The Private Attorneys General Act (PAGA) contains two industry-specific provisions (Cal. Lab. Code §§ 2699.6 & 2699.8) allowing labor organizations in the construction and janitorial industries to waive the right to bring PAGA claims in a collective bargaining agreement (CBA). In Oswald v. Murray Plumbing & Heating Corp., 2022 WL 4008088 (Cal. Ct. App. Sept. 2, 2022), the California Court of Appeal (Second District) construed Section 2699.6 broadly, holding that a CBA can retroactively bar PAGA claims, even where the plaintiff was no longer employed at the time the CBA was adopted.

In Oswald, the plaintiff worked for the defendant briefly in 2019 and 2020. In 2020, after his termination, the plaintiff filed a PAGA action alleging several Labor Code violations. The employer moved to compel arbitration, invoking the CBA’s arbitration provision and citing Section 2699.6. The trial court denied the motion on February 16, 2021, finding that the CBA did not meet the requirements of Section 2699.6.

The employer appealed. Three days after filing the appeal, the employer and the union signed a “Memorandum of Understanding Waiver of PAGA and Class Action Claims” (MOU), replacing the CBA’s original arbitration clause. The MOU expressly waived the right to bring PAGA claims and stated that it was retroactive to 2017.

The Court of Appeal found that the MOU satisfied the express requirements of Section 2699.6, and therefore validly waived the plaintiff’s right to bring a PAGA claim—even though he was no longer employed at the time the MOU was signed. Explaining that “Oswald enjoys the benefits of the union’s bargaining power” and in return is “subject to the burdens imposed by the CBA,” the court rejected the plaintiff’s argument that the union could not waive his right to bring a PAGA claim. Id. at *3. And because nothing in Section 2699.6 prohibits the parties to a CBA from agreeing to make a PAGA waiver retroactive, the court enforced the agreement according to its terms.

Although Oswald specifically involved Section 2699.6 because the plaintiff worked in the construction industry, the same reasoning would apply equally to Section 2699.8, which tracks Section 2699.6 in important respects. (To read more about Section 2699.8, click here.)