Back in the “good old days,” arbitration agreements barred just about any type of civil litigation that was filed in court. Then, as we reported in 2014, the California Supreme Court determined that Private Attorneys General Act (“PAGA”) claims are immune from arbitration in Iskanian v. CLS Transp. Los Angeles, LLC – which, unsurprisingly, led to an avalanche of PAGA claims being filed as plaintiffs’ lawyers scrambled to make their cases arbitration-proof (at least as to those pesky PAGA claims).

In response to Iskanian, some employers immediately and dutifully revised their arbitration agreements to exclude PAGA claims. For the record, we remained skeptical of the durability of Iskanian and generally did not advise employers to surrender on this issue – at least not until the United States Supreme Court had weighed in.

Lo and behold, in June 2022, the United States Supreme Court proved us right and in Viking River Cruises v. Moriana held that the Federal Arbitration Act preempts Iskanian’s holding that PAGA actions could not be divided into individual and representative claims brought on behalf of other allegedly “aggrieved employees.” Thus, according to Viking River, arbitration agreements are enforceable to the extent they require arbitration of individual PAGA claims.

Now, proving that no good deed goes unpunished, an appellate court has decided that a law-abiding employer that relied to its detriment upon Iskanian and included a broad PAGA carve out in its arbitration agreement could not compel to arbitration an employee’s individual PAGA claim – even though that claim would have otherwise been arbitrable but for the Iskanian-inspired carve out.  Duran v. EmployBridge Holding Co., 2023 Cal. App. LEXIS 426 (Cal. App. 5th Dist., Apr. 27, 2023).

Even agreements that do not include broad PAGA carve outs may face additional scrutiny—especially to the extent courts seek to avoid the Viking River rule and keep PAGA cases out of arbitration.  In a case decided the same week as Duran, the Court reviewed an arbitration agreement that included a waiver of representative actions (unenforceable as to the representative PAGA claims under Iskanian and Viking River) but also had a savings clause which provided that if the waiver was unenforceable, “then this agreement is invalid and any claim brought on a class, collective, or representative action must be filed in a court of competent jurisdiction[.]”  Westmoreland v. Kindercare Educ. LLC, 90 Cal. App. 5th (2023).  Although the savings clause was no doubt inspired by Iskanian, the Court found that it was actually a “poison pill,” because instead of expressly allowing the individual PAGA claim to be severed and sent to arbitration (as Viking River would dictate), it simply “invalidates the agreement.”  Id. at 982.  Ironically, had the employer “included a waiver of representative claims” with no savings clause, “the result . . . could have been substantially similar to that in Viking River.”  Id.

We will continue to monitor these decisions and provide any relevant updates.  In the meantime, employers should carefully review and update their post-Iskanian arbitration agreements. Employers would be well-advised to consider excising language broadly excluding PAGA claims from arbitration, and also to scrutinize their agreements for unintended “poison pills” that could invalidate them altogether.

Unfortunately, recent case law in this area has made determining exactly what is and is not arbitrable under PAGA almost as complicated as “splitting the atom”!

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Photo of Tony Oncidi Tony Oncidi

Anthony J. Oncidi is the co-chair of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law, including…

Anthony J. Oncidi is the co-chair of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law, including litigation and preventive counseling, wage and hour matters, including class actions, wrongful termination, employee discipline, Title VII and the California Fair Employment and Housing Act, executive employment contract disputes, sexual harassment training and investigations, workplace violence, drug testing and privacy issues, Sarbanes-Oxley claims and employee raiding and trade secret protection. A substantial portion of Tony’s practice involves the defense of employers in large class actions, employment discrimination, harassment and wrongful termination litigation in state and federal court as well as arbitration proceedings, including FINRA matters.

Tony is recognized as a leading lawyer by such highly respected publications and organizations as the Los Angeles Daily JournalThe Hollywood Reporter, and Chambers USA, which gives him the highest possible rating (“Band 1”) for Labor & Employment.  According to Chambers USA, clients say Tony is “brilliant at what he does… He is even keeled, has a high emotional IQ, is a great legal writer and orator, and never gives up.” Other clients report:  “Tony has an outstanding reputation” and he is “smart, cost effective and appropriately aggressive.” Tony is hailed as “outstanding,” particularly for his “ability to merge top-shelf lawyerly advice with pragmatic business acumen.” He is highly respected in the industry, with other commentators lauding him as a “phenomenal strategist” and “one of the top employment litigators in the country.”

