November 1, 2025
What you need to know about the current law
California’s Private Attorneys General Act (PAGA) allows employees to sue for civil penalties for Labor Code violations on behalf of themselves, other employees, and the state of California. After the U.S. Supreme Court’s decision in Viking River Cruises v. Moriana in 2022, employers could compel arbitration of an employee’s individual PAGA claim, but California courts allowed the representative portion of the claim (sans individual claims) to proceed in court. This created a split: employees could still litigate representative claims even if their individual claim was subject to arbitration.
A pending California Supreme Court case will have significant impact on arbitration
In Leeper v. Shipt, the California Supreme Court will decide whether employees may file “representative-only” PAGA lawsuits (which are claims brought solely on behalf of other employees and the state, without asserting their own individual claims). If allowed, this tactic could let employees bypass arbitration agreements entirely, undermining the protections employers gained under Viking River Cruises. If the Court rules that individual claims are inherent in every PAGA action, employers will retain the ability to compel arbitration of those claims and potentially stay representative claims until arbitration concludes.
Leeper is instructive
Christina Leeper, a Shipt shopper, sued the company under PAGA. She alleged Labor Code wage and hour violations, but attempted to avoid being compelled to arbitration by asserting only representative claims. The Court of Appeal held that individual PAGA claims are “necessarily” part of every PAGA action, meaning Leeper could not sidestep arbitration. Other California appellate courts have disagreed. This has created a split among the courts that the California Supreme Court now will resolve. This decision will be binding on all California employers and could significantly reshape PAGA litigation and arbitration enforcement statewide.
What to do in the meantime?
- Arbitration agreements remain an excellent way to protect your company from wage and hour litigation. For now, employers can compel arbitration of individual PAGA claims and stay representative claims. If you do not have an arbitration agreement in place, you are missing an essential weapon against these company-threatening claims.
- If you don’t have an arbitration agreement in place, get one. If it’s been a minute since you had your arbitration agreement reviewed, get it reviewed ASAP – the law is constantly changing and you want the most compliant agreement possible.
- How you implement your arbitration agreement matters. Get your employment counsel involved the process! As more employers are getting the right document in place, we regularly are seeing attacks on how the agreement was implemented. We have an arbitration bundle that includes a compliant arbitration agreement and a well-documented process that you can use to demonstrate a knowing and voluntary acceptance of your arbitration agreement. If not us, reach out to someone for help!
- Do you have employees in multiple states? One size definitely does not fit all. Many states have their own quirks and employer-obligations for enforceable arbitration agreements. Be sure to reach out to your employment counsel to make sure the version you are using will satisfy the states in which you have employees.
- What’s even better than having an enforceable arbitration agreement? Being in compliance with the law so you reduce your risk for successful wage and hour claims like PAGA. Is your handbook up to date and thorough on wage and hour practices? Are employees getting the notices they need? Are you sufficiently and accurately documenting your compensation practices? Are your meal and rest periods compliant and offering you protection from these claims? A wage and hour audit can provide you the roadmap to protection from wage and hour litigation.
Stay tuned and be prepared
We will keep you posted on the outcome of this case. In the meantime, we can’t encourage you strongly enough to take the steps you need to protect yourself in all the ways possible from wage and hour litigation. If you want to collaborate on a wage and hour protection plan for your company, let me know!
