California Supreme Court Issues Ruling Over Controversial Labor Law

By: David Donovan | Published: Aug 21, 2024

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 Ronald Reagan State Building, the Supreme Court's branch office in Los Angeles, which it shares with the Court of Appeal for the Second District. It is a grey angular building with rows of windows, there are cars parked out front and trees lining the street.

Source: Coolcaesar/English Wikipedia

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.”

Highland Hospital exterior, a grey building with rose of windows, there are cars parked out front with some trees, it is a clear sunny day.

Source: NeoBatfreak/Wikimedia Commons

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 Oakland skyline as seen from the Oakland hills. There is a view of many tall buildings along with the bay in the background and a bridge spanning the bay.

Source: Basil D Soufi/Wikimedia Commons

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.

The eastern span of the San Francisco-Oakland Bay Bridge at dusk as seen from Yerba Buena Island. The bridge is illuminated by lights with lights from the city seen distantly in the background.

Source: Dllu/Wikimedia Commons

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.

Carol Corrigan wearing a robe in a court room, she has white hair and wears glasses.

Source: California Courts/Flickr

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 Oakland California Temple of The Church of Jesus Christ of Latter-day Saints, the building has three spires and the exterior has a fountains and water features alongside manicured lawns, flowers and trees.

Source: USGS photographer/3dparks.wr.usgs.gov

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.

A group of six women and one man in formal wear in front of a podium stating “California for all women” and the state seal of California behind them.

Source: CALaborAgency/X

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.

The Stanley Mosk Library and Courts Building, the Supreme Court's branch office in Sacramento, which it shares with the Court of Appeal for the Third District. The building has columns that emulate Greek architecture, there are people walking outside of the building with trees on either side.

Source: Coolcaesar/Wikimedia Commons

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.”

A group of men and women holding a sign saying “A Stronger California”, there is an image from the seal of California and the state motto “Eureka” visible in the background.

Source: Equal Rights Advocates/Facebook

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.

The exterior of a neo-classical building during a sunny day, there are trees surrounding the building.

Source: California Employment Lawyers Association/Facebook

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.

An image of hands placing a ballot into a box as another hand directs where the envelope should drop.

Source: Arnaud Jaegers/Unsplash

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.