Kelly A. Knight is an attorney and mediator based in Los Angeles, CAlifornia. He handles matters throughout California.

Update: California Supreme Court grants review in Lawson v. Z.B., N.A.

Update 3/23/18: the California Supreme Court just granted review in Lawson v. Z.B., N.A. For my prior post on the opinion from the Court of Appeal, click here

Here's the intro from my short take on Lawson at the Court of Appeal level:

In Lawson v. ZB, N.A., 18 Cal. App. 5th 705 (Cal. Ct. App. 4th Dist. Dec. 19, 2017, as modified Dec. 21, 2017) (slip opinion linked here) the Fourth District Court of Appeal issued an important opinion holding that civil penalties under Labor Code section 558 include both the default civil penalty plus underpaid wages. The result is that (if your trial court follows Lawson) employers cannot compel your PAGA civil-enforcement claims under section 558 into arbitration.

This created a split with the Fifth Appellate District's Esparza opinion. From my prior post:

But in late 2017, the Fifth District Court of Appeal issued its opinion in Esparza v. KS Industries, 13 Cal. App. 5th 1228 (5th Dist. Aug. 2, 2017). In Esparza, the 5th District held that Labor Code section 558(a)'s reference to a civil penalty of $50 or $100 "in addition to an amount sufficient to recover underpaid wages" meant that the $50 or $100 was a civil penalty under the PAGA. But the Esparza court held that the "amount sufficient to recover underpaid wages," however, was not (at least with regards to whether such a claim can be compelled into arbitration). Why? Because the underpaid wages are payable wholly to the aggrieved employees. The Esparza part reasoned that the nature of that portion of the claim was a "private dispute" to which the Iskanian rule of nonarbitrability does not apply. 

Looks like the Cal Supremes will decide what the following portion of Labor Code section 558 means:

Any employer or other person acting on behalf of an employer who violates, or causes to be violated, a section of this chapter or any provision regulating hours and days of work in any order of the Industrial Welfare Commission shall be subject to a civil penalty as follows:

(a) For any initial violation, fifty dollars ($50) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages.

Labor Code § 558 (italics added). More specifically, when section 558 refers to "a civil penalty as follows" and then refers to "an amount sufficient to recover unpaid wages," does the portion that "is sufficient to recover unpaid wages" also part of the civil penalty? Or is it a pure individual wage recovery? The Esparza court held it means wages, while the Lawson court held it means penalty.

This has serious ramifications for PAGA claims and the arbitrability of those claims. (See my original blog post for a discussion on this.)


Court of Appeal reverses $55M judgment in insurance-bad-faith case due to error including use of requests for admission at trial and mishandling of invocation of Fifth Amendment privilege

Court of Appeal upholds cost-shifting under Code of Civil Procedure section 998 in a case involving a joint, unallocated offer by two sets of plaintiffs to settle two wrongful-death claims