In August 2024, the California Supreme Court decided Stone v. Alameda Health System, which clarified that the meal and rest break requirements of the California Labor Code at sections 226.7 and 512 and other Labor Code provisions do not apply to public employers. The Court also held that the California Private Attorneys General Act (PAGA) penalty provisions do not apply to public employers. The decision also clarified that the definition of “municipal corporation” is broad for the purpose of determining what types of public entities are exempt from certain wage payment laws under section 220(b) of the California Labor Code.

Background of the Case

In Stone, employees of Alameda Health System (AHS) field a lawsuit on behalf of themselves and others alleging that AHS: (1) failed to provide off-duty meal periods, (2) failed to provide off-duty rest periods, (3) failed to keep accurate payroll records, (4) failed to provide accurate itemized wage statements, (5) failed to pay wages, (6) failed to pay wages timely, and (7) owed civil penalties under PAGA. AHS argued that, as a public entity, it was exempt from these provisions of the Labor Code. The trial court initially sided with AHS, ruling that public agencies were not subject to wage and hour claims under the Labor Code unless the statute expressly stated it applied to them. However, the Court of Appeal overturned this decision, allowing many employees’ claims to proceed.

Public Agency Obligations under the California Labor...

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