Stoetzl v. Dept. of Human Resources , 248 Cal. Rptr. 3d 891 ( 2019 )

IN THE SUPREME COURT OF
CALIFORNIA
KURT STOETZL et al.,
Plaintiffs and Appellants,
v.
DEPARTMENT OF HUMAN RESOURCES et al.,
Defendants and Respondents.
S244751
First Appellate District, Division Four
A142832
San Francisco City and County Superior Court
CJC11004661
July 1, 2019
Justice Chin authored the opinion of the Court, in which Chief
Justice Cantil-Sakauye and Justices Corrigan, Kruger, and
Groban concurred.
Justice Liu filed a concurring and dissenting opinion in which
Justice Cuéllar concurred.
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
S244751
Opinion of the Court by Chin, J.
In this case, we decide whether a certified class of state
correctional employees is entitled to additional compensation for
time spent on pre- and postwork activities, including traveling
from the outermost gate of the prison facility to their work posts
within the facility, traveling back from their work posts to the
outermost gate, being briefed before the start of a shift, briefing
relief staff at the end of a shift, checking out and checking back
in mandated safety equipment, putting on and removing such
equipment, and submitting to searches at various security
checkpoints within the facility. For convenience, we will refer
to the time spent doing these pre- and postwork activities as
“walk time” although we recognize that walk time includes
many activities besides merely walking to and from a work post.
There are two types of walk time that are relevant here. The
first is the time a correctional employee spends after arriving at
a prison’s outermost gate but before beginning the first activity
the employee is employed to perform (plus analogous time at the
end of the employee’s work shift). We will call this type of walk
time “entry-exit walk time.” The second is the time a
correctional employee spends after beginning the first activity
the employee is employed to perform but before the employee
arrives at his or her assigned work post (plus analogous time at
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Opinion of the Court by Chin, J.
the end of the employee’s work shift). We will call this type of
walk time “duty-integrated walk time.”1
The trial court divided the plaintiff class into two
subclasses, one for supervisory employees who were not
represented by a union during the time period set forth in the
class certification and the other for represented employees. We
conclude that the subclass of represented plaintiffs expressly
agreed, by way of the collective bargaining process, to a specific
amount of compensation for duty-integrated walk time, and
there is no allegation that the state failed to pay the agreed-
upon amount. Moreover, the collective bargaining agreements
that memorialized this agreement all provided that they
constituted the entire understanding of the parties concerning
matters contained therein, and thus they precluded other forms
of compensation, such as compensation for entry-exit walk time.
These agreements were approved by the Legislature, and each
approval was signed by the Governor and chaptered into law,
thus becoming specific legislation applicable to the represented
plaintiffs and superseding more general laws to the extent of
any conflict. Therefore, the represented plaintiffs’ claims fail
insofar as they seek additional compensation for either duty-
integrated walk time or entry-exit walk time.
As to the subclass of unrepresented plaintiffs, we conclude
that they may be entitled to additional compensation for duty-
1
As will be seen, the relevance of these two types of walk
time turns on the definition of compensable work that applies
under the federal Fair Labor Standards Act of 1938 (FLSA) (29
U.S.C. § 201 et seq.) as amended by the Portal-to-Portal Act of
1947 (Portal-to-Portal Act) (29 U.S.C. § 252 et seq.). Our
definitions are designed to reflect the distinction drawn by the
Portal-to-Portal Act.
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Opinion of the Court by Chin, J.
integrated walk time. The terms and conditions that govern the
employment of the unrepresented plaintiffs are determined by
the Department of Human Resources (CalHR) and set forth in a
manual known as the Pay Scale Manual and also in CalHR’s
regulations. The Pay Scale Manual defines compensable work
time for purposes of calculating an employee’s right to regular
and overtime compensation, and duty-integrated walk time falls
squarely within that definition. If, as is alleged, the state did
not take duty-integrated walk time into consideration when
calculating the compensation owed to the unrepresented
plaintiffs, then those plaintiffs may be entitled to additional pay.
Entry-exit walk time, by contrast, does not fall within the
Pay Scale Manual’s definition of compensable work time.
Moreover, because the Pay Scale Manual comprehensively
addresses the question of compensation for the unrepresented
plaintiffs, it precludes compensation for any work time that falls
outside the scope of its definition. Therefore, insofar as the
unrepresented plaintiffs are seeking compensation for entry-
exit walk time, their claims must be rejected.
The Court of Appeal reached somewhat different
conclusions, and therefore we reverse its judgment.
I. FACTS AND PROCEDURAL BACKGROUND
A. Pretrial Proceedings
This matter arises from the coordination (see Code Civ.
Proc., § 404 et seq.; Cal. Rules of Court, rule 3.501 et seq.) and
joint disposition of three class-action complaints. The named
defendants are the State of California and various departments
of the state government. In each of the operative complaints,
plaintiffs allege causes of action for (1) failure to pay contractual
overtime in violation of Labor Code sections 222 and 223; (2)
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STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
failure to pay the minimum wage in violation of Labor Code
sections 1182.11, 1182.12, and 1194, and in violation of the
applicable wage orders (Cal. Code Regs., tit. 8, § 11000 et seq.);
(3) failure to keep accurate records of hours worked in violation
of Labor Code section 1174; and (4) failure to pay contractual
overtime in breach of common law contractual obligations. The
gist of all these claims is that the state did not adequately
compensate plaintiffs for walk time. Plaintiffs seek relief in the
form of unpaid overtime compensation, unpaid California
minimum-wage compensation, liquidated damages, injunctive
relief, and attorneys’ fees.
The trial court granted class certification in all three
actions, and it certified two plaintiff subclasses, one comprising
unrepresented supervisory employees and the other comprising
represented employees. Defendants then moved for judgment
on the pleadings, which the trial court granted as to the causes
of action for failure to pay contractual overtime in violation of
Labor Code sections 222 and 223, and for failure to keep
accurate records of hours worked in violation of Labor Code
section 1174. The trial court ruled that Labor Code sections 222,
223, and 1174 are inapplicable to the state government. As to
plaintiffs’ other two causes of action, the trial court denied
defendants’ motion.
The matter then proceeded to trial, but the parties
stipulated that the trial could proceed in multiple phases. In
the first phase, several threshold questions were tried to the
court. A brief overview of two regulatory schemes is helpful to
understand the threshold questions tried at the first phase.
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Opinion of the Court by Chin, J.
B. Regulatory Background
1. Wage Order No. 4
The Industrial Welfare Commission (IWC) was created in
1913 with express authority to adopt regulations — called wage
orders — governing wages, hours, and working conditions in the
state of California. (Stats. 1913, ch. 324, § 6, pp. 634–635; see
Martinez v. Combs (2010) 49 Cal. 4th 35, 52–57 (Martinez)
[describing the creation and role of the IWC].)2 These wage
orders, being the product of quasi-legislative rulemaking under
a broad delegation of legislative power, are entitled to great
deference, and they have the dignity and force of statutory law.
(Brinker Restaurant Corp. v. Supreme Court (2012) 53 Cal. 4th
1004, 1027 (Brinker); see Martinez, at p. 61.) Our past cases
have used the term “extraordinary” to describe this deference
(Martinez, at p. 61), noting in this context that the Legislature’s
authority to delegate its legislative power to the IWC is
expressly recognized in the state’s Constitution (Martinez, at pp.
60–61). It remains true, of course, that the Legislature can
enact statutes that supersede the wage orders — as occurred in
the case of the Eight-Hour-Day Restoration and Workplace
Flexibility Act of 1999 (Stats. 1999, ch. 134, pp. 1820–1830) —
but courts must seek to harmonize IWC wage orders with
statutes to the extent possible (Brinker, at p. 1027).
IWC wage order No. 4-2001, which is at issue here,
governs wages, hours, and working conditions in professional,
2
The IWC’s wage orders originally protected only women
and children, but since the 1970’s, they have applied to all
California employees. (See Stats. 1973, ch. 1007, § 8, p. 2004;
Stats. 1972, ch. 1122, § 13, p. 2156; see generally Industrial
Welfare Com. v. Superior Court (1980) 27 Cal. 3d 690, 700–701.)
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Opinion of the Court by Chin, J.
technical, clerical, mechanical, and similar occupations. (IWC
wage order No. 4-2001 (Wage Order No. 4); see Cal. Code Regs.,
tit. 8, § 11040.) Wage Order No. 4 includes a minimum wage
section, which requires employers to pay their employees at not
less than a designated hourly rate “for all hours worked” (Wage
Order No. 4, § 4(A)(1)), and an overtime section, which defines
regular hours and requires employers to pay their employees at
an appropriate multiplier of their regular rate “for all hours
worked” in excess of those regular hours (Wage Order No. 4,
§ 3(A)(1)).
Both the minimum wage and the overtime sections of
Wage Order No. 4 refer to “all hours worked,” which the wage
order defines as “the time during which an employee is subject
to the control of an employer, and includes all the time the
employee is suffered or permitted to work, whether or not
required to do so.” (Wage Order No. 4, § 2(K), italics added.)
The parties refer to this definition of compensable work time as
the “control standard.” Under applicable case law, an argument
can be made that both types of walk time at issue in this case
fall within this definition. (See Morillion v. Royal Packing Co.
(2000) 22 Cal. 4th 575, 587–588 [holding that compulsory travel
time on an employer’s buses, to and from agricultural fields, is
compensable under the wage order “hours worked” definition,
because the employees are subject to employer “control”]
(Morillion).)
By reason of a 2001 amendment, Wage Order No. 4 applies
to employees of the state government, but only in part. Before
the 2001 amendment, former section 1(B) of the wage order
stated: “The provisions of this Order shall not apply to
employees directly employed by the State . . . .” (IWC wage
order No. 4-2000, § 1(B).) As a result of the 2001 amendment,
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STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
section 1(B) now states: “Except as provided in Sections 1, 2, 4,
10, and 20, the provisions of this order shall not apply to any
employees directly employed by the State . . . .” (Wage Order
No. 4, § 1(B), italics added.) Thus, only sections 1, 2, 4, 10, and
20 of Wage Order No. 4 govern state employment.3 (See
Sheppard v. North Orange County Regional Occupational
Program (2010) 191 Cal. App. 4th 289, 300–301 (Sheppard).) The
sections that are most relevant here are section 2, which is the
“Definitions” section (and which includes the definition of
“[h]ours worked”), and section 4, which is the “Minimum Wages”
section. Significantly, section 3 — which is the section of Wage
Order No. 4 that guarantees overtime pay — is not among the
excepted sections listed in the opening clause of section 1(B) of
the wage order, and therefore section 3’s overtime guarantee is
not applicable to state government employees.
In summary, Wage Order No. 4’s “Definitions” and
“Minimum Wages” sections expressly apply to rank-and-file
employees of the state government, and Morillion, supra, 22
Cal. 4th 575, supports an argument that both types of walk time
at issue in this case fall within Wage Order No. 4’s definition of
“[h]ours worked,” a definition that focuses on “control.”
2. The Pay Scale Manual
“Under the California Constitution it is the Legislature,
rather than the Governor, that generally possesses the ultimate
authority to establish or revise the terms and conditions of state
employment through legislative enactments, and . . . any
authority that the Governor or an executive branch entity . . . is
3
Sections 4 and 10 do not apply to administrative,
executive, or professional employees of the state government.
(Wage Order No. 4, § 1(A).)
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STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
entitled to exercise in this area emanates from the Legislature’s
delegation of a portion of its legislative authority to such
executive officials or entities through statutory enactments.”
(Professional Engineers in California Government v.
Schwarzenegger (2010) 50 Cal. 4th 989, 1015 (Professional
Engineers), second italics added; see Pacific Legal Foundation v.
Brown (1981) 29 Cal. 3d 168, 188.) The Legislature has
delegated to CalHR express authority to adopt regulations
governing the terms and conditions of state employment,
including setting the salaries of state workers (Gov. Code,
§ 19826) and defining their overtime (id., §§ 19843, 19844,
19845, 19849). Under this delegated legislative authority,
CalHR has adopted the Pay Scale Manual, setting forth salary
ranges for thousands of job classifications and establishing
“work week groups” for purposes of regulating overtime. (See
CalHR, California State Civil Service Pay Scales — Online
Manual (54th Edition) (2019) [as of June 27, 2019] (the
Pay Scale Manual, or the Manual).)4
The wages and hours of workers in California, including
state government workers, are also governed by federal law,
4
Section 10 of the Manual, entitled “Work Week Groups,”
is the section most relevant to this opinion. Section 10 is located
at
[as of June 27, 2019] (Section 10). All Internet citations in
this opinion are archived by year, docket number, and case name
at .
