State and local governments are subject to federal overtime laws. However, questions persist about whether various provisions of the California Labor Code apply to state and local public agencies. This debate is significant because, among other things, some provisions of state wage and hour laws and the regulations issued under the laws are broader than federal law.
The following case is another in a series of cases in which employees have asserted that public agencies in California are subject to state wage and hour laws. As a general matter, it’s established that they are not, but cases continue to arise because the California Labor Code itself isn’t clear on the subject. In this case, the regents of the University of California successfully asserted that they are constitutionally immune to state wage and hour legislation.
Michael Goldbaum is a professor of ophthalmology at the University of California San Diego (UCSD). He began working for UCSD in 1977, and in 1979, he received tenure.
In 2008, Goldbaum sued the school for breach of contract. He alleged that he should have been allowed to participate in the University of California Retirement Plan (UCRP) and that UCSD failed to report him as a participating employee from 1979 to 1992. He sought a judicial determination that he was eligible for pension benefits covering that period. The parties eventually settled the matter out of court, with the regents agreeing to consider him eligible during that period of time. Goldbaum then asked for attorneys’ fees and costs under California Labor Code Section 218.5.
UC regents constitutionally immune
The court analyzed whether Labor Code Section 218.5 applied to the regents. The California Constitution grants the regents broad powers with virtual autonomy in self-governance. Moreover, they have “general immunity from legislative regulation.” The California Legislature may regulate the regents’ conduct in three areas:
(1) It may prevent them from compelling appropriations for salaries.
(2) General police power regulations applying to private persons and corporations may be applied to the university.
(3) Regulations applying to public agencies may be applied to the university when the legislation regulates a matter of statewide concern and doesn’t involve internal university affairs.
Matters related to wages and benefits are internal affairs of the university and aren’t subject to any of the exceptions to the regents’ constitutional immunity from state regulation. The court found that the determination of employee compensation and benefits is particularly a matter within the regents’ broad constitutional grant of authority to manage internal affairs. The court found that nothing in the wording of Section 218.5 suggests that it should trump the regents’ immunity.
The court concluded that “because the underlying action giving rise to attorney fees under California Labor Code Section 218.5 concerns wages and benefits, matters of the University’s internal affairs arising from the employer-employee relationship, whether to pay an opposing party’s fees in such action is also within the Regents’ broad constitutional grant of authority to manage its own internal affairs.” Goldbaum v. Regents of the University of California (California Court of Appeal, Fourth Appellate District, 1/6/11).
More confusion in wage and hour laws wastes public money
It’s a sad truth that public agencies have spent literally billions of taxpayer dollars litigating and settling wage and hour suits because both state and federal wage and hour laws are antiquated and weren’t updated when they were first applied to public agencies. Many of the rules and definitions in federal law and related U.S. Department of Labor (DOL) regulations simply don’t take into account the differences between practices that are necessary to ensure public accountability in public employment and longstanding private-sector practices that wouldn’t withstand public scrutiny.
Realistically, no one argues that public employers should be immune from all overtime regulation, but it’s time that both the DOL and the state legislature clarify the rules. In the case of state law, as this court recognized, state wage and hour laws generally don’t apply to public agencies. It’s time for the legislature to amend the California Labor Code to put a stop to wasteful litigation exploiting alleged ambiguities.
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