The Kim v. Reins Effect – California Appellate Court Holds that Statutes of Limitation Do Not Apply to Representative PAGA Plaintiffs

In Kim v. Reins International California, Inc., the California Supreme Court concluded an employee who settles and dismisses individual Labor Code claims does not lose standing to pursue a PAGA claim. Relying on this ruling, a California appellate court recently held an employee may bring a representative PAGA-only action – even where his or her individual claim is time-barred.

 

A Broad Interpretation of Kim

In Johnson v. Maxim Healthcare Services, Inc. , the plaintiff brought a PAGA action against her employer based on allegations that she had been forced to sign an agreement with an unlawful non-competition clause, signed more than three years prior to the commencement of the action, ostensibly exceeding the three-year statute of limitations for such claims. Defendant Maxim demurred, arguing that Johnson’s individual claims were time-barred. The superior court agreed, prompting Johnson to appeal.

The Court of Appeal ultimately reversed the judgment, stating, “The rule from Kim is an ‘aggrieved employee’ has standing to pursue a PAGA claim, irrespective of whether that employee maintains a separate Labor Code claim. And … Johnson alleged she was an aggrieved employee. Under Kim, this allegation is sufficient, at this stage, to establish standing. To the extent Maxim argues Kim applies only when a plaintiff settles the underlying Labor Code claims, we disagree.”

 

What Does this Mean for Employers?

The proliferation of PAGA claims in recent years has continued to plague California employers. The Johnson decision – should it survive a likely petition to the California Supreme Court – will be yet another weapon in labor plaintiffs’ arsenals, further-broadening the already-expansive scope of PAGA actions.

Accordingly, California employers should continue to do everything possible to comply with the state’s rigorous labor codes. We are available to assist with performing preventive PAGA audits, answer any questions or address any concerns you may have.

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