We recently analyzed the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903, and its potential effect on public employers.1 In Dynamex, the Court held that employers must meet the various minimum wage, overtime, and meal and rest break requirements in the occupational wage orders adopted by the California Industrial Welfare Commission for every worker – even those classified as independent contractors – unless the employer satisfies the three-part “ABC test.”2
Following Dynamex, we urged public employers to review their worker classification decisions under the new test the California Supreme Court announced for determining independent contractor status under the wage orders because although public employers are exempt from most wage order requirements, they are subject to the wage orders’ meal and rest break requirements for certain commercial drivers, and all wage order requirements for certain household and agricultural workers.3 We also explained that “although charter cities and all counties may have a good basis to argue that they are exempt from the wage orders under the home rule doctrine, courts have reached different results on this issue depending on the duties of the workers at issue.”4
The Court of Appeal has since addressed that issue in Marquez v. City of Long Beach (2019) 32 Cal.App.5th 552, holding that charter cities may not invoke the home rule doctrine to avoid the minimum wage obligations of the wage orders. Although the Marquez decision analyzed the applicability of state minimum wage requirements to a charter city, its analysis may extend to the parallel constitutional provisions granting charter counties and general law counties home rule authority over employee compensation.5 In light of Marquez, we recommend that charter cities, charter counties, and general law counties – as well as all other public employers in California– review their employee salary schedules to ensure compliance with state minimum wage requirements.
II. The Marquez Decision
In Marquez v. City of Long Beach, a putative class of City of Long Beach workers alleged that the City had violated the Labor Code and state wage orders by failing to pay workers employed as pages and recreation leader specialists wages at or above the statewide minimum wage.6 Long Beach, a charter city, demurred to the complaint, arguing that it had authority to determine the compensation of its employees under the “home rule doctrine” embodied in article XI, section 5 of the California Constitution.7 That provision provides that charter cities have “plenary authority” with regard to “the compensation, method of appointment, qualifications, tenure of office and removal of such deputies, clerks and other employees” and that city charters “with respect to municipal affairs shall supersede all laws inconsistent.”8
The Court of Appeal disagreed, holding that the home rule doctrine does not exempt charter cities from state minimum wage requirements because “the minimum wage law addresses a statewide concern that justifies the state’s interference in what would otherwise be a merely local affair.”9
The Court of Appeal acknowledged that “article XI, section 5, of the state Constitution limits the Legislature’s authority to determine the wages of charter city employees, to cap those wages, and to outsource to a third party the authority to determine employee wages.”10 It also reaffirmed two other decisions from the Court of Appeal exempting charter counties from “state labor laws governing overtime pay and meal and rest periods” based on the home rule doctrine: (1) Curcini v. County of Alameda (2008) 164 Cal.App.4th 629, which held that prison chaplains for charter county were not entitled to monetary compensation for working through meal and rest breaks under state wage orders and Labor Code; and (2) Dimon v. County of Los Angeles (2008) 166 Cal.App.4th 1276, which held that a deputy probation officer for a charter county was not entitled to premium pay for missed meal periods under state wage orders and Labor Code.11
But the Court of Appeal explained that Curcini and Dimon did not resolve the applicability of the home rule doctrine to statewide minimum wage requirements because they did not “consider the statewide interest in a living wage addressed by the state minimum wage law.”12 In the Court of Appeal’s view, the “minimum wage requirement . . . intrudes less on local authority” than state laws governing overtime pay and meal and rest periods because it merely “sets a floor based on the Legislature’s judgment as to the minimum income necessary for a living wage within this state” and charter cities “retain authority to provide wages for [their] employees above that minimum as [they] see fit.”13
The Court of Appeal also rejected the City’s argument that applying the state minimum wage requirement to its pages and recreation leader specialists would unconstitutionally impair the memorandum of understanding (“MOU”) between the city and its employees setting wages at less than the state minimum wage.14 The court explained that “[w]hen the relevant MOU was enacted by resolution of the City Council in September 2015, the statute setting the minimum wage at $10.00 per hour effective January 1, 2016 had already been enacted by the Legislature two years earlier” in 2013.15 As a result, “the legislation could not impair the contract because at the time of the legislation’s enactment the contract had not been entered into by the parties.”16 Although public agencies with contracts in place that complied with all minimum wage requirements enacted by the state at the time the contracts took effect may seek to distinguish their contracts from the MOU in Marquez, the Court of Appeal cast doubt on the viability of this argument, explaining in dicta that the plaintiffs “are entitled to be paid at or above the minimum wage regardless of any agreement to work for less, because their right to the minimum wage cannot be waived by contract.”17
III. Like all other California Public Agencies, Charter Cities, Charter Counties, and General Law Counties Statewide Should Ensure That They Are Meeting State Minimum Wage Requirements
The Court of Appeal’s decision in Marquez confirms that while the home rule doctrine may exempt charter cities, charter counties, and general law counties from complying with the overtime pay and meal and rest period requirements set forth in state wage orders,18 the home rule doctrine does not exempt charter cities – nor likely charter and general law counties – from the wage order’s minimum wage requirements. Accordingly, we recommend that charter cities, charter counties, and general law counties – along with all other California public agencies –review their employee salary schedules to ensure that all public employees are paid at or above the statewide minimum wage.