CA Courts Still Reluctant To Enforce Arbitration Agreements For PAGA Claims

Courts have little leeway to avoid enforcement of an arbitration clause. Indeed, the United States Supreme Court has spilt much ink reinforcing the power and scope of the Federal Arbitration Act ("FAA"), the legislation requiring that courts compel arbitration of claims subject to an arbitration clause. In California, however, employees can circumvent their arbitration clauses by asserting Private Attorneys General Act ("PAGA") claims, a loophole that two California Courts of Appeal decisions have recently reinforced. The United States Supreme Court, nonetheless, appears poised to step-in and potentially close this loophole for good.

The PAGA Claim Exception

The California Supreme Court in Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348, 378 (Cal. 2014), carved out an exception to the general rule that employees can be compelled to arbitration pursuant to an arbitration clause included in their employers' arbitration agreement. The Iskanian court