California’s Fifth Appellate District has once again approved “headless” PAGA actions — but this time under the post-July 2024 version of the statute. In Castillo v. Belkorp AG, LLP, the court held that an aggrieved employee may pursue a PAGA action consisting solely of non-individual claims brought on behalf of other employees, and that such a claim cannot be forced into arbitration. For employers who hoped the 2024 PAGA reforms had closed this loophole, Castillo is an unwelcome development that widens an already deep split of authority — and it lands just days before the California Supreme Court takes up the issue.
What Happened In Castillo v. Belkorp?
Steven Castillo worked as a service technician for Belkorp AG and, when he was hired, signed an arbitration agreement with a class and collective action waiver. After his termination, he filed a single PAGA cause of action in Stanislaus County Superior Court. Critically, Castillo pleaded his case as “an exclusively representative action,” stating that he sought “only to prosecute his non-individual PAGA claims” and did not seek to prosecute any individual PAGA claims — the hallmark of a “headless” action designed to sidestep arbitration.
Belkorp moved to compel arbitration. The trial court denied the motion, and the Fifth Appellate District affirmed on October 23, 2026. The court held that an aggrieved employee may bring a PAGA action consisting only of non-individual claims, and that because no individual claim was in play, there was nothing to arbitrate. Belkorp’s arbitration agreement and class waiver therefore could not be enforced against Castillo.
Why Does Castillo Extend Headless PAGA Into New Territory?
Longtime readers of this blog will recognize the Fifth District’s reasoning. In our prior coverage of CRST Expedited, Inc. v. Superior Court and Galarsa v. Dolgen California, LLC, we explained how the Fifth District concluded that the word “and” in the phrase “on behalf of himself or herself and other current or former employees” is ambiguous and should be read as “and/or” to advance PAGA’s enforcement purpose. Castillo imports that same statutory gymnastics wholesale.
What makes Castillo different — and significant — is timing. Both CRST Expedited and Galarsa were expressly limited to the pre-July 2024 version of PAGA. Castillo is the first published decision to apply the headless theory to the amended statute that took effect on July 1, 2024. In other words, the Fifth District has now said that nothing in the 2024 reforms changed the result.
Belkorp argued that the 2024 PAGA amendments tightened standing requirements and did not add any language expressly authorizing non-individual-only claims. The court was unmoved. It reasoned that the amended standing provision addresses who qualifies as an “aggrieved employee,” not which type of claim — individual, non-individual, or both — that employee must pursue. And it found the Legislature’s silence unremarkable. However, the Castillo decision fails to consider the wider context of the 2024 PAGA amendments and ongoing regulatory changes. In the wake of abuses by high-frequency filers, the statute’s standing requirement now requires the plaintiff (aka “aggrieved employee”) to personally suffer the alleged Labor Code violations and that other employees must be similarly situated (i.e., that current or former employees sought to be represented also suffered the same Labor Code violation). As a practical matter, this change ensures that the plaintiff in a PAGA case has “skin in the game” and cares about the outcome since they allegedly experienced the labor code violations about which they are suing. The Castillo decision undermines that change by allowing a plaintiff to assert they are only seeking penalties for others, not for themselves. Thus, removing the plaintiff’s interest in the outcome.
How Does This Deepen The District Split?
The split is now wider and more entrenched than ever. On one side, Divisions One and Five of the Second Appellate District — in Leeper v. Shipt, Inc. and Williams v. Alacrity Solutions Group — hold that every PAGA action necessarily includes both an individual and a non-individual component, so a plaintiff cannot disclaim the individual claim to escape arbitration. On the other side, the Fifth District (CRST Expedited, Galarsa, and now Castillo), along with Division Six of the Second District (Balderas), permits an aggrieved employee to bring non-individual claims alone.
With Castillo, the Fifth District has carried its reading forward into the post-amendment era, ensuring that the divide does not simply fade away as pre-July 2024 cases work through the system. For employers litigating in the Central Valley counties covered by the Fifth District, headless PAGA actions remain very much alive.
What About The California Supreme Court’s Leeper Hearing?
Relief — or confirmation of employers’ fears — may be close. The California Supreme Court is scheduled to hear oral argument in Leeper v. Shipt, Inc. on Tuesday morning, November 3, 2026, as the second matter on its 9:00 a.m. calendar in San Francisco. The argument will be livestreamed on the California Supreme Court’s website.
Leeper squarely presents the question dividing the appellate districts: whether every PAGA action must include both individual and non-individual claims, or whether a plaintiff may bring a non-individual, “headless” action alone. The Court’s ruling should finally resolve the conflict that Castillo has just deepened — and will tell employers whether arbitration agreements can reach these representative-only claims.
What Should California Employers Do Now?
Until the Supreme Court speaks, employers should assume that headless PAGA actions can survive a motion to compel arbitration in the Fifth District and elsewhere, regardless of whether the claims arise under the pre- or post-July 2024 statute. This is a good moment to review arbitration agreements and class waivers to confirm they are current, and to revisit Labor Code compliance practices so there are fewer alleged violations for a representative plaintiff to pursue in the first place.
We will be watching Tuesday’s argument closely and will report on the Supreme Court’s decision when it issues. If you haven’t already, subscribe to CDF’s California Labor & Employment Law Blog so you don’t miss our analysis. If your company is facing a PAGA claim or has questions about its arbitration agreements, reach out to the author or your favorite CDF attorney.
