Employees Can Still Pursue PAGA Remedies Despite Time-Barred Individual Claims

On July 21, 2021, the California Court of Appeal, Fourth Appellate District, held in Johnson v. Maxim Healthcare Services, Inc. that a claim under the Private Attorney General Act (PAGA) could continue even though the statute of limitations for the underlying lawsuit passed. Aggrieved employees in California can file a PAGA claim against the employer to enforce provisions of the California Labor Code, essentially acting on behalf of the government to collect civil penalties against the employer.

In Johnson, the plaintiff filed a claim three years after signing an agreement that included a non-competition clause prohibited under California law. Plaintiff filed a lawsuit after initially filing a PAGA claim with the California Labor and Workforce Development Agency (LWDA). The Superior Court ruled that her individual claim was time-barred because she signed the agreement three years before she filed suit, and as such, she could not pursue the PAGA claim.

On appeal, the Court of Appeal reversed the Superior Court’s ruling allowing the PAGA claim to continue. The Appellate Court relied on Kim v. Reins International California, Inc. This 2020 California Supreme Court case found a PAGA claim may continue even if the named plaintiff could not recover. The Court of Appeal held that the plaintiff met the requirements to bring a PAGA claim, and the fact that her injury was time-barred does not nullify her capacity to pursue PAGA remedies.

Employers operating in California should self-audit their practices subject to the California Labor Code to identify and remedy potential violations that could subject the company to increased PAGA claims. For any questions about this case or the practical effects on your business, please contact the California Legal Services team at CAInfo@employerscouncil.org.