In an important new
case, a
that employees’ right to sue on behalf of others for wage and hour violations
under the Private Attorneys General Act of 2004 (PAGA) or
can’t be assigned to a third party such as a union. In light of the increased
volume of wage and hour litigation employers have seen over the past few years,
the limit this decision places on the filing of these suits is welcome news for
employers.
Suit Filed Over Break
Violations
Two labor unions
representing mechanics and transit operators filed a lawsuit against several transit
companies in the
area, alleging that the companies violated the California Labor Code and the
UCL by failing to provide employees with meal and rest breaks. The suit sought
more than $12.6 million in damages for the missed breaks.
Now, labor unions cannot go after employers
under PAGA or the UCL for wage and hour violations unless the union has the permission
of each aggrieved employee to sue on that person’s behalf
The unions indicated in
the lawsuit that they were suing in a representative capacity on behalf of
current and former employees of the transit companies. According to the unions,
about 150 members had assigned or transferred their personal rights to sue to
the union, including the right to sue in a representative capacity on behalf of
all other current and former aggrieved employees.
Unions Don’t Have
Standing
The transit employers
balked, arguing that the union wasn’t authorized to sue under PAGA or the UCL.
The trial court agreed and put the brakes on the lawsuit because the union
itself wasn’t injured by the wage and hour violations. The trial court
explained that the unions didn’t have “standing” to recover civil penalties under
PAGA because that law permits lawsuits to be filed only “by an aggrieved
employee on behalf of himself or herself and other current or former employees.”
Further, the unions didn’t have standing to sue for UCL violations because that
law—as a result of changes made by Proposition 64, approved by voters in
November 2004— permits a private party to sue only if that person “has suffered
injury in fact and has lost money or property as a result of such unfair
competition.”
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CONTENTS
Rights Can’t Be
Transferred
Now, a
trial court’s order, finding that an employee can’t assign to a third party the
employee’s right under PAGA or the UCL to sue on behalf of others or as a
representative of others.1
The unions, the court
explained, were neither “aggrieved employees” under PAGA nor suffered an “injury
in fact” under the UCL. Thus, the unions’ standing here depended on whether
employees could transfer to the unions their rights to sue under those laws. According
to the court, an individual may transfer individual claims for damages to a
third party, as the claim is really just a transferable property right. Thus,
the unions did have standing to pursue claims on behalf of the 150 individual
union members who assigned it the right to sue to recover wages owed to them.
However, ruled the
court, the right to sue as a representative of others is not a property right
belonging to an individual—it isn’t “owned” by that person. Thus, even though
PAGA and the UCL give aggrieved individuals the right to sue on behalf of
others, that right to sue on behalf of others cannot be assigned to a third
party.
The court also made
another important ruling: Prop. 64 requires that representative actions brought
under the UCL comply with class action procedures.
Practical Impact
Now, labor unions (and
other organizations) can’t go after employers under PAGA or the UCL for wage and
hour violations unless the union has the permission of each aggrieved
employee to sue on that person’s behalf. What’s more, the court’s ruling will
make it harder under the UCL to sue on behalf of others. That’s because
employees now can’t simply aggregate the claims of a group of employees, but
instead can sue on behalf of others only by formally bringing a class action
suit and complying with the many, strict class action procedures.
_
1 Amalgamated Transit
Union v. Superior Court,
Court of Appeals (Dist. 2) No. B191879, 2007