Yesterday, the California Supreme Court issued its highly-anticipated decision in ZB, N.A. v. Lawson bringing some welcomed good news for California employers. The case concerned an action brought under the Private Attorneys General Act, wherein the representative employee was seeking, among other things, lost wages under Labor Code Section 558. The question presented was whether the employee’s claim for lost wages under Labor Code Section 558 could be broken off and sent to arbitration on an individual basis, while the remainder of the PAGA action for civil penalties proceeded in court. As discussed in a previous post, California courts were split on this issue.

In something of a surprise move, the California Supreme Court issued a decision that rendered the question of arbitration moot. After undertaking a nuanced statutory analysis, the Court held that PAGA did not authorize a plaintiff to recover unpaid wages under Labor Code Section 558 at all – and, hence, there was no such claim to arbitrate in the case. The Court clarified that only the Labor Commissioner itself was authorized to recover such compensatory relief under Labor Code Section 558.

While much about PAGA remains shrouded in mystery, the Lawson decision presents a welcome clarification of what types of recovery are and are not permissible under PAGA.