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STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
specifically, the FLSA (29 U.S.C. § 201 et seq.).5 The FLSA
imposes a federal minimum wage (id., § 206) and overtime
compensation requirement (id., § 207). It generally defines
overtime as “a workweek longer than forty hours,” and it
requires payment “at a rate not less than one and one-half times
the regular rate” for such work. (Id., § 207(a)(1).) But the FLSA
includes several exemptions from its overtime requirement,
including one for the employment, by a public agency, of fire
suppression or law enforcement personnel (id., § 207(k) (section
7(k))).
The latter exemption is sometimes referred to as the
“section 7(k) exemption” because it appears in section 7(k) of the
FLSA, a provision that is codified as section 207(k) of title 29 of
the United States Code. In the case of law enforcement
personnel (a category that includes correctional employees), the
section 7(k) exemption requires that the employee receive
overtime compensation “at a rate not less than one and one-half
times the regular rate” for any work in excess of 171 hours in a
work period of 28 consecutive days (or a proportionately lesser
number of hours in a shorter work period). (29 U.S.C.
§ 207(k)(1)(B); 29 C.F.R. § 553.230(b) (2018); see Fire Protection
and Law Enforcement Employees of Public Agencies; Study of
Average Number of Hours Worked, 48 Fed. Reg. 40518–40519
(Sept. 8, 1983) [describing how the 171-hour limit was
determined].)
5
Federal law does not preempt state law in this area, and
therefore state law is controlling to the extent its protections
exceed those of federal law. (Alvarado v. Dart Container Corp.
of California (2018) 4 Cal.5th 542, 554; Morillion, supra, 22
Cal.4th at p. 592; Tidewater Marine Western, Inc. v. Bradshaw
(1996) 14 Cal. 4th 557, 566–568.)
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Opinion of the Court by Chin, J.
As already noted, employees of the state government are
not subject to Wage Order No. 4’s overtime compensation
section. (Wage Order No. 4, § 1(B).) Instead, CalHR has
authority to define overtime compensation for state government
employees (Gov. Code, §§ 19843, 19844, 19845, 19849), and
more particularly, CalHR “is authorized to provide for overtime
payments as prescribed by the [FLSA]” (id., § 19845, subd. (a),
italics added). Pursuant to that authority, Section 10 of the Pay
Scale Manual refers to “WORK WEEK GROUPS
ESTABLISHED UNDER FAIR LABOR STANDARDS ACT
(FLSA),” and directly under that heading, the Manual
establishes Work Week Group 2. Under the subheading
“Determination of Coverage under FLSA,” the Manual provides
that “[t]he provisions of Work Week Group 2 are made
applicable to all [employment] classes which are determined by
the Director of [CalHR] to include positions subject to the FLSA.”
(Italics added.) All the job classifications that are at issue in
this litigation — both those of the represented plaintiffs and
those of the unrepresented plaintiffs — are assigned to Work
Week Group 2.6
These same provisions of Section 10 of the Pay Scale
Manual also incorporate the FLSA’s definition of compensable
6
As originally certified, the plaintiff class included
employees whose job classification was “Correctional Counselor
II (Supervisor).” That job classification comes within Work
Week Group E, meaning “white-collar” employees who are not
eligible for overtime compensation and whose salary constitutes
full compensation for all hours worked. By order dated May 29,
2014, the trial court excluded “Correctional Counselor II
(Supervisor)” from the subclass of unrepresented plaintiffs, and
the plaintiffs with that job classification were dismissed from
this action.
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Opinion of the Court by Chin, J.
work time, stating that “[f]or the purpose of identifying hours
worked under the provisions of the FLSA, only the time spent
which is controlled or required by the State and pursued for the
benefit of the State need be counted.” (Italics added.) This
definition, which expressly references the FLSA, is drawn
nearly verbatim from the high court’s decision in Tennessee Coal
Co. v. Muscoda Local. (1944) 321 U.S. 590 (Tennessee Coal),
which defines FLSA-regulated work as “physical or mental
exertion (whether burdensome or not) controlled or required by
the employer and pursued necessarily and primarily for the
benefit of the employer and his business.” (Tennessee Coal, at p.
598, italics added.) Thus, it is clear that the Pay Scale Manual
intends the FLSA’s definition of compensable work time to
apply.7
7
The text of the FLSA does not, itself, define compensable
work time. Instead, the high court has done so in several
decisions interpreting the FLSA, and the high court’s definition
has since been summarized in an interpretive bulletin issued by
the United States Department of Labor. That bulletin provides
in full: “The United States Supreme Court originally stated that
employees subject to the act must be paid for all time spent in
‘physical or mental exertion (whether burdensome or not)
controlled or required by the employer and pursued necessarily
and primarily for the benefit of the employer and his business.’
(Tennessee Coal, Iron & Railroad Co. v. Muscoda Local No. 123,
321 U.S. 590 (1944)) Subsequently, the Court ruled that there
need be no exertion at all and that all hours are hours worked
which the employee is required to give his employer, that ‘an
employer, if he chooses, may hire a man to do nothing, or to do
nothing but wait for something to happen. Refraining from
other activity often is a factor of instant readiness to serve, and
idleness plays a part in all employments in a stand-by capacity.
Readiness to serve may be hired, quite as much as service itself,
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Opinion of the Court by Chin, J.
The Pay Scale Manual’s definition of compensable work
time — like that of Wage Order No. 4 — uses the word
“control[].” Nonetheless, the two definitions differ on a point
that is critical to the parties’ dispute. The Pay Scale Manual’s
definition is expressly based on the FLSA definition, and the
FLSA, by its terms, excludes entry-exit walk time from coverage.
That exclusion is a result of Congress’s enactment, in 1947, of
the Portal-to-Portal Act (29 U.S.C. § 252 et seq.). The Portal-to-
Portal Act states that, except when a contract or custom
provides otherwise, “no employer shall be subject to any liability
or punishment under the Fair Labor Standards Act of 1938 . . .
on account of the failure of such employer to pay an employee
minimum wages, or to pay an employee overtime compensation,
for or on account of any of the following activities of such
employee . . . [¶] (1) walking, riding, or traveling to and from
the actual place of performance of the principal activity or
activities which such employee is employed to perform, and [¶]
(2) activities which are preliminary to or postliminary to said
principal activity or activities, which occur either prior to the
time on any particular workday at which such employee
commences, or subsequent to the time on any particular
and time spent lying in wait for threats to the safety of the
employer’s property may be treated by the parties as a benefit
to the employer.’ (Armour & Co. v. Wantock, 323 U.S. 126
(1944); Skidmore v. Swift, 323 U.S. 134 (1944)) The workweek
ordinarily includes ‘all the time during which an employee is
necessarily required to be on the employer’s premises, on duty
or at a prescribed work place’. (Anderson v. Mt. Clemens Pottery
Co., 328 U.S. 680 (1946)) The Portal-to-Portal Act did not
change the rule except to provide an exception for preliminary
and postliminary activities. See [29 C.F.R.] § 785.34 [(2018)].”
(29 C.F.R. § 785.7 (2018).)
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Opinion of the Court by Chin, J.
workday at which he ceases, such principal activity or
activities. . . .” (Id., § 254(a), italics added.) The parties refer to
this FLSA definition of compensable work time as the “first
principal activity standard.”
Plaintiffs’ petition for review does not argue that entry-
exit walk time is compensable under the constraints the Portal-
to-Portal Act placed on the FLSA; rather, it argues that the
FLSA definition of compensable work time does not apply.
Therefore, we proceed under the assumption that under federal
law, entry-exit walk time is not compensable. (See Integrity
Staffing Solutions, Inc. v. Busk (2014) 574 U.S. ___, ___ [135
S. Ct. 513, 519] [“We hold that an activity is integral and
indispensable to the principal activities that an employee is
employed to perform — and thus compensable under the
FLSA — if it is an intrinsic element of those activities and one
with which the employee cannot dispense if he is to perform his
principal activities. Because the employees’ time spent waiting
to undergo and undergoing [the employer’s] security screenings
[when leaving work each day] does not meet these criteria, we
reverse the judgment of the Court of Appeals.” (italics added)].)
In summary, this case involves a conflict between two
regulatory schemes. Wage Order No. 4 regulates the minimum
wage the state government must pay its rank-and-file
employees, and it defines compensable work time in a broad way
that arguably includes both types of walk time at issue in this
litigation. (See Morillion, supra, 22 Cal.4th at pp. 587–588.) At
the same time, the Pay Scale Manual sets forth the regular and
overtime compensation that the state government must pay to
certain classes of its employees (including plaintiffs’ classes),
and in so doing, it expressly adopts the FLSA’s narrower
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Opinion of the Court by Chin, J.
definition of compensable work time, a definition that, by its
terms, excludes entry-exit walk time.
C. The Trial
As noted, the parties stipulated that the trial could
proceed in multiple phases. In the first phase, several threshold
questions that were potentially dispositive of plaintiffs’ claims
were tried to the court. These questions included: (1) whether
plaintiffs’ compensable work time was properly determined
according to the “control standard” (i.e., the standard that
applies under the state’s wage orders) or according to the “first
principal activity . . . standard” (i.e., the standard that applies
under the constraints the Portal-to-Portal Act placed on the
FLSA), and also whether the represented plaintiffs agreed to
application of the narrower federal standard; (2) whether the
duty to pay plaintiffs the minimum wage was properly
determined by California minimum wage law (including Wage
Order No. 4’s broad definition of compensable work time) or by
federal minimum wage law (including the FLSA’s narrower
definition of compensable work time), and also whether the
represented plaintiffs agreed to the application of federal
minimum wage law and whether any such agreement is
enforceable; and (3) whether an employee of the state can bring
a common law breach of contract claim against the state for
failure to pay overtime compensation that has been earned, and
if so, what contractually enforceable overtime policies existed.
The evidence at the first phase of the trial established the
following facts.
1. The Represented Plaintiffs
The represented plaintiffs are members of State
Bargaining Unit 6, which covers state correctional employees,
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Opinion of the Court by Chin, J.
and they are represented by the California Correctional Peace
Officers Association (CCPOA). The CCPOA and the state have
negotiated several memoranda of understanding (MOUs), but
the MOU in effect from July 1, 1998 to June 30, 1999 (the 1998–
1999 MOU) was the first to include a section 7(k) schedule.
Specifically, the 1998–1999 MOU contained a section entitled
“7k Exemption,” which provided for a work schedule of 168
hours in a recurring 28-day work period.
The “7k Exemption” section of the 1998–1999 MOU began
with an express reference to the FLSA: “CCPOA and the State
agree that the [represented plaintiffs] are working under the
provisions of Section []7k of the Fair Labor Standards Act
(FLSA) and the parties acknowledge that the employer is
declaring a specific exemption for these employees under the
provisions specified herein.” The 1998–1999 MOU then set forth
the 168-hour work schedule, and it defined overtime as time
worked in excess of that schedule. The 168 hours consisted of
160 hours of “on post” duty, four hours of “pre and post work
activities,” and four hours of “training.” Regarding the four
hours of “pre and post work activities,” the 1998–1999 MOU
stated: “CCPOA agrees that generally this is sufficient time for
all pre and post work activities during each work period, and
that the compensation allotted for these activities under this
provision is full compensation for all of these activities.”8 The
8
The trial court made a factual finding that the word
“generally” was included in this provision because the state
wanted to allow employees to apply for additional compensation
when such compensation was needed due to the “dynamic
environment” of the prison.
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1998–1999 MOU further stated: “The State and CCPOA agree
that they have made a good faith attempt to comply with all
requirements of the FLSA in negotiating this provision.”
Significantly, the phrase “pre and post work activities” as
used in the 1998–1999 MOU referred to duty-integrated walk
time, not entry-exit walk time. According to testimony from
David Gilb, the state’s chief negotiator, the state took the
position during negotiations that the phrase encompassed
activities that occurred before correctional employees arrived at
their assigned work posts and after they left those posts, but the
phrase only encompassed activities that began when an
employee first picked up his or her equipment in the central
control area of the prison facility and that ended when an
employee dropped off the same equipment at the end of his or
her shift. According to Gilb, the phrase “pre and post work
activities” did not include time spent between entering the
outermost gate of a prison facility and first picking up
equipment, or time spent leaving a facility after dropping off
equipment. The union initially sought compensation for such
time, but the state argued that entry-exit walk time was not
compensable because the parties were negotiating under the
FLSA’s section 7(k) exemption, and the FLSA — as amended by
the Portal-to-Portal Act — did not require such compensation.
As regards employees in two job classifications
(“Correctional Counselors I” and “Correctional Counselors II”),
the 1998–1999 MOU (and subsequent MOUs between the
parties) did not allocate any time for “pre and post work
activities.” The trial court made a factual finding, with respect
to those employees, that “neither the State nor [the union]
believed that these individuals engaged in any compensable
[pre- and postwork activities].”
