On Oct. 23, the California Fifth District Court of Appeal held in Castillo v. Belkorp AG, LLP, No. F090527, 2026 WL 3181371 (Cal. Ct. App. Oct. 23, 2026), that an employee may bring a Private Attorneys General Act (PAGA) action asserting only nonindividual claims, meaning claims for violations suffered by other employees. Because no individual claim is asserted, the employer could not compel arbitration, even though the employee signed an arbitration agreement. Notably, the court analyzed the 2024 amendments to PAGA in reaching its decision.

The Facts of the Case

The plaintiff, a former service technician for a John Deere equipment dealer, signed an arbitration agreement requiring individual arbitration and waiving representative, class, and collective actions. After his termination, he filed a PAGA complaint seeking penalties only on behalf of other employees. The employer moved to compel arbitration, arguing that every PAGA action necessarily includes an individual claim. The trial court denied the motion, and the court of appeal affirmed.

The Court's Reasoning

California appellate courts are split on whether "headless" PAGA actions, meaning actions that assert only nonindividual claims, are permitted. The Castillo court followed its own prior decision in CRST Expedited, Inc. v. Superior Court. It read the statute's phrase "on behalf of the employee and other current and former employees" to allow either or both types of claims, reasoning that this interpretation best serves PAGA's enforcement purpose. 

The court then held that the 2024 amendments to PAGA did not change its analysis. The amendments revised Labor Code section 2699(c)(1) to require an aggrieved employee to have personally suffered each alleged violation within a one-year period. According to the court, that change governs who qualifies as an aggrieved employee, not which types of claims (individual, nonindividual, or both) the employee may or must bring.

Finally, the court rejected the employer's remaining arguments:

• Standing: A plaintiff must have personally suffered each alleged violation within the one-year period. According to the court, the plaintiff is not required to seek penalties for those violations, and the 2024 amendments did not change which claims a plaintiff must bring.

• Viking River and Adolph: Neither decision addressed representative-only actions, in the court's view. When no individual claim is asserted, the Federal Arbitration Act is not implicated.

Key Takeaways for Employers

For now, an arbitration agreement may not keep a PAGA case out of court if the plaintiff pleads only nonindividual claims. The issue is not settled, however. The California Supreme Court has granted review on the issue, and its decision will ultimately resolve the split. Until the Supreme Court rules, trial courts may continue to reach different results depending on which line of authority they follow. The court also noted that standing challenges belong in a demurrer, not a motion to compel arbitration.