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By: @Mustafa Hessabi 

Last week, the California Supreme Court issued a favorable decision for public agencies in California, reversing a harmful Court of Appeal decision and providing helpful clarity regarding labor laws and the Private Attorneys General Act (also known as “PAGA”). In Stone v. Alameda Health System (S279137), the Court ruled that provisions in the Labor Code pertaining to meal and rest breaks for employees do not apply to public agencies, and also that the mandates and penalties of PAGA do not apply to public agencies. 

This decision affirms the understanding of public employers, including all special districts, that public agencies are not subject to Labor Code provisions unless the Labor Code provisions expressly state as such. Special districts are also not subject to liability for civil penalties imposed by PAGA.

CSDA filed an amicus brief  in support of Alameda Health System, joined by the California Association of Joint Powers Authorities, California State Association of Counties, and the League of California Cities. The CSDA amicus brief, authored by Michael Colantuono and Pamela Graham at Colantuono, Highsmith and Whatley PC, highlighted the diversity of local government services and types, and how failure to reverse the Court of Appeal decision would negatively affect all local governments.

Writing for a unanimous court, Justice Corrigan clarified that California meal and rest break laws do not apply to public agencies unless they specifically state they apply to public agencies. This is because the statutory language, context and history show that the State Legislature intended to exclude public employers from those requirements. Moreover, if the Legislature intended meal and rest break laws to apply to government employers, it would have expressly stated that in the statute, as it has for other provisions that apply to public agencies.

Additionally, the Court adopted a broad view of the definition of “political subdivision” and “municipal corporation” in Labor Code section 220(b), determining that both should be interpreted broadly to include all government employers.

Finally, the court analyzed the legislative history of PAGA as well as the definitions used within the Labor Code sections applicable to PAGA and concluded that public employers are not subject to PAGA and as such, no penalties may be pursued against public employers under PAGA. Justice Corrigan wrote that “[w]hile subjecting public entities to civil penalties might serve PAGA’s goal of augmenting the LWDA’s enforcement of the Labor Code, the result would simply rob Peter to pay Paul. Even though 75 percent of penalties recovered would go to the LWDA for its enforcement efforts, those penalties would be paid from the coffers of other taxpayer funded public institutions.” Justice Corrigan further noted that, “[i]f the Legislature intends otherwise, it is of course free to amend the relevant statutes or pass new legislation to provide for a different result.”

Make sure to contact your district legal counsel with any questions about compliance with relevant labor laws. For questions about this article, please contact CSDA Chief Counsel Mustafa Hessabi at mustafah@csda.net.