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Rather, asserted the state, compensable work time under the
FLSA begins with the “first principal activity” that an employee
is employed to perform. The testimony of CCPOA’s chief
negotiator, Stephen Weiss, confirmed that the parties did not
consider entry-exit walk time to be compensable. He testified
that the phrase “pre and post work activities” was not
specifically defined in the MOU, “[b]ut in the conversations at
the [bargaining] table, it was picking up your keys, picking up
your tools, Mace, whatever was appropriate for the particular
post that they were working.”
During the discussions that led to the 1998–1999 MOU
there was no suggestion that state wage-and-hour protections
applied. The reason CCPOA did not make that argument was
that, at the time of the negotiations, the state statutes setting
the minimum wage and permitting private actions to enforce the
minimum wage (Lab. Code, §§ 1182.11, 1182.12, 1194, 1197)
only applied to the extent a wage order applied (see Martinez,
supra, 49 Cal.4th at pp. 56–57), and the wage order that might
apply to correctional employees — Wage Order No. 4 —
expressly exempted employees of the state government from all
its provisions. As mentioned, Wage Order No. 4 was revised in
2001, making a few of its sections, including its “Definitions”
and “Minimum Wages” sections (but not its overtime section),
applicable to state employees. (See Wage Order No. 4, § 1(B);
see also Sheppard, supra, 191 Cal.App.4th at pp. 300–301.)
The Legislature approved the 1998–1999 MOU, and this
approval was signed by the Governor and chaptered into law.
(Stats. 1998, ch. 820, § 2, p. 5135.) The next MOU, which was
in effect between the parties from July 1, 1999 to July 2, 2001,
continued the relevant provisions of the 1998–1999 MOU, and
like its predecessor, it too was approved by the Legislature by
17
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
way of a regularly enacted law. (Stats. 1999, ch. 778, § 6, subd.
(b), p. 5613.) The MOU in effect from July 1, 2001 to July 2,
2006 (the 2001–2006 MOU) provided for a schedule of only 164
hours in a 28-day work period, with this shorter schedule going
into effect on July 1, 2004. The shorter schedule was achieved
by eliminating the four hours allocated to training in the
previous MOUs. As with the previous MOUs, four hours
remained allocated to “pre and post work activities,” and the
2001–2006 MOU included the language from the previous
MOUs, stating that those four hours were “sufficient time for all
pre and post work activities during each work period” and “that
the compensation allotted for these activities under this
provision is full compensation for all of these activities.” The
2001–2006 MOU also included the language from the previous
MOUs, stating that the parties had made a good faith attempt
to comply with the FLSA. Like its predecessors, the 2001–2006
MOU was approved by the Legislature, and this approval was
signed by the Governor and chaptered into law. (Stats. 2002,
ch. 1, § 2, p. 3.)
From July 2, 2006 to September 18, 2007, the parties
negotiated unsuccessfully for a new MOU, and during that time,
CCPOA and the state continued to give effect to the provisions
of the 2001–2006 MOU. (See Gov. Code, § 3517.8, subd. (a)
[authorizing employment under the terms of an expired MOU
while negotiations are ongoing].) On September 18, 2007, the
parties reached an impasse in their negotiations, and the state
implemented the terms of its “last, best, and final offer.” (See
id., § 3517.8, subd. (b).) Except by way of budget acts
authorizing the expenditure of state funds, the terms of the
state’s “last, best, and final offer” were not approved by the
Legislature. As regards the section 7(k) schedule, however, the
18
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
“last best, and final offer” was not different from the 2001–2006
MOU.
In late 2007, the national economy went into recession,
and a steep drop in state revenues seriously impacted the state’s
budget. (See Professional Engineers, supra, 50 Cal.4th at pp.
1000–1008 [describing state’s fiscal crisis, which began in late
2007 and continued for several years thereafter].) The state and
CCPOA next entered into an MOU on May 16, 2011 (the 2011–
2013 MOU). This new MOU, like its predecessors, invoked
section 7(k) of the FLSA, and it continued the schedule of 164
hours in a recurring 28-day work period, a schedule that
expressly included four hours for “pre and post work activities.”
But, by the time of the 2011–2013 MOU, the present litigation
had begun. Therefore, the 2011–2013 MOU did not include the
language found in the earlier MOUs, stating that four hours
constituted sufficient compensation for pre- and postwork
activities. The MOU stated in a side letter that “nothing in this
MOU shall have prejudicial effect to either side’s arguments in
Stoetzl v. State of California” (referring to the present
litigation). The 2011–2013 MOU, like its predecessors, was
approved by the Legislature, and this approval was signed by
the Governor and chaptered into law. (Stats. 2011, ch. 25, § 2,
p. 684.)
2. The Unrepresented Plaintiffs
Labor relations between the state and the unrepresented
plaintiffs are governed by, among other things, the Bill of Rights
for State Excluded Employees (Gov. Code, § 3525 et seq.), which
imposes “meet and confer” obligations on the state (id., § 3533),
but which does not provide for collective bargaining through an
exclusive employee representative (id., §§ 3530, 3531).
19
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
Therefore, no MOU governs the wages and hours of the
unrepresented plaintiffs. Instead, CalHR, pursuant to its
delegated legislative authority to set wages and hours for state
workers (id., §§ 19826, 19843, 19844, 19845, 19849), has
adopted the Pay Scale Manual. As discussed, state law
expressly permits CalHR “to provide for overtime payments as
prescribed by the [FLSA]” (Gov. Code, § 19845, subd. (a)), and
Section 10 of the Pay Scale Manual does so for specified job
classifications — including all the job classifications that are the
subject of this litigation — by creating “Work Week Group 2”
under the heading “WORK WEEK GROUPS ESTABLISHED
UNDER FAIR LABOR STANDARDS ACT (FLSA).”
Section 10 of the Pay Scale Manual divides Work Week
Group 2 into three categories: (1) “employees in classes not
eligible for exemption under Section 7K of the FLSA”; (2)
“employees in law enforcement classes, for which exemption
under Section 7K of the FLSA is claimed”; and (3) “employees in
fire suppression classes, for which exemption under Section 7K
of the FLSA is claimed.” As to each of these categories, the Pay
Scale Manual adopts work schedules that derive directly from
the FLSA (see 29 U.S.C. § 207(a)(1); 29 C.F.R. § 553.230 (2018)),
thus confirming the intent of CalHR to adopt FLSA standards
for Work Week Group 2. The job classifications of the
unrepresented plaintiffs all fall within the first of the three
Work Week Group 2 categories. Therefore, although their job
classifications are included in Work Week Group 2, the
unrepresented plaintiffs are not eligible for the FLSA’s section
7(k) exemption. Rather, for them, the Pay Scale Manual defines
overtime “as all hours worked in excess of 40 hours in a period
of 168 hours or seven consecutive 24-hour periods,” which, of
20
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
course, is how the FLSA defines overtime when no special
exemption is invoked (see 29 U.S.C. § 207(a)(1)).
D. The Trial Court’s Ruling
The gist of plaintiffs’ claims is that the state did not
adequately compensate them for walk time. The trial court
rejected that assertion, ruling in favor of the defendants on all
issues.
As to the represented plaintiffs, the trial court concluded
that the “first principal activity” standard that defines
compensable work time for purposes of the FLSA governs
plaintiffs’ claims. The trial court based its conclusion on the
language of the MOUs (which incorporated the FLSA’s section
7(k) schedule), testimonial evidence that the parties agreed,
during negotiations, to adopt the FLSA’s “first principal
activity” standard, and the fact that the MOUs were approved
by the Legislature, thus superseding conflicting laws of more
general application.
As to the unrepresented plaintiffs, the trial court
concluded that, by assigning various job classifications to Work
Week Group 2, CalHR had determined that those job
classifications should be governed by the FLSA, and more
specifically by the “first principal activity” standard that defines
compensable work time for purposes of the FLSA. The trial
court further concluded that, in doing so, CalHR acted within its
express delegated authority under Government Code section
19845, subdivision (a). The trial court rejected plaintiff’s
argument that, by using the word “control[]” in the Pay Scale
Manual’s definition of compensable work time applicable to
Work Week Group 2, CalHR had indicated its intent to
incorporate the “control” standard that is used to define
21
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
compensable work time under the state’s wage orders. On the
contrary, concluded the trial court, CalHR took the word
“control[]” directly from the definition of compensable work time
that applies under the FLSA (see Tennessee Coal, supra, 321
U.S. at p. 598), and therefore the word must be read in light of,
and consistent with, the “first principal activity” standard.
In the trial court’s view, the foregoing conclusions
disposed of plaintiffs’ minimum wage cause of action, which was
based on the assertion that the “control” standard of the state’s
wage orders, not the “first principal activity” standard of the
FLSA, defined compensable work time for purposes of the duty
to pay the minimum wage. The trial court reasoned that by
approving the MOUs (in the case of the represented plaintiffs)
and by authorizing CalHR to establish work week groups that
were subject to the FLSA’s overtime standards (in the case of
the unrepresented plaintiffs), the Legislature enacted specific
laws that superseded the state’s more general minimum wage
laws.
As to plaintiffs’ overtime claims based on common law
breach of contract, the trial court ruled that plaintiffs’ claims
were subject to the rule that the terms and conditions of public
employment are controlled by statute and ordinance, not by
contract, and that plaintiffs had not established the existence of
a contractual agreement to pay overtime compensation other
than as provided in the MOUs.
Based on the foregoing conclusions, which disposed of all
of plaintiffs’ remaining claims, the trial court declined to reach
defendants’ contentions that plaintiffs had failed to exhaust
administrative remedies and had failed to comply with the
government claims statutes (Gov. Code, § 900 et seq.).
22
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Opinion of the Court by Chin, J.
E. The Court of Appeal Decision
The Court of Appeal affirmed the trial court as to the
represented plaintiffs, but it reversed the trial court as to the
unrepresented plaintiffs.
As to the represented plaintiffs, the Court of Appeal
reasoned that the Legislature’s approval of the MOUs, and the
Governor’s signature, effectively made those agreements into
laws that, because of their specificity, superseded any
conflicting general laws that might otherwise apply. (Stoetzl v.
State of California (2017) 14 Cal.App.5th 1256, 1272, review
granted Nov. 29, 2017, S244751 (Stoetzl).) The MOUs expressly
stated that the represented plaintiffs were working under the
“7K Exemption” of the FLSA, and they also made express
provision for duty-integrated walk time, allotting an aggregate
of four compensable hours to such walk time in each recurring
28-day work period. (Stoetzl, at p. 1273.) In addition, in
negotiating the 1998–1999 MOU, both the parties understood
that they were proceeding under the FLSA (Stoetzl, at p. 1273),
and they further understood that the state did not consider
entry-exit walk time to be compensable under the FLSA (Stoetzl,
at p. 1273). The text of all the MOUs reflected those
understandings, thus carrying forward the negotiating history
of the 1998–1999 MOU, and the Legislature’s approval of the
MOUs gave those understandings the status of law. Therefore,
in the Court of Appeal’s view, the trial court had properly
concluded that the FLSA governed the represented plaintiffs’
right to compensation. (Stoetzl, at p. 1273.) That conclusion
disposed of the represented plaintiffs’ minimum wage cause of
action (ibid.), their overtime compensation cause of action based
on breach of contract (id. at p. 1278–1279), and their overtime
23
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
compensation cause of action based on Labor Code sections 222
and 223 (Stoetzl, at p. 1279).
As to the unrepresented plaintiffs, the Court of Appeal
concluded that their minimum wage claims should be allowed to
proceed. (Stoetzl, supra, 14 Cal.App.5th at p. 1276, review
granted.) The court reasoned that it needed to harmonize the
requirements of Wage Order No. 4, whose definition of
compensable work time expressly applies to rank-and-file
employees of the state government, with CalHR’s Pay Scale
Manual, which likewise defines compensable work time for
specified classes of state government employees, including
plaintiffs’ classes. (Stoetzl, at p. 1275.) The Court of Appeal
noted, in this regard, that the Pay Scale Manual is not a
legislative enactment, whereas the wage orders “have ‘the same
dignity as statutes.’ ” (Ibid.) The Court of Appeal further noted
that the Manual’s definition of compensable work time uses the
word “control[],” which, in the Court’s view, suggested a parallel
to the “control” standard that applies under the state’s wage
orders. (Id. at pp. 1275–1276.) Moreover, the Court of Appeal
noted that the Manual’s definition of compensable work time,
although drawn nearly verbatim from FLSA definition, does not
expressly exclude entry-exit walk time. (Id. at p. 1276.) Finally,
the Court of Appeal noted that the Pay Scale Manual does not
contain an express provision stating that Wage Order No. 4 does
not apply, whereas Wage Order No. 4 expressly states that its
“Definitions” and “Minimum Wages” sections apply to state
government employees. (Stoetzl, at p. 1276.)
