In other words, Lime argued the court must stay the PAGA action while the parties arbitrate the misclassification dispute and then, only if Olabi wins in arbitration, can the parties return to court to litigate the claims under PAGA. In its appeal, Lime principally argued that the arbitration agreement required the parties to arbitrate the substantive dispute underlying the PAGA action-whether Lime misclassified its employees.
California cause of actio for misclassification trial#
Relying on that authority, the Olabi trial court denied Lime’s petition to compel arbitration, and the Court of Appeal agreed that the PAGA claim was not arbitrable and affirmed the trial court’s ruling. The Supreme Court reasoned that because PAGA actions are claims between the State and the employer, private agreements to arbitrate such claims are not enforceable for public policy reasons. The California Supreme Court has found that representative claims under PAGA cannot be arbitrated. Prior to the trial court’s hearing on the petition, however, Olabi dismissed the unfair competition claim leaving only a single cause of action - a representative PAGA action for civil penalties. Lime filed a petition to compel arbitration based on an arbitration agreement entered into by the parties.
Olabi alleged that Lime intentionally misclassified him and others as independent contractors rather than employees resulting in violations of the Labor Code. Neutron Holdings, Inc., the plaintiff Olabi sued Neutron Holdings, Inc., which does business as Lime, in San Francisco Superior Court asserting various wage and hour violations under PAGA and for unfair business competition.
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