Employment Litigation · Primary-source case analysis

ZB: Section 558 Unpaid Wages Are Not Civil Penalties Recoverable Through PAGA

By Aneeta Mishra and Timothy Chan

Published September 15, 2026

ZB, N.A. v. Superior Court examined whether an employee invoking the Private Attorneys General Act could use Labor Code section 558 to recover both statutory penalties and the employees’ unpaid wages in a representative action.

Section 558 combines two different monetary components

The statute authorizes a fixed civil penalty for each violation and also refers to an amount sufficient to recover underpaid wages. The case asked whether both components count as civil penalties that a PAGA plaintiff may pursue.

The wage amount compensates employees

The court concluded that the underpaid-wage component remedies the employees’ private loss rather than punishing the employer on the state’s behalf. Labeling both amounts in one enforcement provision did not transform unpaid wages into a civil penalty.

PAGA reaches the true penalty component

A PAGA representative may seek the fixed civil penalties available under section 558, subject to PAGA’s allocation rules. The employee could not add the section’s unpaid-wage amount to that representative penalty claim.

The arbitration question fell away

Because the disputed unpaid wages were not recoverable as PAGA civil penalties, the court did not need to decide whether that monetary component was subject to the parties’ arbitration agreement. It affirmed on the narrower statutory ground.

Key takeaways

• Separate unpaid wages from statutory civil penalties.
• Identify the independent Labor Code claim supporting any wage recovery.
• Do not assume every amount in a penalty statute is itself a penalty.
• Analyze arbitration only after classifying the requested remedy.