A union construction contractor sued under PAGA may be able to send the dispute to the CBA’s grievance process instead. Labor Code section 2699.6(a) says PAGA “shall not apply to an employee in the construction industry with respect to work performed under a valid collective bargaining agreement” that meets specific terms. The Legislature extended the exemption through 2037. Whether it applies turns on the exact language in the master agreement.
What must the CBA cover?
Wages, hours, and a pay floor. Under section 2699.6(a), the agreement must expressly provide “for the wages, hours of work, and working conditions of employees, premium wage rates for all overtime hours worked, and for the employee to receive a regular hourly pay rate of not less than 30 percent more than the state minimum wage rate.”
Most building trades agreements clear the pay floor easily. The overtime premium and the express coverage language deserve a closer look, especially in older agreements.
What else does the agreement have to say?
Three things, all required. The statute says the agreement must:
“(1) Prohibits all of the violations of this code that would be redressable pursuant to this part and provides for a grievance and binding arbitration procedure to redress those violations.” It must also “Expressly waives the requirements of this part in clear and unambiguous terms,” and “Authorizes the arbitrator to award any and all remedies otherwise available under this code,” except penalties payable to the Labor and Workforce Development Agency.
A general arbitration clause isn’t enough. The waiver has to name PAGA, and the arbitrator’s remedial power has to match the Labor Code’s.
Who counts as a construction employee?
A broad group. Subdivision (c) covers “an employee performing work associated with construction,” including “alteration, demolition, building, excavation, renovation, remodeling, maintenance, improvement, repair work,” and “other similar or related occupations or trades.”
The exemption is limited to “work performed under” the CBA. A contractor with both union and nonunion crews, or union workers doing some work outside the agreement’s scope, may still face PAGA claims for that other work.
How have courts applied it?
In the employer’s favor where the language fit. In Oswald v. Murray Plumbing & Heating Corp. (2022) 82 Cal.App.5th 938, a published Second District decision, a pipefitter sued under PAGA for meal and rest breaks, wage statements, and late pay. The court held that “The parties’ CBA clearly waives PAGA and satisfies the requirements of section 2699.6, as a matter of law,” and reversed the denial of the employer’s motion to compel arbitration.
The court also enforced a union-employer memorandum signed while the appeal was pending, which applied the waiver retroactively to the life of the master agreement. It reasoned that “a union negotiated and signed them, on Oswald’s behalf.” That gives contractors and unions room to fix older agreements, though counsel should review timing and scope carefully before relying on it.
What claims does the exemption leave open?
Everything but PAGA. Subdivision (b) says that “Except for a civil action under Section 2699, this section does not preclude an employee from pursuing any other civil action,” naming FEHA and Title VII. Individual wage claims typically go through the CBA’s grievance procedure, and discrimination claims proceed under their own rules.
The firm’s page on defending representative PAGA claims in California explains how it handles PAGA notices and lawsuits.
Section 2699.6 requirements at a glance
| Requirement | What the CBA must do | Subdivision |
|---|---|---|
| Industry | Cover construction work as defined | (c) |
| Core terms | Wages, hours, conditions, overtime premium | (a) |
| Pay floor | Regular rate at least 30 percent above state minimum | (a) |
| Grievance process | Prohibit PAGA-covered violations and arbitrate them | (a)(1) |
| Waiver | Waive PAGA in clear and unambiguous terms | (a)(2) |
| Remedies | Arbitrator can award all Labor Code remedies except LWDA penalties | (a)(3) |
When a PAGA notice reaches a union contractor
- Preserve the master agreement, every side letter and memorandum, and payroll records showing which work and workers were covered.
- Calendar the response deadline on the PAGA notice or complaint, and notify the EPLI carrier and the contractor association if the agreement requires it.
- Identify the foremen and payroll staff for the jobs at issue, and make sure no one treats the complaining worker differently.
- Pull the grievance and waiver provisions and compare them line by line with section 2699.6.
- Talk to a lawyer before contacting the union about any clarifying memorandum, since timing and wording affect enforceability.
PAGA construction exemption questions from employers
Does a project labor agreement qualify?
Possibly, if it meets every element. Project labor agreements vary widely. The test is the language, not the label: wages, hours, overtime premium, the pay floor, the grievance procedure, the express waiver, and full remedial authority for the arbitrator.
What if some employees earn less than 30 percent above minimum wage?
The statute ties the pay floor to “the employee.” Apprentices or lower-paid classifications may fall outside it. Contractors should check each classification the PAGA notice covers.
When does the exemption expire?
Subdivision (d) says the section “shall remain in effect only until January 1, 2038.” The 2024 amendment (AB 1034) extended it to that date.
Does the exemption stop a Labor Commissioner claim?
Not by its terms. The section bars a “civil action under Section 2699.” Agency claims and individual wage claims are different proceedings, though a CBA grievance procedure may still matter to how they’re handled.
If your company has received a PAGA notice on a union job
If your company is a union construction contractor and has received a PAGA notice or lawsuit, the master agreement may already answer it, but only if the language matches the statute. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including claims involving PAGA and collective bargaining agreements. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.
Sources
The statute is Labor Code section 2699.6. The opinion is Oswald v. Murray Plumbing & Heating Corp. (2022) 82 Cal.App.5th 938.
This post is general information about California and federal employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.