Therefore, the Court of Appeal concluded that Wage Order
No. 4’s broad definition of compensable work time governed the
state’s obligation to pay the minimum wage to the
unrepresented plaintiffs. The Court said: “We may reasonably
24
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
construe the regulatory schemes to mean that entitlement to
overtime compensation is controlled by the FLSA but that the
meaning of ‘hours worked’ is governed by Wage Order 4. Such
a construction does violence to neither regulatory scheme. [¶]
Accordingly, we conclude the unrepresented employees are
entitled to [minimum wage] pay for all hours worked under the
applicable California standard rather than the FLSA’s
standard.” (Stoetzl, supra, 14 Cal.App.5th at p. 1276, review
granted.)
As to the breach of contract claims of the unrepresented
plaintiffs — claims that sought overtime compensation for walk
time — the Court of Appeal concluded that those claims, too,
should be allowed to proceed because the unrepresented
plaintiffs “are entitled to compensation for all hours worked
under California’s broader standard.” (Stoetzl, supra, 14
Cal.App.5th at p. 1279, review granted.) The Court of Appeal
held, however, that the trial court properly rejected the
unrepresented plaintiffs’ Labor Code section 222 cause of action,
because that statute only applies where there is a collective
bargaining agreement in force between the parties. (Stoetzl, at
pp. 1279–1280.) Likewise, it properly rejected their Labor Code
section 223 cause of action, because that statute is concerned
with secret deductions and kick-backs, an issue not presented
by the allegations of plaintiffs’ operative complaints. (Stoetzl, at
pp. 1280–1281.)
Both sides petitioned for review, and we granted both
petitions.
II. DISCUSSION
Plaintiffs seek additional compensation for walk time,
basing their claims on three legal theories set forth in three
25
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
causes of action: (1) failure to pay the minimum wage in
violation of state minimum wage laws; (2) failure to pay
overtime compensation in breach of common law contractual
obligations; and (3) failure to pay overtime compensation in
violation of Labor Code sections 222 and 223.9 We address each
of these causes of action in turn.
A. The Minimum Wage Cause of Action
1. The Represented Plaintiffs
We agree with the trial court and the Court of Appeal that
the represented plaintiffs agreed, through the collective
bargaining process, to receive a specific amount of compensation
for walk time, and the state’s minimum wage laws do not entitle
them to additional compensation.
Since enactment of the Ralph C. Dills Act in 1977 (the
Dills Act) (Gov. Code, § 3512 et seq.), state government
employees have had the right to be represented by a union and
to bargain collectively over the wages, hours, and terms of
employment. (Gov. Code, §§ 3512, 3515, 3515.5, 3516, 3517.)10
The Director of CalHR represents the Governor in these
negotiations (id., §§ 19815, subd. (b), 19815.4, subd. (g)), and
once a union and the Director have reached agreement, they are
9
Each of the operative complaints also alleges a cause of
action for failure to keep accurate records of hours worked in
violation of Labor Code section 1174, but the trial court granted
judgment in favor of defendants on that cause of action, the
Court of Appeal did not address it, and it was not mentioned in
plaintiffs’ petition for review in this court. Therefore, only the
three causes of action for unpaid compensation are before us.
10
Managerial, confidential, and supervisory employees as
defined in subdivisions (e), (f), and (g) of Government Code
section 3513 are excluded from this right. (Id., § 3513, subd. (c).)
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STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
required to prepare an MOU memorializing the terms of that
agreement (id., § 3517.5). Significantly, “the Dills Act is a
‘ “supersession statute” ’ [citation], meaning that when a
provision of an MOU conflicts with an otherwise applicable
statutory provision governing the terms and conditions of
employment, the provision of the MOU generally ‘supersedes’ or
prevails over the terms of the otherwise applicable statute,
without any need for further legislative approval of the
conflicting MOU provision. [Citation.]” (Professional Engineers,
supra, 50 Cal.4th at p. 1018.) Statutory provisions that are
automatically superseded by an MOU are listed in Government
Code sections 3517.6 and 3517.61. If, however, an MOU
requires the expenditure of state funds or if its implementation
requires amendment of statutory provisions that are not among
those listed in Government Code sections 3517.6 and 3517.61, it
must be approved by the Legislature. (Gov. Code, §§ 3517.5,
3517.6, subd. (b), 3517.61.)
The represented plaintiffs agreed through the foregoing
collective bargaining process to a specific amount of
compensation for duty-integrated walk time. Specifically, they
agreed to four hours’ pay for “pre and post work activities” in a
recurring 28-day work period, and the record supports the trial
court’s finding that the phrase “pre and post work activities” was
used by the parties to refer to duty-integrated walk time.11
11
The trial court’s order stated: “During bargaining, the
parties understood that [pre- and postwork activities] included
(1) the time at the beginning of the work shift from the point
when an employee picked up his/her keys and tools to the time
when the employee reported to his/her post and, (2) the time at
the end of the work shift, from the point the employee departs
27
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
Moreover, CCPOA expressly conceded in the text of three
of the four MOUs at issue here “that generally [four hours] is
sufficient time for all pre and post work activities during each
work period, and that the compensation allotted for these
activities under this provision is full compensation for all of
these activities.” Significantly, the trial court made a finding
that the word “generally” was included in the foregoing
stipulation because the state wanted to allow employees to apply
for additional compensation when such compensation was
necessary due to the dynamic environment of the prison. This
factual finding, too, is amply supported by testimony at trial,12
and therefore it is not subject to being reconsidered by us on
review. (See People ex rel. Dept. of Corporations v. SpeeDee Oil
Change Systems, Inc. (1999) 20 Cal. 4th 1135, 1143 [“If the trial
his/her post to the time when the employee drops off his/her keys
and tools. [Pre- and postwork activities] did not include time
spent by an employee traveling from the initial security gate or
‘sallyport’ to the point where the employee picked up his/her
keys and tools. Similarly, it did not include time spent by an
employee after he or she dropped off his/her keys and tools.”
12
David Gilb testified: “In the normal course of business,
once an employee picked up their equipment at what’s called
control, picked up their tools, and then started for their post,
that we agreed that, in the normal course of business, four hours
was sufficient compensation — four hours every 28-day work
period was sufficient compensation for that. The word
‘generally’ is in there because a prison is a very dynamic
environment, and issues come up where from the point you
picked up your equipment until the time you actually report to
your post, you may be waylaid. You may be diverted. Somebody
may ask you to do an additional errand. Under those
circumstances, we wanted some language in the contract that
allowed basically the employees to apply and the employer to
approve additional compensation when it met the requirements
of the FLSA.”
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STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
court resolved disputed factual issues, the reviewing court
should not substitute its judgment for the trial court’s express
or implied findings supported by substantial evidence.”]; see
also Gaines v. Fidelity National Title Ins. Co. (2016) 62 Cal. 4th
1081, 1100; Haraguchi v. Superior Court (2008) 43 Cal. 4th 706,
711; Professional Engineers in California Government v.
Kempton (2007) 40 Cal. 4th 1016, 1032.) Accordingly, the word
“generally” cannot be read to suggest that in some work periods
duty-integrated walk time consumed more than four hours and
the represented plaintiffs worked without compensation.
Rather, the parties expressly agreed that four hours in 28 days
was ordinarily enough time to complete the activities associated
with duty-integrated walk time and that when more time was
necessary, an employee could apply for it.
Although CCPOA did not make this same concession in
the 2011–2013 MOU, the parties agreed in a side letter that
“nothing in this [2011–2013] MOU shall have prejudicial effect
to either side’s arguments in Stoetzl v. State of California,”
referring to the present litigation. Therefore, the omission of
language that had been included in all the previous MOUs,
stating that four hours was generally sufficient for pre- and
postwork activities, cannot be construed as an indication that
four hours had somehow ceased to be sufficient, at least under
ordinary circumstances. In addition, there is no allegation that
the represented plaintiffs were barred from applying for
additional compensation if such compensation became
necessary due to the “dynamic environment” of the prison. As
noted, the trial court found that the state permitted employees
to apply for such additional compensation. Therefore, the
represented plaintiffs cannot, as a factual matter, show that
duty-integrated walk time ever went uncompensated.
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STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
The represented plaintiffs also agreed through the
collective bargaining process to forgo compensation for entry-
exit walk time. Each of the MOUs included a heading that read
“Entire Agreement,” followed by a provision that stated: “This
[MOU] sets forth the full and entire understanding of the parties
regarding the matters contained herein . . . .” Compensation
was certainly one of the “matters contained” (i.e., provided for)
in each of the MOUs. In fact, the preamble of each of the MOUs
stated: “This AGREEMENT . . . has as its purpose . . . the
establishment of rates of pay, hours of work, and other terms
and conditions of employment.” (Italics added.) Therefore,
pursuant to the integration clauses, the MOUs “set[] forth the
full and entire understanding of the parties regarding”
compensation, precluding any forms of compensation not
addressed in the MOUs. More to the point, each of the MOUs
made specific provision for compensating pre- and postwork
activities, providing four hours’ pay for such activities in a
recurring 28-day work period. Because the MOUs “set[] forth
the full and entire understanding of the parties regarding the
matters contained [t]herein,” and because compensation for pre-
and postwork activities was one of the “matters contained” in
each of the MOUs, the MOUs precluded compensation for entry-
exit walk time by not making any provision for it.13
13
Significantly, the parties expressly bargained over entry-
exit walk time. As the trial court explained, the CCPOA
suggested during negotiations over the 1998–1999 MOU that
the state should compensate entry-exit walk time, and the state
rejected the idea, pointing out that the parties were negotiating
under the FLSA, which excludes entry-exit walk time from
compensable work time. It is true that the legal landscape
30
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
Moreover, the MOUs were all approved by the Legislature,
with this approval signed by the Governor and chaptered into
law. Thus, the MOUs became legislative enactments that
because of their specificity, supersede the more general state
laws on which the represented plaintiffs base their claims. (See,
e.g., Lopez v. Sony Electronics, Inc. (2018) 5 Cal.5th 627, 634 [in
the event of a conflict, specific provisions ordinarily prevail over
general ones].) It would be unfair to allow the represented
plaintiffs, who negotiated a favorable deal at the bargaining
table and who agreed to certain concessions as part of that deal,
including concessions concerning compensation for walk time, to
avoid those concessions after the Legislature passed a series of
special laws approving their agreement.
This is not a case in which a party to a labor agreement
agreed to waive state law protections that are not subject to
waiver. (Cf. Gentry v. Superior Court (2007) 42 Cal. 4th 443, 455
[“By its terms, the rights to the legal minimum wage and legal
overtime compensation conferred by the statute are
unwaivable.”]; Hoover v. American Income Life Ins. Co. (2012)
206 Cal. App. 4th 1193, 1208 [“[T]he rights accorded by [Labor
Code] section[] . . . 1194 . . . may not be subject to negotiation or
waiver.”]; Grier v. Alameda–Contra Costa Transit Dist. (1976)
55 Cal. App. 3d 325, 335 [“[F]ull payment of accrued wages is an
changed after the IWC amended Wage Order No. 4, causing the
“Entire Agreement” provision of the MOUs to take on a new
significance (see conc. & dis. opn. of Liu, J., post, pp. 4–7), but
given the prevailing agreement, these facts mean only that the
represented employees needed to negotiate a change in the
language of the MOUs if, based on the amended wage order,
they wanted minimum wage compensation for entry-exit walk
time.
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STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
important state policy, enacted for protection of employees
generally. As such, it is not to be avoided by the terms of a
private agreement.”].) Rather, this is a case in which a party to
a labor agreement agreed, subject to legislative approval, to
certain specified terms of employment, and the Legislature then
enacted a special law approving the agreed-upon terms. Having
expressly agreed to specific terms of compensation for pre- and
postwork activities, and having declared those terms to be the
“entire agreement” of the parties concerning compensation for
such activities, and, most important, having received legislative
approval of the agreement, the represented plaintiffs cannot
credibly argue that they should now be released from the terms
of the agreement and granted additional compensation based on
the general laws of the state.
Of course, there was no special law approving the terms of
defendants’ “last, best, and final offer” (see Gov. Code, § 3517.8,
subd. (b)), which was in effect between the parties from
September 18, 2007 until May 16, 2011. During that time
period, the Legislature fully funded the state’s obligation under
the last, best, and final offer, but it did not otherwise approve
that offer, as it did the MOUs. The represented plaintiffs argue,
on that account, that their claims for additional minimum wage
compensation should prevail at least as to the 44-month period
from September 18, 2007 until May 16, 2011.
