The Regents Of The University Of California Are Not Subject To State Minimum Wage Laws; The Regents’ Timekeeping Procedures Are Matters Of Internal Affairs Of The University That Do Not Come Within Any Of The Exceptions To The Regents’ Constitutional Immunity

CATEGORY: Public Education Matters
CLIENT TYPE: Public Education
DATE: Jun 02, 2021

Guivini Gomez worked for the Regents of the University of California as an hourly-paid, non-exempt employee at the University of California, San Diego Medical Center. The Regents utilized “a uniform company policy and practice” to pay employees. Two facets of this practice included rounding the actual time worked (“usually down”) and automatically deducting a 30-minute meal period regardless of whether an employee was actually offered or took a meal period.

After leaving her employment, Gomez brought a class-action lawsuit against the Regents and alleged they engaged in payment policies that resulted in nonexempt employees receiving less than minimum wage for the hours worked. Gomez alleged the Regents owed the unpaid balance of the full amount of the unpaid minimum wages owed, and she sought civil penalties under the Private Attorneys General Act (PAGA) for the Regents’ violation.

The Regents objected to the complaint and argued it was exempt from statutes and regulations that govern wages and benefits of public employees. The Regents further argued Gomez’s claim under PAGA was barred because: (1) it was derivative of the minimum wages claim; (2) the Labor Code only applied to employees in the private sector unless the provision specifically stated it applied to public employees; and (3) the Regents were exempt from this provision of the Labor Code.

Gomez opposed the Regents’ objection and argued minimum wage laws apply to all workers employed in California. Gomez also argued that PAGA applied to the Regents, and the Regents were not exempt from civil penalties.

The trial court found in favor of the Regents on the first claim and found the Regents were exempt from PAGA, which defeated Gomez’s second claim. Gomez appealed the judgment.

On appeal, Gomez argued that Wage Order No. 4-2001 (Wage Order No. 4) from the Industrial Welfare Commission applied to the Regents. Wage Order No. 4 governs wages, hours, and working conditions in professional, technical, clerical, mechanical, and similar occupations and requires employers to pay their employees at no less than a designated hourly rate “for all hours worked.” The Regents argued this wage order did not apply.

The Court of Appeal noted that the California Constitution established the Regents as a “public trust,” and the Legislature may regulate the Regents’ conduct in only limited circumstances. Furthermore, the Court of Appeal noted that courts have consistently held the Regents are exempt from statutes regulating the wages and benefits of employees and other workers, including those pertaining to prevailing wages and overtime pay on the ground those matters are internal affairs of the university that do not come within any of the areas the Legislature may regulate.

The Regents argued that Wage Order No. 4 does not apply to them because the section on minimum wage only applied to the state and the state’s political subdivisions, which, it argued, did not include the Regents. The Regents also argued that the definition of employer in Labor Code Section 1182.12, which set forth the actual minimum wage required under state law, did not explicitly refer to the Regents, but did provide: “For purposes of this subdivision, ‘employer’ includes the state, political subdivisions of the state, and municipalities.” Accordingly, the Regents argued because they are not specifically named in the statute nor identified in Wage Order No. 4, they are not subject to the minimum wage laws identified by Gomez.

However, the Court of Appeal found Labor Code Section 1182.12 did not definitively address whether the Regents were a political subdivision of California for purposes of Wage Order No. 4.

Ultimately, the Court of Appeal held, consistent with another case, that the University of California is not a political subdivision, which made the Regents a public corporation that administers that trust. Therefore, neither the Regents or the University of California could be considered a “political subdivision” to which Wage Order No. 4 applied to set the minimum wage at the University of California.

Furthermore, the Court of Appeal found that Gomez did not allege the Regents set her hourly pay below the minimum wage. Instead, she challenged certain time-keeping procedures the Regents employed. In light of California courts’ consistent deference to the Regents regarding the setting of wages and benefits for employees, the Court of Appeal concluded the trial court did not err in finding in favor of the Regents on the first cause of action. The Regents’ time-keeping procedures are matters of internal affairs of the university that do not come within any of the exceptions to the Regents’ constitutional immunity.

Finally, because Gomez’s claim under PAGA was derivative of her first cause of action, and the Court did not find that the Regents violated any labor laws in the first cause of action, Gomez’s PAGA action also failed.

Gomez v. Regents of Univ. of California (2021) 63 Cal.App.5th 386.

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