Construction Worker Under A Collective Bargaining Agreement? No PAGA Claims For You!

• Published date: 16 February 2023
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Contract of Employment, Employee Benefits & Compensation, Arbitration & Dispute Resolution
• Law Firm: Wood Smith Henning & Berman LLP
• Author: Ms Ahllam Berri and Alicia R. Kennon

Though attempts to contractually waive an employee's right to sue pursuant to the California Labor Code Private Attorneys General Act (PAGA) typically fail in court, a narrow, but important exception to this rule are collective bargaining agreements involving construction workers. In Oswald v. Murray Plumbing & Heating Corp., No.B312736, 2022 Cal. App. Lexis 752 (Ct. App. Sep. 2, 2022), the Court of Appeal found that because the collective bargaining agreement at issue addressed wage and hour provisions, working conditions, and grievance procedures, and specifically mandated arbitration of disputes regarding Labor Code violations, the denial of the plaintiff's right to sue under PAGA was warranted. Consequently, the Court of Appeal found that all employment claims, including those claims under PAGA, should have been submitted to arbitration for resolution in accordance with the provisions of the collective bargaining agreement.

Background Facts

Jerome Oswald was employed by Murray Plumbing and Heating Corporation (Murray) as a journeyman pipefitter for a portion of 2019-2020. Oswald filed a claim for civil penalties in 2020 against Murray under PAGA. In his complaint he alleged that Murray did not provide required rest and meal breaks, or accurate wage statements. Oswald also claimed that his wages were not paid in a timely manner and that his business expenses were not reimbursed properly. During the time Oswald was employed with Murray, a Master Agreement between Oswald's union and Murray's contractor association was in effect and governed the relationship of the parties. In this collective bargaining agreement, which was effective from 2017-2026, the parties agreed to submit all labor disputes to arbitration, including those arising under PAGA, as the "sole and exclusive remedy." Murray filed a motion to compel arbitration, which the trial court denied.

Three days after Murray's motion was denied, collective bargaining representatives for the parties signed a "Memorandum of Understanding Waiver of PAGA and Class Action Claims" (MOU). The parties agreed that the MOU replaced the prior collective bargaining agreement and was retroactive to 2017. Based on the MOU, Murray's attorneys requested that Oswald's counsel immediately dismiss the PAGA claim. No response was ever made and both parties briefed their arguments for the appeal without mentioning the MOU. Without knowledge of the MOU, the court prepared a bench memorandum based on the original collective...