The Practical Consequence Is That There Is No Private Right Of Action Under Section 558 To Collect Civil Penalties, And Hence Such A Claim Is Not Arbitrable.
The California Supreme Court granted an employer's petition for review in ZB, N.A. v. Superior Court, S246711 ((Cal. Sup. Ct. 9/12/19) (Cuéllar, J.), "to resolve the split of authority over whether an employer may compel arbitration of an employee's PAGA claim requesting unpaid wages under section [Labor Code section] 558." After 30 pages of statutory construction and "on the one hand, on the other hand" arguments, the Court concludes that an employer may not compel arbitration of an employee's PAGA claim requesting unpaid wages under section 558.
However, if you were to guess that the Court reached that conclusion because the unpaid wage claims were civil penalties within the meaning of PAGA, and PAGA claims are not arbitrable, you would be wrong -- though that in fact was the reasoning of the Court of Appeal, which reached the right conclusion for the wrong reason. Instead, the Supreme Court concluded that there is no private cause of action for unpaid wages under section 558; only the Commissioner can bring a claim. And even though the Commissioner is the only one with standing, the claim for unpaid wages is in the nature of specific compensation, not really a penalty, and therefore not a PAGA claim at all. The court cannot compel arbitration of a claim for which no private right of action exists.
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