On August 15, 2024, the California Supreme Court issued its opinion in Stone v. Alameda Health System and clarified that public employers are generally exempt from most provisions of the Labor Code unless the California Legislature clearly indicates otherwise. Key to the dispute in Stone was how courts should read and interpret statutes in the Labor Code that include the term “employer” but do not provide a definition for that term. Based on longstanding legal principles and what could be derived of Legislative intent when passing Labor Code provisions, in Stone the California Supreme Court found that “employer” does not include the government unless there is an indication that the legislature intended to do so. (Stone’s specific holdings were that California meal and rest break laws and Labor Code “Private Attorneys General Act” (PAGA) penalties do not apply to public agencies.)
What makes Stone impactful and far-reaching is the fact that the reasoning and holding is widely applicable to other Labor Code provisions that contain the word “employer” but fail to define it. Maybe it goes without saying, but the term “employer” frequently appears in the Labor Code—though ChatGPT could not provide an exact count due to the resources required to conduct a thorough search, it estimates somewhere between 900 to 1,200 sections of the Labor Code contain “employer” at least once. For each of those instances, Stone emphasized the possibility that it does not apply to “the government as an employer.”
Now, nearly a year after Stone, at least 10 published court opinions have either relied upon or cited to Stone. Because the Courts and Legislature have had time to react and follow Stone’s guidance, it feels like a good time to recap what has happened since Stone and revisit notable sections of the Labor Code that do not expressly include “the government as an employer.”
Of the 10 published court opinions that reference Stone, four rely upon it to hold that certain statutes do not apply to public entities.
A. Reimbursements — Labor Code § 2802
The most important of these decisions is likely Krug v. Board of Trustees of the California State University (2025) 110 Cal.App.5th 234, where a professor sued California State University (CSU) under Labor Code section 2802 for reimbursement of work-related expenses, including among other things electricity charges, postage, office supplies, and computer monitors, after being directed to teach remotely due to the COVID-19 pandemic. Labor Code section 2802 mandates that “employers” reimburse employees for necessary business expenses “in direct consequence” of performing duties or of “obedience to the directions of the employer,” and the professor argued that such basic expenses were necessary to perform his work. Pointing to Stone, Krug applied the rule that the absence of express inclusion of, or any legislative intent indicating application of section 2802 to, public entities, signals the exclusion of public entities from the statute’s reach. It thereby found that mandatory reimbursement requirements under section 2802 do not apply to public employers.
B. Failure to Pay Wages Agreed to in Collective Bargaining — Labor Code § 222
In Bath v. State of California (2024) 105 Cal.App.5th 1184, dental workers employed within a state prison sued the State of California for pre- and post-shift safety and security activities, alleging the State failed to pay them California minimum and overtime wages, in violation of contract and law, and failed to pay wages agreed to through collective bargaining pursuant to Labor Code section 222. In assessing Labor Code section 222, the Court found that the statute did not apply to the State because it did not specifically state that it applied to government agencies or public employers.
C. Non-Labor Code Analysis
In Ryan v. County of Los Angeles (2025) 109 Cal.App.5th 337, a California appellate court considered the claims of a surgeon who has been employed by the County of Los Angeles. After the resolution through motion practice of the surgeon’s claims for violation of whistleblower retaliation laws, including laws found within the Health and Safety Code (§ 1278.5) and the California False Claims Act (Government Code § 12653), and after a jury trial, both sides appealed. Relying on Stone, the court found that the County was not subject to suit for whistleblower retaliation under the California False Claims Act (Government Code § 12653) but was subject to whistleblower retaliation under Health and Safety Code section 1278.5. The key distinction between the two statutes considered? The Health and Safety Code explicitly brought some public health facilities within its scope and prohibited retaliation there; the California False Claims Act did not bring the government within its scope. The Ryan court noted that including some public health facilities within the statute’s scope indicated the California Legislature’s intent to make retaliation claims viable against government entities. The court also looked to the legislative history behind the statute’s adoption, which noted potential costs to state and public hospitals.
D. Wage Withholding and Overtime — Labor Code §§ 225.5 and 515
The fourth case, Larocque v. City of Los Angeles (C.D. Cal. 2024) 760 F.Supp.3d 1007, found that, in the absence of affirmative statements that Labor Code sections 225.5 (wage withholding penalties) and 515 (overtime) apply to the government, such claims could not be brought against the government. (Our firm represented the City in this matter.) The case is decided by a federal district court and not a state court of appeal, and thus does not set binding precedent in California for either federal or state courts. Thus, public employers cannot rely on it with any certainty as to what the law is. But Larocque’s holding is a good barometer of which way the law is heading, and provides potentially persuasive authority for California courts to follow in future cases.
Though Courts have not weighed in on any additional Labor Code provisions after Stone except for those discussed above, there are a few that we will be tracking because of their possibility to cause litigation.
A. Social Media and Labor Code § 980
One potential flashpoint is Labor Code section 980, which governs employer requests for employee and applicant social media information. Though section 980 does not explicitly state that it applies to public employers, the California Legislature considered an amendment that would have included public entities within the statute’s scope. That attempt to amend eventually faded at some point in 2014 and resulted in no change to section 980. But the consideration of an amendment to specifically make it apply to government entities could impact a future court’s analysis. Post-Stone, it seems that the failed amendment, coupled with the lack of express language in the statute to indicate it applies to public employers, makes for a strong argument that Labor Code section 980 does not apply to public employers. Employers will need to await binding California case precedent to be sure, however.
B. Vested Vacation Time and Labor Code § 227.3
Another portion of the Labor Code to watch is section 227.3, which mandates payout for accrued, unused vacation upon separation unless otherwise provided by a collective bargaining agreement. Like the Labor Code sections discussed above, section 227.3 lacks any explicit inclusion of public employers in its language. Pursuant to Stone, unless the Legislature amends the statute, or any relevant legislative history shows that the California Legislature intended to include public entities within its purview, Labor Code section 227.3 also seems like a candidate for a judicial determination that it does not apply to public employers.
Stone v. Alameda Health System represented a renewed proclamation of the California courts that, insofar as the Labor Code is concerned, government employers fall outside the traditional understanding of “employer” if the statute does not expressly state that it applies to the government and there is a lack of demonstrated intent from the Legislature to make it applicable to the government. As time continues to pass after Stone, we expect to see additional Labor Code statutes scrutinized for their applicability to public entities.
Common understanding likely draws most from the concept that an “employer” is a business or individual that employs others regardless of what sort of work is performed. So it comes as a surprise that the government, which has some of the largest employee pools within the state, is not automatically considered to be an “employer.” But California has a longstanding principle drawn from England’s common law, which formed the foundation of America’s system of law, that “the general words of a statute ought not to include the government, or affect its rights, unless that construction be clear and indisputable upon the text of the act.” See Mayrhofer v. Board of Education (1891) 89 Cal. 110, 112.
Accordingly, “employer” does not mean “the government as an employer” unless it explicitly says so or there is some other indication that the California Legislature intended “employer” to extend to the government. In effect, this centuries old principle led to the unanimous 7‑0 decision of Stone that hospital authorities and other public entities are not subject to California’s general meal and rest‑break requirements (Labor Code §§ 226.7, 512), timely payment of wages provision (§ 220(b)), or PAGA suits for civil penalties (§ 2699), because the Legislature did not include “the government as an employer” within the definition of “employer” for those laws.