Exhausting Claims under the Labor Code Private Attorney General Act

9th Circuit Confirms Employees Do Not Have to Exhaust Administrative Remedies to Pursue Statutory Penalties

When the legislature amended the Private Attorney General Act (PAGA), employees seeking civil penalties that previously could only be collected by the Labor Workforce Development Agency (LWDA) were required to exhaust administrative remedies by providing notice to the LWDA before commencing suit. It was unclear whether employees were required to exhaust such remedies if they were not seeking civil penalties, but rather were seeking only statutory penalties.

For example, Labor Code Section 203 allows an employee to obtain a statutory penalty equal to the employee’s daily rate of pay, up to a maximum of 30 days, when an employer fails to timely pay an employee’s final wages. Under PAGA, the employee could also bring a claim for civil penalties. In 2005, a California Appellate Court, in Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal.App.4th 365, held that employees seeking statutory penalties for wage and hour violations, as opposed to civil penalties under the PAGA, are not required to file a claim with the LWDA.

On August 28, 2006, the Ninth Circuit adopted Caliber’s ruling. Dunlap v. Superior Court (Bank of America, N.A.) 06 C.D.O.S. 8049. Adopting Caliber’s rationale, the Ninth Circuit similarly distinguished between statutory claims that could have been brought by employees regardless of the PAGA and civil penalties that could only be obtained by the LWDA, holding “To be subject to the [PAGA], the employee’s cause of action must allege a violation of one of the provisions listed in section 2699.5 and seek recovery of a ‘ civil penalty’ assessable by the [LWDA].”

While the California Supreme Court has yet to issue a decision on this issue, Caliber and Dunlap will likely continue to be the law. The PAGA is a powerful means for ensuring compliance with the Labor Code. All employers in California should carefully evaluate their policies and procedures to ensure compliance.

The Law Office of Phillip J. Griego
95 South Market Street, Suite 520
San Jose, CA 95113
Tel. 408-293-6341
 
Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
 

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Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

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