Courts Hold PAGA Claims Can Still Be Time Barred

Courts Hold PAGA Claims Can Still Be Time Barred

In a case earlier in the year, the California Court of Appeals found that a plaintiff could pursue Private Attorneys General Act (PAGA) claims for violations of the state’s Labor Code despite the statute of limitations having run its course. However, now multiple court rulings have provided a much more narrow interpretation of this precedent that indicates PAGA’s statute of limitations may still be effective.

In the earlier case that established these questions, the plaintiff had alleged that their employer had violated Labor Code Section 432.5 by forcing them and multiple other employees to sign an unenforceable non-compete agreement. The employer demurred, arguing that the claim was barred by PAGA’s one-year statute of limitations as the employee signed the agreement over three years prior. The trial court sustained, however, on appeal, the Court of Appeals reversed the decision.

The Court of Appeals found that the plaintiff did have standing based on the precedent set by the state’s Supreme Court, which holds that a plaintiff need not have the standing to bring an individual claim in order to possess standing for a PAGA claim. The court found that the plaintiff had suffered at least one violation of the state’s labor code, and though the claim was barred for a time as an individual, it did not nullify the violations of the labor code.

This ruling raised a lot of concern among employer counsel across the state because the ruling could potentially be interpreted as placing no limit on the date of time from a violation to filing a PAGA claim. This interpretation would allow employees who have not even worked for an employer in decades to file a PAGA lawsuit for alleged violations.

Recent cases have appeared to show a much narrower interpretation of the case, though. Specifically, these rulings appear to rely on a detail in the earlier case, specifically that the plaintiff had been aggrieved by the labor code violation within the one-year period of limitation as the unlawful agreement still governed the employee.

Two cases that have recently been decided seem to confirm this interpretation. In two cases, the courts have found that the plaintiff’s attempts to bring PAGA actions were time-barred because the plaintiffs had not been aggrieved within the one-year statute of limitations.

These rulings would appear to leave employers safe from PAGA claims by former employees that have not been aggrieved within a year of their claim. This should prove to be a welcome relief for many employers.

Source: Akin Gump Strauss Hauer & Feld