Johnson v. Maxim Healthcare Services, Inc.
D077599
| Cal. Ct. App. | Jul 21, 2021Background
- Gina Johnson was hired by Maxim as an hourly, nonexempt employee and in 2016 signed a “Non‑Solicitation, Non‑Disclosure and Non‑Competition Agreement.”
- On June 19, 2019 Johnson notified the Labor & Workforce Development Agency that the agreement violated Labor Code §432.5 (prohibiting employers from requiring employees to agree to terms known to be prohibited by law) and intended to bring a representative PAGA action.
- After 65 days without Agency action, Johnson filed a PAGA-only complaint (Sept. 9, 2019) asserting representative civil penalties for violations of §432.5.
- Maxim demurred, arguing Johnson’s individual claim was time‑barred (signed agreement ~3 years earlier) and thus she lacked PAGA standing; the superior court sustained the demurrer without leave to amend and later dismissed with prejudice.
- The Court of Appeal reversed, holding that under Kim v. Reins an employee can have PAGA standing even if her individual Labor Code claim is time‑barred, so long as she was employed by the alleged violator and at least one violation was committed against her.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an employee whose individual Labor Code claim is time‑barred may still have standing to pursue a representative PAGA action | Johnson: Time‑barred individual claim does not defeat PAGA standing; she is an "aggrieved employee" and exhausted LWDA remedies | Maxim: Statute of limitations bars the individual claim; without a viable individual claim plaintiff lacks PAGA standing | Reversed — Under Kim, PAGA standing depends on being an aggrieved employee (employed by violator and subjected to at least one violation), not on the viability of a separate individual claim |
Key Cases Cited
- Kim v. Reins International California, Inc., 9 Cal.5th 73 (an employee who settles or whose individual claims are resolved still may have PAGA standing if she was employed by the violator and a violation was committed against her)
- Arias v. Superior Court, 46 Cal.4th 969 (PAGA allows employees to act as private attorneys general to recover civil penalties on the state's behalf)
- Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (PAGA actions are disputes between employer and state; the government is the real party in interest)
- Robinson v. Southern Counties Oil Co., 53 Cal.App.5th 476 (claim‑preclusion and standing issues where prior PAGA settlement existed; distinguished in this case)
- Edwards v. Arthur Andersen LLP, 44 Cal.4th 937 (noncompetition agreements are generally invalid under California law)