Plaintiffs, however, misread the law that applies to a last,
best, and final offer. As noted, the Dills Act requires that an
MOU be presented to the Legislature for approval if it requires
the expenditure of state funds or if its implementation requires
the amendment of statutory provisions that are not among those
provisions that the MOU automatically supersedes. In
Department of Personnel Administration v. Superior Court
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STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
(Greene) (1992) 5 Cal. App. 4th 155 (Greene), the Court of Appeal
considered whether, in the context of the state’s 1991–1992
fiscal crisis, CalHR’s predecessor could, after bargaining to an
impasse, unilaterally impose its last, best, and final offer
regarding wages and health care contributions. (Id. at pp. 162–
164.) The court held that when an MOU expires, its
supersession of conflicting state laws comes to an end, and
therefore those state laws come back into full effect. (Id. at p.
176.) Accordingly, the court concluded that the state was not
permitted to implement its last, best, and final offer insofar as
that offer included terms that conflicted with formerly
superseded state laws. (Id. at pp. 172, 174, 185.)
The holding of Greene, supra, 5 Cal. App. 4th 155, created
problems for state employees because the expired MOU often
offered greater employee protections than the general state laws
that came back into full effect upon the MOU’s expiration. Of
particular concern to state employee unions was the continuing
ability to collect fair share fees14 and to rely on arbitration to
resolve disputes. The CCPOA therefore sponsored legislation to
set aside the holding of Greene. (See, e.g., Sen. Rules Com., Off.
of Sen. Floor Analyses, Analysis of Sen. Bill No. 683 (1999–2000
Reg. Sess.) as amended Aug. 30, 2000, pp. 2–4; Assem. Com. on
Appropriations, Analysis of Sen. Bill No. 683 (1999–2000 Reg.
Sess.) as amended Aug. 19, 1999, pp. 1–2; Sen. Rules Com., Off.
of Sen. Floor Analyses, 3d reading analysis of Sen. Bill No. 683
(1999–2000 Reg. Sess.) as amended April 19, 1999, pp. 2–5.)
That legislation added section 3517.8 to the Government
14
Fair share fees are fees imposed on nonunion employees
to ensure that they pay a portion of the cost of collective
bargaining.
33
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
Code — sometimes referred to as the “evergreen” law —
addressing the situation where an MOU expires with no new
MOU in place.
If, upon expiration of the MOU, negotiations over a new
MOU are ongoing, subdivision (a) of Government Code section
3517.8 requires the parties to give effect to the terms of the
expired MOU, including terms that supersede existing law, with
no need for additional legislative action. Next, if the parties
reach an impasse in their negotiations, subdivision (b) of
Government Code section 3517.8 authorizes the state to
implement the terms of its last, best, and final offer. In the
latter case, however, “[a]ny proposal in the state employer’s last,
best, and final offer that, if implemented, would conflict with
existing statutes or require the expenditure of funds shall be
presented to the Legislature for approval and, if approved, shall
be controlling without further legislative action . . . .” (Gov.
Code, § 3517.8, subd. (b), italics added.)
The represented plaintiffs argue that here, because the
state’s last, best, and final offer was not approved by the
Legislature, there was no supersession of conflicting state laws,
and therefore their claims for additional minimum wage
compensation should prevail at least as to the 44-month impasse
period in which no MOU was in place. What plaintiffs overlook
is that the legislative approval required by Government Code
sections 3517.6, subdivision (b), 3517.61, and 3517.8,
subdivision (b) can, at least in some circumstances, be satisfied
by a budget act authorizing the expenditure of state funds. As
we explained in Professional Engineers, “[u]nder the Dills Act,
it is clear that an MOU, once approved by the Legislature (either
directly — see [Gov. Code], § 3517.5 — or through the
appropriation of sufficient funds to pay the agreed-upon
34
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
employee compensation), governs the wages and hours of the
state employees covered by the MOU.” (Professional Engineers,
supra, 50 Cal.4th at p. 1040, italics added; see id. at p. 1043 [“the
Legislature retain[s] its ultimate control (through the budget
process) over expenditures of state funds required by the
provisions of an MOU” (italics added)]; ibid. [“by enacting
appropriations for employee compensation in the [budget
act] . . . , the Legislature approved that level of compensation”].)
In fact, our opinion in Professional Engineers went even
further, stating that the Legislature can use appropriations bills
to modify the terms of state employment even while an MOU is
in effect. Our decision in Professional Engineers arose in the
context of the state fiscal crisis that began in late 2007 and
continued for several years thereafter. (Professional Engineers,
supra, 50 Cal.4th at pp. 1000–1008.) In December 2008, the
Governor issued an executive order instructing the Department
of Personnel Administration (now CalHR) to implement a
mandatory two-day-a-month unpaid furlough of most executive
branch employees. (Id. at p. 999.) In reviewing the legality of
that mandatory furlough, we noted that when the Legislature
revised the Budget Act of 2008, it reduced the relevant
appropriation to a level that reflected the Governor’s furlough
plan. (Id. at 1043.) We said: “By reducing the appropriation for
employee compensation, the Legislature no longer had ‘fully
funded’ the provisions of the MOU’s supporting the higher level
of pay that previously had been approved, and thus . . . the
provisions of the applicable MOU’s . . . no longer were effective.”
(Ibid., italics added; see Service Employees Internat. Union,
Local 1000 v. Brown (2011) 197 Cal. App. 4th 252, 263
[“Professional Engineers made it clear that it is the
Legislature . . . which has . . . the final say [] in fixing the
35
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
compensation paid to represented state employees, with that
final say often being expressed in the budget process.”].)
The holdings of Professional Engineers suffice to answer
the represented plaintiffs’ argument that there was no
legislative approval here. (See also Brown v. Superior Court
(2011) 199 Cal. App. 4th 971, 998 [appropriations bills satisfy
legislative approval required by § 3517.8, subd. (b)].)15 Because
the last, best, and final offer that governed the represented
plaintiffs’ employment during the 44 months from September
18, 2007, until May 16, 2011, was funded by the Legislature, it
was legislatively approved, and it therefore superseded
conflicting state laws.
Accordingly, we agree with the trial court and the Court of
Appeal that the represented plaintiffs are not entitled to
additional minimum wage compensation for either duty-
integrated walk time or entry-exit walk time. The MOUs made
specific provision for duty-integrated walk time, and the trial
court’s findings of fact, which are supported by trial testimony,
do not suggest that duty-integrated walk time ever went
uncompensated. Although the MOUs did not specifically refer
to entry-exit walk time, they expressly stated that they
constituted the entire understanding of the parties regarding
15
This conclusion — allowing the state to implement its last,
best, and final offer in the case of an impasse in negotiations —
does not unfairly tilt the balance in favor of the state in labor
negotiations. Government Code section 3517.8, subdivision (b)
also provides in relevant part: “Implementation of the last, best,
and final offer does not relieve the parties of the obligation to
bargain in good faith and reach an agreement on a
memorandum of understanding if circumstances change, and
does not waive rights that the recognized employee organization
has under this chapter.”
36
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
the matters they addressed, and compensation for pre- and
postwork activities was one of those matters. Moreover, the
Legislature’s enactment of special laws approving the MOUs
(and its decision to fund the state’s last, best, and final offer)
precludes the represented plaintiffs’ reliance on more general
state laws to support their minimum wage claims.
2. The Unrepresented Plaintiffs
As noted, the trial court concluded, as to the
unrepresented plaintiffs, that the specific statutes authorizing
CalHR to set the wages and hours of employees of the state
government (see Gov. Code, §§ 19826, 19843, 19844, 19845,
19849) — and, in particular, to provide for overtime
compensation as prescribed by the FLSA (see id., § 19845, subd.
(a)) — superseded the more general statutes authorizing the
IWC to regulate the wages and hours of public and private
employees working in the state. The Court of Appeal rejected
that conclusion, reasoning that CalHR intended to incorporate
into its Pay Scale Manual the definition of compensable work
time that appears in Wage Order No. 4 and, therefore, that the
wage order definition applied not only to plaintiffs’ minimum
wage claims but also to their overtime compensation claims
based on breach of contract. We agree with the conclusion of the
trial court and disagree with the conclusion of the Court of
Appeal.
The Court of Appeal suggested that this case pitted an
IWC wage order that has the “dignity” of statutory law against
a provision of CalHR’s Pay Scale Manual that does not. (See
Stoetzl, supra, 14 Cal.App.5th at p. 1275, review granted.) That
characterization is not completely accurate, however. Rather,
we are confronted here with two competing statutory schemes,
37
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
each broadly authorizing administrative action. It is true that
the IWC’s wage orders are entitled to extraordinary deference
and that they must be harmonized, to the extent possible, with
conflicting laws and regulations, but that harmonization does
not mean that the wage orders must invariably prevail over the
regulations of other agencies.
On the one hand, the Legislature empowered the IWC to
regulate the wages and hours of employees generally. (Stats.
1913, ch. 324, § 6, pp. 634–635; Stats. 1972, ch. 1122, § 13, p.
2156; Stats. 1973, ch. 1007, § 8, p. 2004; see Martinez, supra, 49
Cal.4th at pp. 52–57 [describing the history of the IWC];
Industrial Welfare Com. v. Superior Court (1980) 27 Cal. 3d 690,
700–701 [describing the expansion of the IWC’s jurisdiction to
cover all employees].) Pursuant to that authority, the IWC
issued wage orders that, as relevant here, (1) define
compensable work time, (2) establish a minimum wage, (3)
mandate overtime compensation, and (4) expressly apply the
minimum wage section (but not the overtime section) to rank-
and-file employees of the state government.
On the other hand, the Legislature empowered CalHR to
set the wages and hours of employees of the state government
(Gov. Code, §§ 19826, 19843, 19844, 19845, and 19849),
including assigning various job classifications to work week
groups for purposes of defining compensable work time and
regulating overtime compensation (id., § 19843, subd. (a)).
Moreover, the Legislature expressly authorized CalHR to
provide for overtime payments as prescribed by the FLSA. (Id.,
§ 19845, subd. (a).) In California, the Legislature has ultimate
responsibility for setting the terms and conditions of state
employment, and therefore CalHR’s authority in this area is
unquestionably legislative, “emanat[ing] from the Legislature’s
38
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
delegation of . . . its legislative authority.” (Professional
Engineers, supra, 50 Cal.4th at p. 1015.)
Given these two broad delegations of quasi-legislative
authority, it is not obvious that, in the case of a direct conflict,
the decisions of the IWC should invariably prevail over those of
CalHR. The Court of Appeal reasoned that the IWC’s wage
orders “have ‘the same dignity as statutes,’ ” whereas “the Pay
Scale Manual is not a legislative enactment” (Stoetzl, supra, 14
Cal.App.5th at p. 1275, review granted), but the underlying
basis for treating the wage orders like statutes is the
Legislature’s broad delegation of legislative power to the IWC
(see Martinez, supra, at p. 61), and the Legislature’s delegation
of legislative power to CalHR is likewise very broad. We are not
dealing here with an ambiguous statutory phrase or standard
that CalHR must clarify, nor has the Legislature given CalHR
much specific guidance as to what terms of employment it
should adopt. Rather, we are dealing with a broad legislative
gap — the terms of employment, including specific salary
ranges, for thousands of state job classifications — and CalHR
has filled that legislative gap, exercising its delegated legislative
authority. Therefore, the provisions of the Pay Scale Manual at
issue here are best characterized as quasi-legislative rules. (See
Yamaha Corp. of America v. State Bd. of Equalization (1998) 19
Cal. 4th 1, 10–11 [defining quasi-legislative rules as those that
result from a delegation of legislative power, not those that
merely represent the agency’s view of a statute’s meaning]; id.
at p. 6 fn. 3 [noting that “the terms ‘quasi-legislative’ and
‘interpretive’ . . . designate opposite ends of an administrative
continuum, depending on the breadth of the authority delegated
by the Legislature” (italics added)]; accord, Ramirez v. Yosemite
Water Co. (1999) 20 Cal. 4th 785, 798–799; see also American
39
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
Mining Congress v. Mine Safety & Health Administration
(D.C.Cir.1993) 995 F.2d 1106, 1110 [“[T]he dividing line
[between interpretive and quasi-legislative regulations] is the
necessity for agency legislative action . . . [.] [A] rule supplying
that action will be legislative . . . , and an interpretation that
spells out the scope of an agency’s or regulated entity’s pre-
existing duty . . . will be interpretive . . . .”].) As such, the
provisions of the Pay Scale Manual, like the IWC’s wage orders,
“have the dignity of statutes.” (Yamaha, at p. 10.)16
It is true that IWC wage orders must, when possible, be
harmonized with statutes. (Brinker, supra, 53 Cal.4th at p.
