California’s Supreme Court has ruled that public agencies are exempt from a contentious law that grants workers the right to sue their employers for alleged labor violations.
In a case involving a large Bay Area healthcare system, justices on California’s highest court unanimously decided last week that public employers are largely exempt from wage law, which guarantees workers the right to daily meal and rest breaks.
Restricting Public Employees
The two aspects of the ruling, when taken together, significantly restrict public employees in the state’s ability to seek legal assistance in labor disputes.
The decision was criticized by advocates for workers in restricting the rights of employees, but others said it would protect agencies from costly lawsuits and penalties.
“Beneficial for the Public”
Attorney Brian P. Walter stated, “Public employers are getting hit with lawsuits that can be very expensive to defend.” He claimed that the decision “is beneficial for the public.”
The case stems from a medical assistant and nurse who worked at Highland Hospital in Oakland in 2021 and filed a lawsuit against Alameda Health System, which owns and operates a number of hospitals and clinics.
Allegations Against Highland Hospital
The employees at Highland Hospital claimed that their employer did not keep accurate payroll records, deducted half an hour from each work day even when employees did not take a meal break, and frequently denied or discouraged employees from taking breaks to eat and rest.
The Private Attorneys General Act allows workers to sue employers on behalf of themselves and other employees for allegations of wage theft and other workplace abuses. The suit sought civil penalties for these violations.
California Labor Code
The unresolved relationship between labor law and government agencies was the focus of the case against Highland Hospital.
Some parts of the California labor code don’t say if they apply to the public sector at all, while others do. For instance, public employees involved in direct patient care in hospitals, clinics, and other public health settings are explicitly required to take meal and rest breaks by a new law enacted in 2023.
Court Ruling
Justice Carol A. Corrigan wrote the court’s decision, which made it clear that the labor code only applies to public agencies if they are specifically included.
She wrote that “plain language of the governing wage order … excludes public employers from most of the wage and hour obligations it places on private employers.”
“Rob Peter to Pay Paul”
Corrigan stated that the Legislature did not intend for government agencies to be subject to penalties under the Private Attorneys General Act in regards to the right of public employees to sue their employers.
The ruling stated that “the result would simply rob Peter to pay Paul” and that it would be strange for a public agency to be required to pay such penalties and attorney fees out of taxpayer funds.
PAGA Logistics
PAGA allows workers to sue the state for civil penalties. One-quarter of any award goes to the workers who brought the claim, and the rest goes to the state’s Labor and Workforce Development Agency to help pay for its labor rules enforcement.
The court stated that as a result of the decision, state lawmakers could either enact new legislation or amend the existing one to include government employees.
Impact on Future Rulings
Following a recent compromise that reduced legal penalties to address long-standing concerns from businesses that it left them vulnerable to potentially devastating rulings, lawmakers may be reluctant to revisit the act’s wording.
In the past, public employees’ PAGA lawsuits have been upheld by some lower courts; however, the top court’s decision prevents such rulings from occurring in the future.
Significant Statute for Workers
The California Employment Lawyers Assn.’s Ari Stiller stated that the decision “cuts public employees out of certain rights” once again. Stiller stated that treating public employers as sovereign entities “hurts public workers.”
Stiller stated that the decision is inconsistent with previous statements made by justices arguing that PAGA is one of the most significant statutes workers have at their disposal to enforce their rights under the labor code.
Union Negotiations
While this may be a setback according to worker’s advocates, unions representing workers in the public sector may be able to negotiate rights for workers that are comparable to those provided by state laws.
Stiller stated, “That’s not a strong justification for depriving all public workers of those rights in the first place.”
Avoiding the Ballot
Many large companies in the state had been looking to put a measure on the November ballot to effectively repeal PAGA.
Now backroom negotiations between unions and Democrats who were against the initiative means that the motion has been taken off of the ballot.
The concessions to PAGA related to alterations to the penalty structure which makes it more difficult for lawyers to demand a payout from a company.
