Last month, the California Court of Appeal determined in Khan v. Dunn-Edwards Corp., 2018 Cal.App. LEXIS 44 (Cal. App. 2d Dist. Jan. 4, 2018)(certified for publication), that a former employee’s claim under the Private Attorneys General Act (“PAGA”) failed due to insufficient notice to the California Labor and Workforce Development Agency (“LWDA”).

Plaintiff’s Lawsuit & LWDA Letter

Plaintiff sued his former employer, Dunn-Edwards, in a proposed class action claiming that he, and others similarly situated, did not receive their final pay in a timely manner pursuant to Labor Code sections 201-203. After the lawsuit was pending, Plaintiff provided the following notice to Dunn-Edwards and the LWDA:

This correspondence shall constitute written notice under Labor Code § 2699.3 of my claims against my former employer, Dunn-Edwards Corporation (“Dunn Edwards” or “Defendant”). Specifically, I allege that Dunn Edwards:

1. Violated Labor Code § 226(a) by failing to identify all of the required information on my final paycheck stub/itemized wage statement that I received, including but not limited to the pay period begin date, the correct pay date, and the total hours worked.
2. Violated Labor Code §§ 201–203 by failing to pay all of my earned wages immediately upon termination and failure to pay waiting time penalties as a result thereof.

Plaintiff’s notice made no mention of any other Labor Code violations and did not reference any other current or former employee besides himself.

After the LWDA provided notice that it did not intend to investigate the allegations in his notice, Plaintiff filed an amended complaint adding a cause of action under PAGA. He specifically alleged that Dunn-Edwards’ final pay practices applied to all of its former employees. Plaintiff also dismissed his individual claim after the court found he was compelled to arbitrate it.

PAGA’s Notice Requirement

Under the PAGA, an “aggrieved employee” may file a representative action “on behalf of himself or herself and other current and former employees” to recover civil penalties for violations of the Labor Code that otherwise would be assessed and collected by the LWDA. For all provisions of the Labor Code for which a civil penalty is not specified, PAGA creates a default civil penalty. The civil penalties available under PAGA are in addition to any other remedies available under state or federal law. Any civil penalty recovered is paid 75 percent to the LWDA and 25 percent to aggrieved employees.

Before bringing a PAGA claim, a plaintiff must comply with administrative procedures outlined in section 2699.3, requiring notice to the LWDA and allowing the employer an opportunity to cure unspecified violations not listed in section 2699.5. Recently, the California Supreme Court explained that: “[a]s a condition of suit, an aggrieved employee acting on behalf of the state and other current or former employees must provide notice to the employer and the responsible state agency ‘of the specific provisions of [the Labor Code] alleged to have been violated, including the facts and theories to support the alleged violation.’” Williams v. Superior Court, 3 Cal.5th 531, 545 (2017). The evident purpose of the notice requirement is to afford the LWDA the opportunity to decide whether to allocate scarce resources to an investigation, a decision better made with knowledge of the allegations an aggrieved employee is making and any basis for those allegations. Notice to the employer serves the purpose of allowing the employer to submit a response to the agency, again thereby promoting an informed agency decision as to whether to allocate resources toward an investigation. Id. at 545-46.

Trial Court Grants Dunn-Edward’s Motion for Summary Judgment

The Trial Court granted Dunn-Edward’s motion for summary judgment, concluding that Plaintiff’s notice to the LWDA was insufficient because, “unless the group is identified” the notice does not specify the aggrieved employees.

Plaintiff appealed, arguing that his notice was sufficient even though he limited it to his claims “because plaintiff is a proxy of the state,” and his notice should be “assumed to being brought on a representative capacity.”

Court of Appeal Upholds Trial Court’s Dismissal Based On Insufficient LWDA Notice

The Court of Appeal determined that the trial court properly granted summary judgment. It noted that because Plaintiff’s notice expressly applied only to him, it failed to give the LWDA adequate opportunity to decide whether to investigate the action, and it failed to provide Dunn-Edwards with an adequate opportunity to respond to the agency since the notice only suggested an individual violation.

Plaintiff relied on two unpublished decisions in an attempt to demonstrate that his LWDA notice was sufficient. However, the Court distinguished those cases, finding that the notice in those cases suggested claims on behalf of multiple employees.

Takeaway

PAGA claims are becoming increasingly popular after the California Supreme Court found in Iskanian v. CLS Transportation, 59 Cal.4^th 348, that these claims could not be compelled to arbitration. The potential exposure of PAGA penalties can quickly add up for employers. This decision provides support for attacking a deficient LWDA notice in an attempt to eliminate or reduce the potential exposure of a PAGA claim at the beginning of the lawsuit.