Uber, Lyft, Lawyers, Misclassified Workers: PAGA Claims Are Not Arbitrable

 In recent years the courts of this State have reviewed several petitions compelling arbitration or otherwise whether an arbitration clause in employment or independent contractor engagement agreements are enforceable with respect to PAGA claims. (Z.B., N.A. v. Superior Court (2019) 8 Cal.5th 175; Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348; Provost v. YourMechanic, Inc. (2020) 55 Cal.App.5th 982; Correia v. NB Baker Electric, Inc. (2019) 32 Cal.App.5th 602;  Jilian v. Glenair, Inc. (2017) 7 Cal.App.5th 853.)

Counsel for those seeking to enforce a catch-all arbitration clause in an employment agreement to avoid PAGA claims in the California court system often cite Epic Systems Corporation v. Lewis (2018) 138 S.Ct. 1612 (Epic) for the proposition that Epic preempts California law. But, the construction, interpretation, and enforcement of a contract are governed by State law and, generally speaking, the State of California does not enter arbitration provisions with organizations such as Uber, Lyft, Postmates, or any of the other organizations which hire independent contractors and which may have misclassified those contractors. The unique quality of a PAGA claim is that it allows an individual to bring a qui tam or whistleblower complaint on behalf of the State of California acting as a private attorney general. Since such a plaintiff is acting on behalf of the State of California, and the State of California does not generally assent to all employment-agreements or the arbitration clauses contained therein, the PAGA claim cannot be arbitrable for lack of any agreement with the State of California.

In an especially harshly worded opinion, on October 29, 2020, California's First District Court of Appeal followed the growing number of cases which support the foregoing propositions, enabling PAGA Plaintiff's to proceed with a PAGA court action even while their individual claims are being resolved in arbitration. The case is Olson v. Lyft, Inc. (Oct 29, 2020 A156322) __ Cal.App.5th __ and may be found at <https://www.courts.ca.gov/opinions/documents/A156322.PDF>.

Feb. 4, 2021, Post script: see also, Jarboe v. Hanlees Auto Grp. (2020) 53 Cal. App. 5th 539, review denied (Dec. 9, 2020).

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