California is one of the most employee-friendly states in the country. From strict hiring laws (don’t think about asking about an applicant’s criminal, credit or even salary history), to generous benefits (minimum wage, overtime, meal and rest breaks, family medical leave, etc.) and strict anti-harassment laws (if you have to think about it, even for a second, don’t do it), to protections for terminated workers (whistle blower protections, WARN notices, non-compete restrictions), California workers enjoy protections that many others do not.
This includes PAGA, or the Private Attorneys General Act, which authorizes aggrieved employees to file lawsuits against their employers to recover civil penalties on behalf of themselves, other employees, and the State of California for Labor Code violations. In general, the right of an employee to file a PAGA action cannot be waived by contract. However, Labor Code section 2699.6 which was enacted in 2018 provides an exception for construction workers who perform work under certain collective bargaining agreements.
In the next case, Oswald v. Murray Plumbing and heating Corporation, 82 Cal.App.5th 938 (2022), the 2nd District Court of Appeal examined whether collective bargaining agreement with a retroactive date, signed after an employee was terminated, precluded an employee from bringing a PAGA action.
The Oswald Case
Jerome Oswald was employed by Murray Plumbing & Heating Corporation as a journeyman pipe fitter from 2019-2020. In 2020, Oswald sued Murray Plumbing under PAGA claiming that Murray Plumbing failed to provide him with meal and rest breaks or accurate wage statements, pay all wages in a timely manner, or reimburse business expenses.
During his time employed by Murray Plumbing, Oswald was a part of a union, and Murray Plumbing was a signatory to a collective bargaining agreement with the union. Under the terms of the collective bargaining agreement all disputes, including claims arising under PAGA, were subject to arbitration.
Murray Plumbing filed a motion compel arbitration that was opposed by Oswald. The trial court found that Labor Code action 2699.6 did not apply and denied the motion. Murray Plumbing appealed.
On April 8, 2021, three days after Murray Plumbing filed its appeal, the collective bargaining representatives signed a new collective bargaining agreement, and that agreement, which was retroactive to 2017, replaced the original collective bargaining agreement’s arbitration provision. Although both parties were aware of the new collective bargaining agreement, Murray Plumbing did not bring it to the attention of the appellate court until 16 months later.
On appeal, the 2nd District Court of Appeal noted that while an employee’s right to file a PAGA action generally cannot be waived by contract, in 2018, the State Legislature carved out an exception for construction workers subject to a collective bargaining agreement meeting certain requirements.
Under Section 2699.6, the right of an aggrieved employee to file a PAGA action doe not apply to construction workers who perform work under a collective bargaining agreement in effect before January 1, 2025 provided that the collective bargaining agreement provides for: (i) the wages, hours of and working conditions of employees, (ii) premium wage rates for all overtime hours worked, (iii) a regular hourly pay rate of not less than 30% or more of the state minimum wage rate and the collective bargaining agreement does all of the following:
Prohibits all violations of the Labor Code that would be redressable under PAGA and provides for a grievance and binding arbitration procedure to redress such violations;
Expressly waives the requirements of PAGA in clear and unambiguous terms; and
Authorizes the arbitrator to award any and all of the remedies available under PAGA other than penalties that would be payable to the California labor and Workforce Development Agency.
Examining the “new” collective bargaining agreement, the Court of Appeal held that under the collective bargaining agreement Oswald had waived his right to bring a PAGA action. The collective bargaining agreement, explained the Court of Appeal, covers the wages, hours and conditions of work, Oswald was entitled to premium overtime wages, and Oswald’s pay of $50/hr. was 400% more than the state minimum wage at the time of $12/hr.
Further, held the Court of Appeal, the collective bargaining agreement, as required by Labor Code section 2699.6, expressly prohibited “any and all violations of the California Labor Code sections identified in Labor Code §§ 2699.5 and 2699(f) as well as any other that would be redressable by PAGA” and provided that all claims were to “be resolved exclusively through the Grievance-Arbitration procedure contained in this Memorandum of Agreement and shall not be brought in a court of law or before any administrative agency such as the California Labor Commissioner.”
Moreover, held the Court of Appeal, the collective bargaining agreement expressly waived the requirements of PAGA in clear and unambiguous terms. stating that “Pursuant to California Labor Code section 2699.6, the Parties hereby expressly and unambiguously waive the provisions of the California Private Attorneys General Act (PAGA), Labor Code Section 2698, et seq., and agree that none of the provisions of that statute apply to any of the employees covered by the 2017-2026 Master Agreement.”
Finally, held the Court of Appeal, the collective bargaining agreement authorized the arbitrator to award any and all remedies available under PAGA other than penalties payable to the California, stating that “[a]n arbitrator presiding over an arbitration conducted pursuant to the Grievance/Arbitration Procedure shall have the authority to make an award of any and all remedies available under the California Labor Code, except for an award of penalties that would be payable to the Labor and Workforce Development Agency.”
Addressing Oswald’s claim that “he” was not a signatory to the collective bargaining agreement, the Court of Appeal explained:
As a union member, Oswald enjoys the benefits of the union’s bargaining power but he is also subject to the burdens imposed by the CBA, which limit his remedy for Labor Code violations to an arbitral forum. Oswald cites no limitation, restriction or qualifying language in the Agreement preventing his union from signing an MOU that is retroactive to 2017 and incorporates section 2699.6. The union’s agreement to make the MOU retroactive affects Oswald’s pending claims.
So there you have it. While an employee’s right to file a PAGA action generally cannot be waived by contract, for construction workers subject to a collective bargaining agreement, provided that the collective bargaining agreement strictly follows the dictates of Labor Code section 2699.6, such employees can be subject to arbitrating their claims even under collective bargaining agreements with retroactive dates.