Traveling California with PAGA

If you are an employer in California, you are probably familiar with the various employment peculiarities in the state, such as the five-hour meal rule, four-hour (or major fraction) rest rule, piece rate rules, wage statement rules, and much (much) more. 

Another law unique to California is the Labor Code Private Attorneys General Act of 2004, often referred to as “PAGA.” Enacted in 2003, PAGA deputizes “aggrieved employees” to file lawsuits to recover civil penalties on behalf of themselves, other employees, and the State of California for Labor Code violations. 

Since its enactment various California courts have issued decisions interpreting PAGA in a manner unfavorable for employers. For example, in Iskanian  the California Supreme Court held that PAGA claims cannot be waived or subject to mandatory arbitration in a pre-dispute agreement. In Kim, the California Supreme Court held that an individual settlement of claims does not bar the settling employee from maintaining a PAGA claim on behalf of other alleged aggrieved employees. And in Raines the Court of Appeal held that the requirement to prove injury to recover damages for inadequate wage statements does not apply to a PAGA claim.

Recently, a California Court of Appeal issued another PAGA related decision that may impact employers who operate throughout the state.   

In Crestwood Behavioral Health, Inc. v. Superior Court, Plaintiff filed a PAGA complaint against her former employer (Defendant) in Alameda County, even though Plaintiff’s work and Defendant’s principle place of business was not in Alameda County. Plaintiff argued venue in Alameda County was proper because Defendant operated a chain of treatment centers and employed aggrieved employees across California, including in Alameda County.

Defendant filed a motion to change venue to Sacramento County, where its principle place of business is located. The trial court denied the motion and Defendant appealed.

The Court of Appeal affirmed, finding venue is not limited to the location of an individual employee when the employee is suing on behalf of all aggrieved employees and has no individual claims. Because Plaintiff alleged Labor Code violations at Defendant’s locations statewide, including in Alameda County, the Court held venue was proper in Alameda County.

This decision may heavily impact employers who operate statewide as they may be required to litigate (already costly) PAGA claims in any venue in which they operate, even if such venue is far away from their principal place of business. Employers are advised to review their practices and confirm compliance with the various Labor Code requirements.

Nicholas Kanter and Tal Burnovski Yeyni are attorneys for employers.