1027.) It is also true that the Legislature’s authority to delegate
its legislative power to the IWC is expressly recognized in the
state’s Constitution. (Cal. Const., art. XIV, § 1.) But contrary
to the conclusion of the Court of Appeal (Stoetzl, supra, 14
Cal.App.5th at p. 1275, review granted), neither of these points
establishes that IWC wage orders prevail over the Pay Scale
Manual. Despite the constitutional authorization, the IWC, in
adopting and amending the wage orders, still only exercised
authority delegated to it from the Legislature, as did CalHR in
this area, so the IWC’s wage orders and the Pay Scale Manual
must be harmonized with statutes and with each other to the
extent possible.
We also reject the Court of Appeal’s suggestion that, by
using the word “control[],” the Pay Scale Manual intended to
16
The broad deference owed to all properly adopted quasi-
legislative regulations, including the obligation to afford them
the dignity of statutes, is a point that the author of the
concurring and dissenting opinion has noted in the past. (See
Western States Petroleum Assn. v. Board of Equalization (2013)
57 Cal. 4th 401, 415.)
40
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
incorporate Wage Order No. 4’s broad definition of compensable
work time, a definition that also happens to use the word
“control.” (See Stoetzl, supra, 14 Cal.App.5th at pp. 1275–1276,
review granted.) Rather, the Pay Scale Manual’s definition of
compensable work time expressly incorporates the FLSA’s
definition. Government Code section 19845, subdivision (a)
authorizes CalHR “to provide for overtime payments as
prescribed by the [FLSA].” (Italics added.) CalHR exercised that
authority in Section 10 of the Pay Scale Manual, which includes
the heading “WORK WEEK GROUPS ESTABLISHED UNDER
FAIR LABOR STANDARDS ACT (FLSA),” and which creates
“Work Week Group 2” directly under that heading. Likewise,
the provision of the Manual bearing the subheading
“Determination of Coverage Under FLSA” states that “[t]he
provisions of Work Week Group 2 are made applicable to all
classes which are determined by the Director of [CalHR] to
include positions subject to the FLSA” (italics added), and the
three definitions of overtime that apply to job classifications in
Work Week Group 2 precisely track the FLSA.17 We are
therefore confident about the intent of CalHR to adopt FLSA
17
The FLSA includes a general provision requiring overtime
compensation for any work in excess of 40 hours in a workweek
(29 U.S.C. § 207(a)(1)), and it includes a special provision, for
law enforcement employees, requiring overtime compensation
for work in excess of 171 hours in a 28-day period, and another
special provision, for fire suppression employees, requiring
overtime compensation for work in excess of 212 hours in a 28-
day period. (29 U.S.C. § 207(k)(1)(B); 29 C.F.R. § 553.230
(2018).) CalHR’s Pay Scale Manual defines overtime for Work
Week Group 2 using the same three categories and the same
hourly limits for each category.
41
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
overtime standards for job classifications falling within Work
Week Group 2.
More to the point, the definition of compensable work time
that appears in Section 10 of the Pay Scale Manual not only
expressly references the FLSA, but it also tracks the language
of the definition that applies under the FLSA. Specifically, the
Pay Scale Manual states in relevant part: “For the purpose of
identifying hours worked under the provisions of the FLSA, only
the time spent which is controlled or required by the State and
pursued for the benefit of the State need be counted.” (Italics
added.) By way of comparison, the interpretive bulletin of the
United States Department of Labor, defining compensable work
time for purposes of the FLSA, states in relevant part:
“[E]mployees subject to the act must be paid for all time . . .
‘controlled or required by the employer and pursued necessarily
and primarily for the benefit of the employer and his
business.’ [Citation.]” (29 C.F.R. § 785.7 (2018), quoting
Tennessee Coal, supra, 321 U.S. at p. 598, italics added.) Thus,
contrary to the Court of Appeal’s suggestion, the Pay Scale
Manual clearly adopts the FLSA definition of compensable work
time; it does not adopt Wage Order No. 4’s definition.
It is true that the Pay Scale Manual’s definition, like that
of Wage Order No. 4, uses the word “control[].” It is also true
that, in Morillion, we focused on the word “control” in the wage
order’s definition of compensable work time, making that word
the basis of our decision. (See Morillion, supra, 22 Cal.4th at
pp. 587–588 [holding that travel time is compensable under the
wage orders because it was under the “control” of the employer].)
But because the Pay Scale Manual’s definition of compensable
work time expressly refers to the FLSA, and because its
language tracks that of the FLSA definition almost verbatim
42
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
(including the word “ ‘control[]’ ” that appears in that definition)
(29 C.F.R. § 785.7 (2018), quoting Tennessee Coal, supra, 321
U.S. at p. 598), there is no possibility that the Pay Scale Manual
intended to incorporate the wage order definition and not the
FLSA definition.
Moreover, the Pay Scale Manual’s definition of
compensable work time includes, by implication, the limitation
that the Portal-to-Portal Act placed on the FLSA. It is simply
not credible that the Manual — which (1) uses the heading
“WORK WEEK GROUPS ESTABLISHED UNDER FAIR
LABOR STANDARDS ACT (FLSA)”, (2) consistently and
repeatedly incorporates FLSA standards in the provisions that
fall under that heading, and (3) defines compensable work time
using language drawn almost verbatim from the FLSA
definition — was intended by CalHR to exclude an important
aspect of the FLSA definition and that it did so without
mentioning that fact expressly. If CalHR had wanted to exclude
the Portal-to-Portal Act’s limiting provisions from the Pay Scale
Manual’s FLSA-based definition of compensable work time, it
certainly could have done so (see Morillion, supra, 22 Cal.4th at
pp. 588–594; see also In Re: Amazon.com, Inc., Fulfillment
Center Fair Labor Standards Act (FLSA) and Wage and Hour
Litigation (6th Cir. 2018) 905 F.3d 387), but it would have
needed to make that intention clear.
The Court of Appeal, however, strained the plain meaning
of both the wage order and the Pay Scale Manual to hold that
the latter incorporated the former’s definition of compensable
work time. The court did so because it correctly saw the need to
harmonize the two administrative schemes to the extent
possible. We conclude, however, that Wage Order No. 4 and the
Pay Scale Manual cannot be harmonized and that the Pay Scale
43
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
Manual must be treated as a statutorily authorized exception to
Wage Order No. 4.
As discussed, the IWC was given authority to adopt
regulations governing wages, hours, and working conditions for
“all employees” — private and public — in the state of
California. (Lab. Code, § 1173; see id., § 1182; Martinez, supra,
49 Cal.4th at pp. 52–57.) Pursuant to that authority, the IWC
amended Wage Order No. 4 in 2001 to apply that order’s
minimum wage provision to the state government’s rank-and-
file employees, and in so doing, it also applied the wage order’s
broad definition of compensable work time to those employees.
But at the time of that amendment (as now), Government Code
section 19845, subdivision (a) already included an overlapping
and much more specific authorization of administrative action.
It provided: “Notwithstanding any other provision of this
chapter, [CalHR] is authorized to provide for overtime payments
as prescribed by the [FLSA] to state employees.” Pursuant to
the latter authority, CalHR had already, as of the time that the
IWC amended Wage Order No. 4, included Work Week Group 2
in its Pay Scale Manual, and it had already provided that FLSA
overtime standards — including the FLSA’s narrow definition
of compensable work time — applied to state employees in that
work week group. Therefore, the IWC’s action in 2001 must be
viewed as being taken subject to CalHR’s more specific
authority, and the latter must prevail to the extent of a conflict.
(See State Dept. of Public Health v. Superior Court (2015) 60
Cal. 4th 940, 960 [“[T]he rule that specific provisions take
precedence over more general ones trumps the rule that later-
enacted statutes have precedence [over earlier ones].”]; People v.
Gilbert (1969) 1 Cal. 3d 475, 479 [“ ‘[W]here the general statute
standing alone would include the same matter as the special act,
44
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
and thus conflict with it, the special act will be considered as an
exception to the general statute whether it was passed before or
after such general enactment.’ ” (italics added)]; Code Civ. Proc.,
§ 1859 [“[W]hen a general and particular provision are
inconsistent, the latter is paramount to the former.”].)18
In summary, the IWC was authorized to adopt general
background rules governing employee wages and hours, but
CalHR was the recipient of a more specific delegation, to
establish salary ranges for state workers and to adopt, as
appropriate, FLSA overtime standards for such workers.
Regardless of which agency most recently exercised its
delegated authority, to the extent CalHR’s standards conflict
with the more generally applicable wage order standards, they
supersede them. It follows, therefore, that the Pay Scale
Manual, including its narrow FLSA-based definition of
compensable work time, governs the right of the unrepresented
plaintiffs to compensation and that they are not entitled to
18
Noting our conclusion that Wage Order No. 4 does not
govern the unrepresented employees’ claims, the concurring and
dissenting opinion argues that we need not decide the relative
degree of deference owed to Wage Order No. 4 and the Pay Scale
Manual and that our discussion of that question (see ante, p. 40)
is dictum regarding a matter that was not briefed by the parties.
(Conc. & dis. opn. of Liu, J., post, pp. 10–11.) That argument
misreads our opinion. Wage Order No. 4 and the Pay Scale
Manual are in direct conflict, which forces us, in this case, to
apply the rule that the specific prevails over the general.
Moreover, the deference owed to IWC wage orders was a matter
that the Court of Appeal noted and that plaintiffs relied on
extensively in their briefs in this court.
45
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
minimum wage compensation based on Wage Order No. 4’s
broader definition of compensable work time.19
We conclude that the trial court was correct to reject the
minimum wage claims of the unrepresented plaintiffs and that
the Court of Appeal erred in reversing that portion of the trial
court’s judgment.
B. The Breach of Contract Cause of Action
Plaintiffs argue on a breach of contract theory that they
are entitled to overtime compensation for walk time that the
state did not properly accredit to them as compensable work
time. Plaintiffs rely on White v. Davis (2003) 30 Cal. 4th 528 and
Madera Police Officers Assn. v. City of Madera (1984) 36 Cal. 3d
403. In White and Madera, we recognized an exception to the
general principle that public employment is a creature of statute
or ordinance, not contract. Specifically, we held that although
19
It is no answer to argue that Wage Order No. 4 governs
the right of the unrepresented plaintiffs to receive the minimum
wage, while the Pay Scale Manual governs their right to receive
compensation at their regular rate of pay. (Cf. conc. & dis. opn.
of Liu, J., post, pp. 8–10.) That is so because the Pay Scale
Manual occupies the field with respect to the compensation
rates of state employees. CalHR’s regulations provide in
relevant part: “Unless otherwise indicated in the pay plan, the
rates of pay set forth represent the total compensation in every
form except for overtime compensation.” (Cal. Code Regs, tit. 2,
§ 599.671, italics added.) Here, the term “pay plan” refers,
among other things, to the Pay Scale Manual. (See Cal. Code
Regs, tit. 2, § 599.666.1.) The concurring and dissenting opinion
argues that the phrase “every form” in section 599.671 does not
actually mean every form and that it does not cover work falling
outside the pay plan’s definition of hours worked. (See conc. &
dis. opn. of Liu, J., post, p. 10.) We see no reason to read this
limitation into the broad phrase “every form.”
46
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
the terms of public employment are legislatively determined,
when a public agency employee has completed his or her work
in accordance with those legislative terms, the employee’s right
to receive compensation for the completed work ripens into a
contractual right that is protected by the contract clause of the
state Constitution. Thus, in Madera, the court said: “ ‘[T]o the
extent services are rendered under statutes or ordinances then
providing mandatory compensation for authorized overtime, the
right to compensation vests upon performance of the overtime
work, ripens into a contractual obligation of the employer and
cannot thereafter be destroyed or withdrawn without impairing
the employee’s contractual right.’ ” (Madera, at p. 413, quoting
Longshore v. County of Ventura (1979) 25 Cal. 3d 14, 23, italics
added.) Likewise, in White, we said: “[P]ast California cases
clearly establish that although the conditions of public
employment generally are established by statute rather than by
the terms of an ordinary contract, once a public employee has
accepted employment and performed work for a public employer,
the employee obtains certain rights arising from the legislative
provisions that establish the terms of the employment
relationship — rights that are protected by the contract clause of
the state Constitution from elimination or repudiation by the
state. . . . [A] number of cases have stated broadly that among
the rights protected by the contract clause is ‘the right to the
payment of salary which has been earned.’ ” (White, at p. 566,
quoting Kern v. City of Long Beach (1947) 29 Cal. 2d 848, 853,
italics added.) We recently reaffirmed these conclusions in Cal
Fire Local 2881 v. California Public Employees’ Retirement
System (2019) 6 Cal.5th 965.
