California public agencies have long operated in a legal gray zone when it comes to the application of state wage and hour law. Although the California Labor Code sets out extensive obligations for employers, the law had been unsettled as to whether those obligations apply to government entities—until the California Supreme Court’s decision in Stone v. Alameda Health System last August.
In Stone, the court clarified that Labor Code provisions only apply to public agencies if the statutory language expressly includes them. The court also held that Labor Code PAGA claims don’t apply to public agencies. The Stone decision is welcome relief from the previously unsettled legal landscape and has already been used by the courts to reject Labor Code lawsuits brought against public agencies.
Under the Fair Labor Standards Act, if a state wage and hour law conflicts with a provision of the FLSA, employers must follow the law more favorable to employees.
Primarily found in its Labor Code and Industrial Welfare Commission Wage Orders, California wage and hour law generally provides more favorable terms for employees than the FLSA—such as for daily overtime and double-time, meal and rest periods, and extensive penalty provisions. For this reason, most California employers focus on compliance with state, not federal, law.
But this isn’t the case for California public agency employers. Certain California wage and hour laws expressly exclude public agencies from coverage....
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