Litigating California Wage & Hour and Labor Code Class Actions

Before suing, an aggrieved employee now must exhaust an administrative
procedure that involves providing written notice of the particular Labor Code
violation to the employer and the Labor Commissioner, for possible investigation
before filing suit. 248 Failure to exhaust this administrative remedy within one year of
the violation bars the suit. 249
The Labor Commissioner now has authority to promulgate regulations to
implement the statute (although they have yet to attempt to do so).
Although the 2004 reforms to PAGA may seem modest, they appear to have had the effect
of substantially reducing the attractiveness of these kind of lawsuits. PAGA claims are not
typically asserted by themselves, but rather are added to standard wage and hour class
actions, typically for bargaining leverage.
B. Scope of the “Civil Penalty” Provisions
With the creation of the administrative remedy requirement before an employee could seek
penalties under PAGA, the question arose whether this administrative requirement applied
to all statutes covered by PAGA. More specifically, Section 2699.3 sets forth a long list of
particular statutes that are purportedly subject to the administrative remedy. Included on
this list are several statutes that provided for penalties recoverable by individual employees
even before the passage of PAGA (e.g., Labor Code Section 203, which provides for
waiting time penalties where employers willfully fail to pay terminating employees all wages
owed to them). Defendants began to argue that no employee could sue to recover
penalties under any statute listed in Section 2699.3 without first exhausting administrative
remedies.
In November 2004, the Second District Court of Appeal issued Caliber Bodyworks v.
Superior Court, 250 which clarified the scope of the administrative remedy exhaustion
requirement in PAGA. The court held that the administrative remedy requirement applied
only to actions seeking to recover a “civil penalty,” which the court distinguished from
actions that could be advanced by individuals to recover “statutory penalties,” such as
Labor Code Section 203. In short, the court held that if a plaintiff seeks to recover penalties
that were available under a statute and recoverable by an individual prior to PAGA’s
248
249
250
Lab. Code §§ 2699(a), 2699(g)(1), and 2699.3.
Moreno, 2007 U.S. Dist. LEXIS 43873, at *4-10 (N.D. Cal. June 5, 2007) (employee who filed lawsuit within one year,
but failed to exhaust administrative remedies until more than one year after leaving employment was time-barred from
asserting PAGA claims).
134 Cal. App. 4th 365 (2005).
Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (12th Edition) 58