These cases do not help plaintiffs except insofar as the
legislatively created terms of their employment included walk
47
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
time that these employees actually worked and that the state
failed to compensate. As to the represented plaintiffs, the
Legislature approved the MOUs governing their employment,
and it also approved the last, best, and final offer that applied
during the 44-month impasse period in which no MOU was in
place. We have already determined that in light of those
legislative approvals, the represented plaintiffs’ claims for
additional compensation fail. Under White and Madera,
plaintiffs’ contractual rights are derivative of and limited by the
legislatively created terms of their employment. Accordingly,
we agree with the Court of Appeal that the trial court properly
rejected the represented plaintiffs’ claims for overtime
compensation on a breach of contract theory.
As to the unrepresented plaintiffs, the Legislature
delegated its power to set the terms of their employment to two
administrative agencies, the IWC and CalHR, and we have
already determined that CalHR’s Pay Scale Manual, which
adopts the FLSA definition of compensable work time, controls
the unrepresented plaintiffs’ right to compensation. To the
extent the breach of contract claims of these plaintiffs are based
on the failure to pay overtime for entry-exit walk time, such time
is not compensable under the Pay Scale Manual’s narrow
definition of compensable work time, and therefore their claims
lack merit. To the extent, however, that their claims are based
on the failure to pay overtime for duty-integrated walk time,
such time is compensable under the Pay Scale Manual’s narrow
definition of compensable work time. The unrepresented
plaintiffs, having alleged that they performed such work and did
not receive overtime compensation for it, may have a contractual
interest in receiving that compensation. Whether they do
48
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
depends, of course, on whether they can prove their allegations
in future phases of the trial.
Accordingly, we agree with the Court of Appeal that the
trial court erred in rejecting the breach of contract claims of the
unrepresented plaintiffs, although we do not agree with the
Court of Appeal that the unrepresented plaintiffs can seek
overtime compensation based on the broad definition of
compensable work time that appears in Wage Order No. 4.
Rather, they can only do so based on the FLSA’s narrower
definition of compensable work time, a definition that excludes
entry-exit walk time.
C. Labor Code sections 222 and 223 Cause of
Action
We agree with the Court of Appeal that the trial court
properly rejected the plaintiffs’ claims for overtime
compensation under Labor Code sections 222 and 223.
Labor Code section 222 states: “It shall be unlawful, in
case of any wage agreement arrived at through collective
bargaining, either wilfully or unlawfully or with intent to
defraud an employee, a competitor, or any other person, to
withhold from said employee any part of the wage agreed upon.”
Labor Code section 223 states: “Where any statute or
contract requires an employer to maintain the designated wage
scale, it shall be unlawful to secretly pay a lower wage while
purporting to pay the wage designated by statute or by
contract.”
It is not at all clear that there is a private right of action
for violation of Labor Code sections 222 and 223 (see Lab. Code,
§ 225.5 [specifying civil penalties that the Labor Commissioner
may recover]), nor is it clear that these Labor Code provisions
49
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
apply against the state government (see Campbell v. Regents of
University of California (2005) 35 Cal. 4th 311, 330
[“ ‘Generally, . . . provisions of the Labor Code apply only to
employees in the private sector unless they are specifically made
applicable to public employees.’ ”]). In any case, Labor Code
section 222, by its terms, applies only when an employer
withholds “the wage agreed upon” in “any wage agreement.”
Thus, it does not apply to the unrepresented plaintiffs, whose
employment was not governed by an agreement. As to the
represented plaintiffs, we have already concluded that they
cannot show, as a factual matter, that duty-integrated walk
time ever went uncompensated, and we have further concluded
that the MOUs expressly precluded compensation for entry-exit
walk time. Accordingly, defendants did not withhold “the wage
agreed upon” in a “wage agreement,” and plaintiffs’ Labor Code
section 222 claims are without merit.
Plaintiffs’ claims for overtime compensation under Labor
Code section 223 fare no better. Section 223 is concerned with
“secret deductions or ‘kick-backs’ ” that are not the subject
matter of plaintiffs’ allegations. (Kerr’s Catering Service v.
Department of Industrial Relations (1962) 57 Cal. 2d 319, 328.)
Plaintiffs allege, rather, that defendants applied too narrow a
definition of compensable work time and, therefore, that
plaintiffs were not paid overtime compensation for some of the
work they performed. We conclude that defendants did not
apply the wrong definition of compensable work time, but even
if they had done so, that error would not amount to “secretly
pay[ing] a lower wage while purporting to pay the wage
designated by statute” (Lab. Code, § 223), because there was
nothing hidden or deceptive about defendants’ payment
practice. (See Prachasaisoradej v. Ralphs Grocery Co., Inc.
50
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Opinion of the Court by Chin, J.
(2007) 42 Cal. 4th 217, 236.) Rather, defendants were forthright
from the outset that they believed the narrow FLSA definition
of compensable work time applied.
III. CONCLUSION
We affirm the judgment of the Court of Appeal insofar as
it rejected the claims of the represented plaintiffs.
We reverse the judgment of the Court of Appeal insofar as
it allowed the unrepresented plaintiffs’ minimum wage claims
to proceed.
We affirm the judgment of the Court of Appeal insofar as
it allowed the unrepresented plaintiffs’ breach of contract claims
to proceed, but we conclude that those claims should be limited
to seeking unpaid overtime compensation based on the FLSA’s
definition of compensable work time, not based on the broader
definition that appears in Wage Order No. 4.
We affirm the judgment of the Court of Appeal insofar as
it rejected the unrepresented plaintiffs’ claims under Labor
Code sections 222 and 223.
We remand the case to the Court of Appeal with
instructions to remand to the trial court for further proceedings
consistent with this opinion. During such proceedings,
defendants can raise any defenses that the trial court did not
reach in its previous consideration of the case.
CHIN, J.
We Concur:
CANTIL-SAKAUYE, C. J.
CORRIGAN, J.
KRUGER, J.
GROBAN, J.
51
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
S244751
Concurring and Dissenting Opinion by Justice Liu
I agree with today’s opinion that the represented plaintiffs
cannot pursue claims for duty-integrated walk time for the
period when a memorandum of understanding (MOU) was in
effect. The represented plaintiffs appear to have explicitly
bargained for a specific amount of compensation for duty-
integrated time, and they do not allege that the state failed to
pay the agreed-upon amount. (Maj. opn., ante, at pp. 27–28.)
With regard to the unrepresented employees, I agree that the
Department of Human Resources (CalHR) Pay Scale Manual’s
definition of compensable work does not expressly include entry-
exit walk time and that the state therefore has no obligation to
pay regular or overtime compensation for that time. (Id. at
pp. 10–12.) I also agree that plaintiffs’ Labor Code section 222
and section 223 claims are without merit; the record contains no
evidence that the state unlawfully withheld wages or paid the
employees a lower rate in violation of an agreed-upon
contract. (Maj. opn., ante, at pp. 48–49.)
I disagree, however, with the court’s rejection of the
represented plaintiffs’ and unrepresented plaintiffs’ minimum
wage claims for entry-exit walk time. (Maj. opn., ante, at pp. 2–
3, 26–45.) The 2001 revisions to the Industrial Welfare
Commission’s (IWC) wage order No. 4-2001 (Wage Order No. 4)
extended minimum wage protections to rank-and-file employees
of the state government. (Wage Order No. 4, § 1(B); see Cal.
Code Regs., tit. 8, § 11040.) Because Wage Order No. 4 extended
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Liu, J., concurring and dissenting
the state’s broad definition of compensable work to the
represented employees, and because there is no clear indication
that the represented employees agreed to forgo that right in the
relevant MOUs, I would allow their minimum wage claims to
proceed. In addition, because the CalHR Pay Scale Manual can
be harmonized with the requirements of Wage Order No. 4, I see
no obstacle to giving effect to both schemes in a manner that
allows the unrepresented employees to pursue minimum wage
compensation for entry-exit walk time under the wage order.
Our longstanding rule that we interpret state wage and hour
laws to “promote employee protection” (Mendiola v. CPS
Security Solutions, Inc. (2015) 60 Cal. 4th 833, 840) compels me
to dissent from those portions of today’s opinion.
I.
Today’s opinion concludes that the represented plaintiffs
“agreed through the collective bargaining process to forgo
compensation for entry-exit walk time.” (Maj. opn., ante, at
p. 30.) But nothing in the text of the MOUs or the record of the
bargaining history indicates that the California Correctional
Peace Officers Association (CCPOA) intended to forgo any
entitlement that its members may have to minimum wage
compensation for entry-exit walk time under Wage Order No. 4.
Through the MOUs, the represented plaintiffs “agreed to
four hours’ pay for ‘pre and post work activities’ in a recurring
28-day work period, and the record supports the trial court’s
finding that the phrase ‘pre and post work activities’ was used
by the parties to refer to duty-integrated walk time.” (Maj. opn.,
ante, at p. 27.) In concluding that the represented plaintiffs
agreed to forgo compensation for entry-exit walk time, the court
explains that each MOU “included a heading that read ‘Entire
2
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Liu, J., concurring and dissenting
Agreement,’ followed by a provision that stated: ‘This [MOU]
sets forth the full and entire understanding of the parties
regarding the matters contained herein . . . .’ . . . Because the
MOUs ‘set[] forth the full and entire understanding of the
parties regarding the matters contained [t]herein,’ and because
compensation for pre- and postwork activities was one of the
‘matters contained’ in each of the MOUs, the MOUs precluded
compensation for entry-exit walk time by not making any
provision for it.” (Id. at pp. 30–31.)
Although it may be plausible to adopt such a reading of
the MOUs, it is equally plausible to understand “the matters
contained herein” as referring only to matters addressed by the
specific provisions of the MOUs — i.e., duty-integrated walk
time, and not “compensation” generally or “pre- and postwork
activities” generally. On this view, the parties reached an
agreement on compensation for duty-integrated walk time and
simply did not reach an agreement on entry-exit walk time.
But even if we assume the represented plaintiffs agreed to
forgo compensation for entry-exit walk time in the 1998–1999
MOU, it is clear from the bargaining history that they did not
agree to forgo any current or future protections to which they
may be entitled under state wage and hour law. At no point
during negotiations over the 1998–1999 MOU was there any
indication that the contract provisions addressing “pre- and
postwork activities” were meant to displace state wage and hour
law. When questioned at trial, the state’s chief negotiator,
David Gilb, testified that there was no discussion about CCPOA
waiving any of its members’ state wage and hour law rights.
According to Gilb, “The issue never came up in bargaining”:
3
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Liu, J., concurring and dissenting
“Q: Do you recall there any being [sic] discussion
whatsoever during the 1998 negotiations with
respect to whether CCPOA was offering to or
attempting on behalf of its members to waive any
state wage and hour laws?
“A: They were not.
“Q: Do you recall any discussions during the 1998–
1999 negotiations in which any representative of
CCPOA made any concession or statement that
you interpreted as a concession that state
minimum wage law was either waived or
otherwise agreed to not be utilized in determining
the rights of CCPOA members?
“A: They made no statements. The issue never came
up in bargaining.
“Q: So [sic] the extent that you do not recall any
discussion of state wage and hour law, you would
agree nobody at CCPOA made a statement or
comment that was communicated to the State that
you interpreted as an intent to waive any such
wage and hour rights of the employees.
“A: It did not.”
It is not surprising that the parties did not discuss any
waiver by CCPOA of its members’ right to minimum wage
compensation at the time of the 1998–1999 MOU negotiation.
In 1998, the IWC wage orders did not require state employers to
provide minimum wage compensation. (Maj. opn., ante, at
pp. 5–6.) In 2001, however, Wage Order No. 4 was amended to
extend minimum wage compensation to state employees, and
this guarantee, which has the same dignity and force as
statutory law (Brinker Restaurant Corp. v. Supreme Court
(2012) 53 Cal. 4th 1004, 1027 (Brinker)), arguably extends to
entry-exit walk time. (Maj. opn., ante, at pp. 6–7; see Morillion
v. Royal Packing Co. (2000) 22 Cal. 4th 575, 587–588.) Nothing
4
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Liu, J., concurring and dissenting
in the bargaining history of the 1998–1999 or later MOUs
suggests that the represented plaintiffs ever agreed to forgo the
benefits of this change in the law. Even if the represented
plaintiffs agreed to forgo minimum wage compensation for
entry-exit walk time at a time when they had no right to such
compensation under state law, that agreement cannot plausibly
be understood to include agreement to forgo such compensation
at a time when they did have a right to such compensation
under state law. As the quotations from Gilb’s testimony show,
CCPOA never agreed to waive any of its members’ rights to
current or future wage and hour protections under state law.
