California Supreme Court Exempts Public Employers from PAGA Claims on Wage and Break Laws

In a significant ruling, the California Supreme Court determined that public employers, including hospital authorities, are exempt from civil penalties under the Private Attorneys General Act (PAGA). The case, Stone v. Alameda Health System, involved public employees filing wage and hour claims for missed meal and rest breaks. The court held that public employers, unless explicitly included in the labor code provisions, are not subject to meal and rest break requirements under Labor Code sections 226 and 512. It also clarified that the definition of "municipal corporation" under Labor Code section 220(b) encompasses all public employers, including entities like Alameda Health System. This ruling overturns previous appellate decisions and reinforces the notion that public entities are not bound by PAGA penalties unless otherwise specified by law.

The court emphasized that applying PAGA to public employers would impose undue financial burdens on taxpayers. The decision serves as a crucial reminder that public entities remain largely exempt from California’s labor laws unless expressly mentioned. This ruling solidifies the legal protections for public employers from PAGA claims and other related labor code violations.