On the cusp of the new year, Private Attorneys General Act plaintiffs were dealt a significant setback. On Dec. 30, a California appeals court ruled that such plaintiffs could not pursue so-called "headless" PAGA claims. As long as an employee has standing to bring a representative action on behalf of fellow employees, he or she must first arbitrate any individual PAGA claim based on those same violations.

In its unanimous decision in the case of Leeper v. Shipt (B339670, Cal.App.2nd, Division One), the Court of Appeals for the Second Appellate Division said that every PAGA action necessarily includes an “individual PAGA claim.” That individual claim cannot be set aside or disregarded while the larger representative claim is pursued in court. Therefore, PAGA plaintiffs may not bypass arbitration simply by asserting only a representative PAGA claim on behalf of their fellow employees—i.e., “headless” claims.