The 2001 revision to Wage Order No. 4 changed the
default law governing the relationship between state employers
and their employees. From 2001 onward, the burden was on the
employer to seek a concession from its employees that entry-exit
walk time would not be compensable in future MOUs. Yet
nothing in the bargaining history of the subsequent MOUs
indicates that the parties revisited this issue or that CCPOA
later agreed to waive any right its members may have to
minimum wage compensation under the amended wage order in
exchange for some other benefit. Thus, there is no basis in the
text or bargaining history of any of the MOUs, either before or
after 2001, for concluding that the represented plaintiffs agreed
to forgo minimum wage compensation for entry-exit walk time
under Wage Order No. 4 as revised in 2001.
Today’s decision awards the employer an exemption from
Wage Order No. 4’s potential applicability to entry-exit walk
time, even though the parties never negotiated over this issue
after the IWC extended the wage order’s minimum wage
requirement to state employees in 2001. On its face, the court’s
opinion seems to suggest that any state employee union seeking
5
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Liu, J., concurring and dissenting
to preserve state law rights not addressed in an MOU’s specific
provisions must incorporate into the MOU an express
reservation of all state law provisions conferring such rights,
present or future. This is in substantial tension with extensive
case law holding that waiver of statutory rights in collective
bargaining occurs only when such waiver is “clear and
unmistakable.” (Choate v. Celite Corp. (2013) 215 Cal. App. 4th
1460, 1465; see Vasserman v. Henry Mayo Newhall Memorial
Hospital (2017) 8 Cal.App.5th 236, 245; Mendez v. Mid-Wilshire
Health Care Center (2013) 220 Cal. App. 4th 534, 543; Vasquez v.
Superior Court (2000) 80 Cal. App. 4th 430, 432; 14 Penn Plaza
v. Pyett (2009) 556 U.S. 247, 272 [same rule for federal statutory
rights]; Metropolitan Edison Co. v. NLRB (1983) 460 U.S. 693,
708.) “[S]ilence in a bargaining agreement with respect to an
issue previously in dispute does not meet the test of ‘clear and
unmistakable’ language of relinquishment of that issue.”
(Oakland Unified School Dist. v. Public Employment Relations
Bd. (1981) 120 Cal. App. 3d 1007, 1011.)
The court’s reliance on the Legislature’s approval of the
post-2001 MOUs is also unavailing. Although the Ralph C. Dills
Act (the Dills Act) (Gov. Code, § 3512 et seq.), allows for an MOU
to supersede other state law, such supersession requires
legislative approval (Gov. Code, § 3517.5) if an MOU would
amend any statutory provision not specifically designated in the
Dills Act itself. The Dills Act enumerates the statutory
provisions over which “the memorandum of understanding shall
be controlling without further legislative action” when a
provision is “in conflict with the provisions of a memorandum of
understanding.” (Gov. Code, §§ 3517.6, 3517.61.) Wage Order
No. 4 is not one of the enumerated provisions; thus, in order to
supersede it, an MOU must be presented to and approved by the
6
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Liu, J., concurring and dissenting
Legislature. Senate Bill No. 65, which authorized the 2001–
2006 MOU at issue here, listed several statutory provisions that
the MOU superseded, but it made no mention of Wage Order
No. 4 or minimum wage compensation. (Sen. Bill No. 65 (2001–
2002 Reg. Sess.) § 5.) And the parties have not pointed to
anything in the bill’s legislative history indicating that the MOU
was intended to supersede the minimum wage provisions of
Wage Order No. 4. Thus, the very legislation authorizing the
2001–2006 MOU confirms that the parties made no agreement
displacing the represented plaintiffs’ right to compensation for
entry-exit walk time under Wage Order No. 4.
In sum, the 2001 revision to Wage Order No. 4 changed
the baseline expectations with respect to minimum wage
compensation for entry-exit walk time. Because there is no
indication, much less a clear and unmistakable indication, that
the represented plaintiffs agreed to waive any right they may
have to such compensation in the post-2001 MOUs, I would
allow their claim for such compensation to proceed.
II.
As for the unrepresented plaintiffs, today’s opinion
concludes that Wage Order No. 4 and CalHR’s Pay Scale
Manual are in “direct conflict” (maj. opn., ante, at p. 39) and
“cannot be harmonized” (id. at pp. 43–44) with respect to their
definitions of compensable work time, and that the Pay Scale
Manual’s definition must prevail because of “CalHR’s more
specific authority” (id. at p. 44). But I see no direct conflict here.
Nor do I think it necessary or wise to opine on whether the Pay
Scale Manual is entitled to the same degree of judicial deference
as IWC wage orders. As the court acknowledges, we must accord
great deference to IWC wage orders, and we must “harmonize[]”
7
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Liu, J., concurring and dissenting
those orders with other statutory directives whenever possible.
(Id. at p. 38.) Such harmony is achievable here because the Pay
Scale Manual can be readily construed in a manner that poses
no obstacle to the unrepresented plaintiffs’ minimum wage
claim for entry-exit walk time under Wage Order No. 4.
In interpreting wage orders, we have long observed the
“remedial nature” of the legislative enactments empowering the
IWC to regulate “wages, hours and working conditions for the
protection and benefit of employees.” (Industrial Welfare Com.
v. Superior Court (1980) 27 Cal. 3d 690, 702; see id. at pp. 697–
698 [IWC’s authority also derives from article XIV, section 1 of
the California Constitution].) Wage orders are to be “liberally
construed with an eye to promoting [employee] protection[s]”
(Industrial Welfare, at p. 702), and “courts have shown the
IWC’s wage orders extraordinary deference, both in upholding
their validity and in enforcing their specific terms” (Martinez v.
Combs (2010) 49 Cal. 4th 35, 61 (Martinez)). Because wage
orders have “the same dignity as statutes,” they “must be given
‘independent effect’ separate and apart from any statutory
enactments.” (Brinker, supra, 53 Cal.4th at p. 1027.) Thus,
insofar as we are able, we are required to give “independent
effect” to Wage Order No. 4’s minimum wage protections
“separate and apart from” the Pay Scale Manual. Even if the
Pay Scale Manual is the product of “CalHR’s more specific
authority” (maj. opn., ante, at p. 44), we must still give effect to
the terms of the IWC’s wage order if possible. Only in the case
of a direct and irreconcilable conflict may we consider declining
to give effect to the wage order.
The text of the Pay Scale Manual contains nothing that
expressly excludes the unrepresented employees from the wage
order’s coverage. Nor does it specifically address the availability
8
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Liu, J., concurring and dissenting
of minimum wage compensation for entry-exit activities. By
contrast, the 2001 revision to Wage Order No. 4 expressly
extended the “Definitions” and “Minimum Wage” sections to
apply to state employees (Cal. Code Regs., tit. 8, § 11040,
subd. 1(B)), even as the provisions addressing “Daily Overtime”
and “Alternative Workweek Schedules” were not extended to
apply to state employees (id., subds. (1)(B) & (3)). There is no
conflict between the Pay Scale Manual and Wage Order No. 4:
The Pay Scale Manual governs the regular and overtime pay of
the unrepresented employees as members of “Work Week Group
2,” and Wage Order No. 4 governs their entitlement to minimum
wage compensation for other time worked.
Thus, Wage Order No. 4 and the Pay Scale Manual are
overlapping administrative schemes that can both be enforced.
Wage Order No. 4 defines compensable work time broadly, using
a definition that arguably includes entry-exit walk time. But
Wage Order No. 4 applies only in part to state employees.
Specifically, its minimum wage provision applies, but not its
overtime provision (Wage Order No. 4, § 1(B)), and its minimum
wage provision does not apply to administrative, executive, or
professional employees (id., § 1(A)). Meanwhile, the Pay Scale
Manual defines compensable work time narrowly, incorporating
the definition established by the federal Fair Labor Standards
Act of 1938 (FLSA) (29 U.S.C. § 201 et seq.). But the Pay Scale
Manual governs only the regular and overtime compensation of
employees falling within Work Week Group 2; it says nothing
about the minimum wage compensation of such employees for
hours worked outside of its definition of compensable work time.
In short, Wage Order No. 4 and the Pay Scale Manual govern
distinct forms of compensation, and there is no obstacle to
9
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Liu, J., concurring and dissenting
enforcing both schemes simultaneously, each within its own
sphere of application.
The court concludes that “the Pay Scale Manual occupies
the field with respect to the compensation rates of state
employees” (maj. opn., ante, at p. 45, fn. 18) because CalHR’s
regulations say: “Unless otherwise indicated in the pay plan,
the rates of pay set forth represent the total compensation in
every form except for overtime compensation.” (Cal. Code Regs.,
tit. 2, § 599.671.) Although the court’s reading of this regulatory
language is reasonable, I do not think it is the only reasonable
reading. The language also may be construed to mean that “the
rates of pay set forth represent the total compensation in every
form” for all hours worked that qualify as compensable work
time under the pay plan. In other words, within the sphere of
application of the pay plan (here, the Pay Scale Manual), the pay
plan exclusively sets forth “the rates of pay” comprising “total
compensation in every form except for overtime compensation.”
Notably, the regulation does not use a “comprehensive” phrase
such as “ ‘notwithstanding any other provision of law,’ ” which
“signals a broad application overriding all other code sections
unless it is specifically modified by use of a term applying it only
to a particular code section or phrase.” (In re Marriage of Cutler
(2000) 79 Cal. App. 4th 460, 475; see Arias v. Superior Court
(2009) 46 Cal. 4th 969, 983.) Because the regulation can be
reasonably construed in a manner that does not displace the
minimum wage requirement of Wage Order No. 4, that is the
construction we must adopt in light of our obligation to give
“ ‘independent effect’ ” to the wage order if reasonably possible.
(Brinker, supra, 53 Cal.4th at p. 1027.)
Today’s opinion takes insufficient account of our long
history of deference to IWC wage orders and unnecessarily
10
STOETZL v. DEPARTMENT OF HUMAN RESOURCES
Liu, J., concurring and dissenting
suggests that the Legislature’s delegation of authority to CalHR
is enough to afford its manual the same dignity as IWC wage
orders. (Maj. opn., ante, at pp. 40–41.) There is no reason here
to address whether an ordinary statutory delegation of
authority is equivalent to a constitutionally authorized
delegation of legislative, judicial, and executive authority, let
alone a delegation of authority that has been affirmed
repeatedly, over nearly a century, by “formal expressions of
legislative and voter intent” construed to insulate the IWC’s
work from judicial interference. (See Martinez, supra, 49
Cal.4th at p. 61; see Cal. Const., art. XIV, § 1.) The issue has
not been briefed by the parties, and the court’s discussion of this
point is dictum in light of its conclusion that the wage order does
not govern the unrepresented plaintiffs’ claims.
In sum, I agree with the trial court that CalHR intended
the FLSA standard to define compensable work time for
purposes of calculating the unrepresented plaintiffs’ regular and
overtime compensation. But this conclusion does not foreclose
those plaintiffs’ minimum wage claims. Although compensable
work time for the purpose of calculating regular and overtime
compensation is governed by the narrow FLSA definition,
compensable work time for the purpose of paying the minimum
wage is governed by the broader Wage Order No. 4 definition.
I respectfully dissent from the court’s rejection of the
represented plaintiffs’ and the unrepresented plaintiffs’
minimum wage claims.
LIU, J.
I Concur:
CUÉLLAR, J.
11
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion Stoetzl v. State of California
__________________________________________________________________________________
Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 14 Cal.App.5th 1256
Rehearing Granted
__________________________________________________________________________________
Opinion No. S244751
Date Filed: July 1, 2019
__________________________________________________________________________________
Court: Superior
County: San Francisco
Judge: John E. Munter
__________________________________________________________________________________
Counsel:
Carroll, Burdick & McDonough, Laurie J. Helper; Squire Patton Boggs (US), David M. Rice; Messing
Adam & Jasmine, Jack T. Friedman, Gary M. Messing, Gregg McLean Adam, Yonatan L. Moskowitz,
Monique Alonso; Goyette and Associates, Inc., and Gary G. Goyette for Plaintiffs and Appellants.
Kronick, Moskovitz, Tiedemann & Girard, David W. Tyra, Kristianne T. Seargeant; Joan A. Markoff,
Frolan R. Aguiling, Christopher E. Thomas and David D. King for Defendants and Respondents.
Counsel who argued in Supreme Court (not intended for publication with opinion):
Gregg McLean Adam
Messing Adam & Jasmine
235 Montgomery Street, Suite 828
San Francisco, CA 94104
(415) 266-1800
David W. Tyra
Kronick, Moskovitz, Tiedemann & Girard
400 Capitol Mall, 27th Floor
Sacramento, CA 95814
(916) 321-4500