PAGA allows employees to file lawsuits on behalf of themselves and other employees for labor code violations. However, recent legal interpretations have clarified that only those who have directly experienced a violation can initiate such actions. This requirement aims to prevent frivolous lawsuits and ensure that genuine grievances are addressed. 

In the case at issue a former employee filed a lawsuit against his employer for alleged wage and hour violations and a PAGA action for civil penalties. The PAGA action was stayed pending the outcome of arbitration proceedings. The arbitrator found in favor of the employer and once judgment was entered by the trial court the employer moved for a dismissal of the PAGA action. The motion was granted, and the employee appealed.   

The Appellate Court’s holding found that the elements of issue preclusion prohibited the former employee from bringing his PAGA action. This means that where an arbitrator determines that a plaintiff is not an aggrieved employee and the court confirms that determination and reduces it to a final judgment, a would-be PAGA plaintiff can no longer prosecute non-individual claim(s) due to lack of standing. The clear implication being that arbitral findings have a preclusive effect on standing in a stayed PAGA claim.