A PAGA action with no individual claim stays in court, for now.

The misreading goes like this: We have an arbitration agreement with a class waiver, so a PAGA case against us goes to arbitration. PAGA, California's private-enforcement law, lets one employee sue for civil penalties, the amounts a court can award, on behalf of the state and of other employees. As of October 23, 2026, that is not a safe assumption for an employer in the Fifth Appellate District, the San Joaquin Valley courts from Kern County north through Stanislaus and Tuolumne. And as of November 3, the question is sitting with the California Supreme Court for every employer in the state.

This is a status post. It has three facts in it, and then a section on what does not change whichever way the Court rules.

On October 23, 2026, the Fifth District decided Castillo v. Belkorp AG, a published opinion, and affirmed the denial of an employer's motion to compel arbitration.

The Courts of Appeal are split, and every published decision on both sides of the question is under review by the Supreme Court.

On November 3, 2026, the Supreme Court heard argument in Leeper v. Shipt (S289305), the case it took on its own motion to settle the question. The Court ordinarily rules within ninety days of submission.

What Castillo held

The employee worked as a service technician from May 2021 until his termination in January 2024. His onboarding paperwork included an arbitration agreement under which any dispute arising out of his employment "shall be resolved by binding arbitration," with a waiver of any right to bring a claim "as a class or collective action."

In November 2024 he sent the notice that starts a penalty claim to the Labor and Workforce Development Agency under Labor Code §2699.3. The agency did not respond within the sixty-five-day waiting period of §2699.3(a)(2)(A), and in February 2025 he filed a single cause of action under PAGA in Stanislaus County. The complaint said the action was brought "as an exclusively representative action on behalf of other current and former aggrieved employees," and that he sought "only to prosecute his non-individual PAGA claims and does not seek to prosecute any individual PAGA claims." That is the shape the trade press calls a headless PAGA action: the claims on behalf of other employees, with the plaintiff's own claim left out so that there is nothing for an arbitration agreement to reach.

The employer moved to compel arbitration. The trial court denied the motion in September 2025, and the Fifth District affirmed. The statute gives the action to an aggrieved employee, a person who "personally suffered each of the violations alleged" (§2699(c)(1)), and the sentence that matters is this one:

"Because we detect no reason to depart from CRST, we conclude that an aggrieved employee may bring a PAGA action that consists only of nonindividual PAGA claims under the post-July 1, 2024 version of PAGA."

And the consequence, in the court's words: "Because Castillo is pursuing a PAGA action that consists of only nonindividual PAGA claims, Belkorp's arbitration agreement and class or collective action waiver provision cannot be enforced against him."

The argument turns on one word. Section 2699(a) lets civil penalties be recovered "through a civil action brought by an aggrieved employee on behalf of the employee and other current and former employees." The Second District's Division One read that "and" as conjunctive in Leeper: every PAGA action necessarily includes the employee's own claim, so the employer can compel that claim to arbitration and stay the rest. The Fifth District, following its own two earlier decisions on the pre-2024 statute, reads the "and" as ambiguous and construes it to include "or," because a reading that forces every plaintiff into a bifurcated proceeding works against the enforcement purpose the statute was written for.

The new part of Castillo is the date. The earlier Fifth District decisions concerned the statute as it stood before July 1, 2024. The employer here argued that the 2024 amendments changed the answer, because they rewrote the definition of an aggrieved employee to a person who "personally suffered each of the violations alleged" (§2699(c)(1)). The court disagreed: that amendment "speaks to qualifications of a person to be an aggrieved employee, it does not speak to the types of claims (individual, nonindividual, or both) that an aggrieved employee may or must make." So, in the Fifth District, a claim under the amended statute is no different from one under the old statute on this question; which version governs turns on the notice date, and here it did not matter.

What it did not decide, and what sits above it

A published Court of Appeal opinion binds every trial court in California until a higher court or a conflicting published opinion says otherwise, and here the conflict already exists. Castillo itself says so: two divisions of the Second District require both kinds of claim; the Fifth District and a third division of the Second District do not. Every one of those decisions is under Supreme Court review, and the Court's order in Leeper lets trial courts cite it to show the conflict. The trial court in Castillo said as much in its ruling, and then chose a side. Which side a trial judge chooses, today, depends on the courthouse.

That ends when Leeper is decided. The Supreme Court framed two questions for itself: does every PAGA action necessarily include both individual and non-individual claims, regardless of how the complaint is pleaded, and can a plaintiff choose to bring only a non-individual action? Argument was November 3. We are not going to predict the answer, and we would treat anyone who does as guessing.

Two more things Castillo does not do. It does not hold that arbitration agreements are unenforceable in PAGA cases; the opinion restates the settled rule that where an action includes the employee's own claim, a valid agreement sends that claim to arbitration while the claims on behalf of others stay in court. And it does not touch the merits. Nothing in the opinion says whether a single meal period was missed or a single final paycheck was late. That is the part worth sitting with.

What does not change either way

An employer reading the coverage of Castillo and Leeper is being asked to think about forum: court or arbitrator, now or after a stay. Three things about the claim itself are the same under both readings of the statute.

The sequence starts with a letter, and the letter is usually not the first one. A PAGA claim begins with the notice to the agency under §2699.3, and the agency's waiting period runs before any complaint can be filed. In practice the records request under §226, §432 or §1198.5 comes before the notice, and that request is what closes the window on the steps an employer can still take. No reading of §2699(a) moves that letter. Whether the eventual action has a head or not, the records it is built on were fixed before it was filed.

The plaintiff still has to be an aggrieved employee. The 2024 definition that Castillo discusses, a person who "personally suffered each of the violations alleged," applies to a headless action as much as to any other. The court is explicit that the amendment governs who qualifies, not which claims they bring. So a headless action still opens with one worker's own shifts, and the employer's first factual question is the same as it has always been: what do that worker's time and pay records show for the pay periods inside the one-year window?

The arbitration agreement decides where; the record decides what. A clause can move the employee's own claim to an arbitrator, or, in the Fifth District today, it cannot reach an action that leaves that claim out. Either way, the question that gets answered in whichever room the case lands is whether the meal period was provided, whether the overtime was paid at the right rate, whether the final wages went out on time. The agreement is an argument about the room. The record is the argument about what happened in it, and it is the only one of the two that an employer builds for itself, pay period by pay period, before anyone writes a letter.

That is the operational consequence. An employer whose PAGA strategy was the arbitration clause has, as of this autumn, a strategy that depends on a courthouse and a pending opinion. Whether the clause distinguishes individual from representative claims, and what its severability language does, is a question for your counsel, and a good one to ask this month. What your records show for the last twelve months of pay periods is a question you can answer yourself, and it is the one that survives Leeper whichever way it goes.

Where MicroForensics fits

MicroForensics catches missed breaks, unpaid overtime and late final pay for California employers with hourly workers, and chases each one to a documented fix. It reads the payroll and time clocks you already run, and runs the loop every pay period, so the record of what happened, and what was done about it, exists on the day a notice arrives. Which forum reads that record is the part we leave to the courts.

Bring your arbitration agreement and a time export for the last two pay periods to a brief call, and we will walk through what the export shows against the three claims above. We will not tell you how the Supreme Court is going to rule in Leeper, and we will not review the agreement; that is your counsel's work. We will tell you what your records show.

This post is a watch item. When the Supreme Court decides Leeper, every statement above about the split and the Fifth District's reading is re-verified against the opinion before the next deployment, and anything that no longer holds is fixed.