“Tony is the author of the treatise titled Employment Discrimination Depositions (Juris Pub’g 2020; www.jurispub.com), co-author of Proskauer on Privacy (PLI 2020), and, since 1990, has been a regular columnist for the official publication of the Labor and Employment Law Section of the State Bar of California and the Los Angeles Daily Journal.

Tony has been a featured guest on Fox 11 News and CBS News in Los Angeles. He has been interviewed and quoted by leading national media outlets such as The National Law JournalBloomberg News, The New York Times, and Newsweek and Time magazines. Tony is a frequent speaker on employment law topics for large and small groups of employers and their counsel, including the Society for Human Resource Management (“SHRM”), PIHRA, the National CLE Conference, National Business Institute, the Employment Round Table of Southern California (Board Member), the Council on Education in Management, the Institute for Corporate Counsel, the State Bar of California, the California Continuing Education of the Bar Program and the Los Angeles and Beverly Hills Bar Associations. He has testified as an expert witness regarding wage and hour issues as well as the California Fair Employment and Housing Act and has served as a faculty member of the National Employment Law Institute. He has served as an arbitrator in an employment discrimination matter.

Tony is an appointed Hearing Examiner for the Los Angeles Police Commission Board of Rights and has served as an Adjunct Professor of Law and a guest lecturer at USC Law School and a guest lecturer at UCLA Law School.

Photo of Mark Theodore Mark Theodore

Mark Theodore is a partner in the Labor & Employment Law Department. He has devoted his practice almost exclusively to representing management in all aspects of traditional labor law matters throughout the U.S. He is Co-Chair of Proskauer’s Labor-Management and Collective Bargaining Practice…

Mark Theodore is a partner in the Labor & Employment Law Department. He has devoted his practice almost exclusively to representing management in all aspects of traditional labor law matters throughout the U.S. He is Co-Chair of Proskauer’s Labor-Management and Collective Bargaining Practice Group.

Some recent highlights of his career include:

  • Successfully defended client against allegations that it had terminated a union supporter and isolated another. T-Mobile USA, Inc., 365 NLRB No. 15 (2017).
  • Successfully appealed NLRB findings that certain of client’s written policies violated the National Labor Relations Actions Act.  T-Mobile USA, Inc., 363 NLRB No. 171 (2016), enf’d in part, rev’d in part 865 F.3d 265 (5th Cir. 2017).
  • Represented major utility in NLRB proceedings related to organizing of planners.  Secured utility-wide bargaining unit. Bargained on behalf of grocery chain.  After negotiations reached an impasse, guided the company through lawful implementation of five year collective bargaining agreement.
  • Coordinated employer response in numerous strike situations including a work stoppage across 14 western states of the client’s operations.

Mark has extensive experience representing employers in all matters before the NLRB, including representation petitions, jurisdictional disputes and the handling of unfair labor practice charges from the date they are filed through trial and appeal. Mark has acted as lead negotiator for dozens of major companies in a variety of industries, including national, multi-unit, multi-location, multi-employer and multi-union bargaining. Mark has handled lockout and strike situations, coordinating the clients efforts.

In addition, Mark has handled hundreds of arbitrations involving virtually every area of dispute, including contract interest arbitration, contract interpretation, just cause termination/discipline, benefits, pay rates, and hours of work.

Photo of Jonathan Slowik Jonathan Slowik

Jonathan Slowik is a special counsel in the Labor Department and a member of the Employment Litigation & Counseling Group.

Photo of Ariel Brotman Ariel Brotman

Ariel Brotman is an associate in the Labor & Employment Department and a member of the Employment Litigation & Arbitration Group. She represents employers in all aspects of employment litigation, including wage and hour, wrongful termination, discrimination, harassment, retaliation, whistleblower, trade secrets, and…

Ariel Brotman is an associate in the Labor & Employment Department and a member of the Employment Litigation & Arbitration Group. She represents employers in all aspects of employment litigation, including wage and hour, wrongful termination, discrimination, harassment, retaliation, whistleblower, trade secrets, and breach of contract litigation, in both the single-plaintiff and class-action context. She also counsels employers on a diverse range of workplace issues.

Ariel earned her J.D. from USC Gould School of Law, where she was a member of the Southern California Interdisciplinary Law Journal. During law school, she was also a clinical student in the University of Southern California Immigration Clinic. In addition, she served as a judicial extern to the Honorable Robert N. Kwan in the United States Bankruptcy Court, Central District of California.