In a July 2025 decision, the California Court of Appeal for the Fifth Appellate District ruled that so-called “headless PAGA” lawsuits are allowed—actions in which a plaintiff drops their own Labor Code claims but continues to pursue penalties on behalf of other employees under the Private Attorneys General Act (PAGA). This holding, in CRST Expedited v. Superior Court, intensifies an existing split among California appellate courts and sets up a definitive ruling by the California Supreme Court in Leeper v. Shipt, Inc.

Here are five things California employers should know about this growing legal divide and its implications:

1. What Is a “Headless” PAGA Case?

A “headless PAGA” case refers to a situation where a PAGA plaintiff disclaims or dismisses their individual claims—typically to avoid arbitration pursuant to an agreement to arbitrate all employment issues—and instead continues only with representative claims on behalf of other allegedly aggrieved employees. These plaintiffs argue that they may proceed solely as proxies for the State of California to enforce the Labor Code, even if they no longer pursue any relief for themselves.

This procedural strategy aims to bypass arbitration agreements that contain a class action waiver and require the plaintiff to arbitrate their individual claims prior to being a representative in a PAGA case.  These arbitration agreements have been upheld by the US Supreme Court in Viking River Cruises v. Moriana. 

2. CRST Expedited v. Superior Court: The Fifth District Approves Headless PAGA Claims

In CRST Expedited, the plaintiff initially asserted both individual and representative PAGA claims. After the court compelled the individual portion to arbitration, the plaintiff voluntarily dismissed those claims and proceeded in court with the representative portion alone—thus rendering the case “headless.”

The employer argued this stripped the plaintiff of standing. The appellate court disagreed, finding that the statutory phrase allowing an aggrieved employee to bring a civil action “on behalf of himself or herself and other employees” was ambiguous. The court reasoned that the word “may” is permissive, and to promote PAGA’s core purpose of Labor Code enforcement, the word “and” could reasonably be read as “and/or.”

In short: the Fifth District held that plaintiffs may bring representative PAGA claims even after discarding their own, at least under the version of PAGA in effect before the July 1, 2024 amendments.

3. Leeper v. Shipt, Inc.: The Second District Says “No” to Headless PAGA

In a prior case, the Second District Court of Appeal reached the opposite conclusion in Leeper v. Shipt, Inc., holding that every PAGA action inherently includes both individual and non-individual claims. According to Leeper, a plaintiff cannot surgically remove their own claim to avoid arbitration and still retain standing to prosecute claims on behalf of others.

The court emphasized that under the ordinary reading of the statute, the phrase “on behalf of himself or herself and other employees” requires inclusion of both types of claims. It argued that allowing purely representative (headless) actions rewrites the statute and undermines legislative intent.

4. The California Supreme Court Will Decide: Leeper Now Under Review

On April 16, 2025, the California Supreme Court granted review in Leeper, even though neither party petitioned for it. This rare move reflects the urgency and importance of resolving this issue, which is also been addressed in Williams v. Alacrity Solutions Group, which is also under review pending Leeper.

The Court has asked the parties to address two key questions:

  1. Does every PAGA action necessarily include both individual and non-individual PAGA claims, regardless of whether the complaint expressly alleges them?
  2. Can a plaintiff choose to bring only a non-individual PAGA action?

Employers across California should closely watch for this decision, which could significantly reshape how PAGA claims are structured and litigated.

5. Key Takeaways and Employer Action Items

While the legal landscape remains uncertain, California employers should:

  • Review arbitration agreements carefully. Language and structure still matter—and may determine how courts handle bifurcated claims.
  • Proactively audit wage-and-hour practices. The best defense to PAGA claims remains full compliance and routine audits and training to potentially cap PAGA penalties at 15%. Learn more about how employers can reduce their liability by routine audits in our prior article here.
  • Track the Leeper and CRST developments closely.
  • Consider the cost of delay and dual-forum litigation.
  • Consult experienced employment counsel to tailor strategies to this shifting environment.

Final Thoughts

The CRST Expedited ruling and the issue of headless PAGA cases will impact California’s PAGA landscape. With the California Supreme Court set to resolve the issue in Leeper, now is the time for employers to audit their arbitration agreements, examine potential PAGA exposure, and stay informed.

Need help reviewing your policies or responding to a PAGA notice? Our team is actively helping clients defend PAGA claims as well as advising on proactive steps to mitigate PAGA exposure.