Cal.5th 175.
“the action named as defendants Lawson’s employer, ZB, N.A. … and its parent company, Zions Bancorporation.” — 8 Cal.5th at p. 181
Source: California Official Reports – [insert durable courts.ca.gov / Official Reports link at verification].
Read the full opinion (official slip opinion, PDF) →
See also: Turrieta v. Lyft