In another clarifying ruling from the California Supreme Court, the Court answered the question as to whether public entities, including public agency hospitals and health care facilities, are exempt from lawsuits for California Labor Code violations and whether Private Attorneys General Act (PAGA) penalties apply to those public entities. In Stone v. Alameda Health System (AHS), a unanimous Court determined that state lawmakers intended to exclude public employers from liability for labor code violations, including violations for meal and rest breaks, as well as the PAGA civil penalties available for violations of the statutes.
The case was brought by a medical assistant and a licensed vocational nurse, both of whom worked at Highland Hospital, a facility operated by Alameda Health System. The wage and hour claims alleged multiple class action claims for violations of numerous labor codes and industrial wage orders. The nature of the complaint concerns accusations that the hospital either failed to provide or discouraged the workers from taking mandatory meal and rest breaks in violation of California law.
Defendant Alameda Health System filed a motion in the trial court arguing that public entities are immune from liability for the labor code violations asserted. The trial court agreed, granting the motion without leave to amend the complaint, essentially dismissing the case. Plaintiffs appealed the decision to the Court of Appeal and applying somewhat convoluted reasoning, reversed in part by concluding that there was no legislative intent to exclude public entities, similar to AHS, from the meal and rest break requirements.
In a thorough analysis of what establishes a public entity and then whether or not the legislature intended on exempting public entities from certain Labor Code requirements, the California Supreme Court has apparently put this issue to rest. Public entities, including public hospital systems cannot be held liable for labor code violations, including meal and rest breaks.
In terms of PAGA claims against public entities, the Court stated that public entities are exempt from PAGA — since the underlying claim giving rise to statutory penalties was invalid, there are no “aggrieved employees” to pursue the penalties available under the PAGA statute. The case was sent back to the Court of Appeals to reinstate the trial court ruling.
Meal and rest period compliance is highly regulated in California and frequently litigated. Employers Council’s California Legal Services team can assist with policy development and compliance on this and other employment law issues in California that affect our members. If you have any questions about this or any other California wage and hour issue, please contact our team at cainfo@employerscouncil.org
Mary Miller is an attorney for Employers Council.