New Development for California Employers Defecting PAGA Claims

Finally, employers have some good PAGA news!

Key Takeaways

• Meyers Nave recommends that employers consider utilizing Arbitration Agreements to reduce liability related to wage and hour claims.
• Employers should update handbooks and arbitration agreements annually to assure up to date legal compliance.
• Based on two 2024 rulings (see below), Arbitration agreements can positively impact the Employers ability to quickly resolve PAGA claims.

Supporting Cases

• Leeper v. Shipt, Inc. (Dec. 30, 2024). The court clarified that every PAGA action includes an individual claim, based on the statutory language and legislative history. This decision confirms that employees must arbitrate their individual claims before pursuing a PAGA representative action, reinforcing the importance of arbitration agreements ending the so-called “headless” case strategy.
• Rodriguez v. Lawrence (Oct. 10, 2024). This case highlights the preclusive effect of arbitration in PAGA actions, where an employer’s victory in arbitration can bar relitigating collective wage and hour claims in a PAGA representative action. It underscores the strategic advantage of arbitration agreements in reducing the risk of duplicative litigation and penalties under PAGA.

Learn more about PAGA reform in our 2025 Employment Law Update Handout.