In Gomez v. Regents of University of California (2021) 63 Cal.App.5th 386, the Fourth District of the California Court of Appeals held that the Regents of the University of California have some immunity when it comes to California’s minimum wage laws. At issue in this case was whether the Regents —an independent governing body that oversees the state’s colleges and universities—are a public employer, or whether the University is a public trust, as defined by the California Constitution, making them free to make internal decisions relating to wages and benefits given to its employees.

A former employee of the University of California, Guivini Gomez, alleged that due to the University’s time management policies she received below the state required minimum wage for all the hours she worked. While the Gomez’s hourly rate was above minimum wage, Gomez asserted that the University’s time keeping policies violated the law in two ways. First, they rounded the number of hours worked, which usually resulted in rounding down. And secondly, they automatically deducted thirty minutes for meal breaks, regardless if the employee was offered or took the break.

Gomez alleged that this practice violated the California Labor Code Sections 1194 & 1197, which require employers to pay the minimum wage “for all hours worked.” Gomez brought suit against the Regents seeking relief for unpaid wages and civil penalties under the Private Attorneys General Act (PAGA). In response, the Regents claimed they were exempt from any PAGA penalties because the Labor Code only applied to private sector employees, unless specifically stated otherwise. The trial court sided with the Regents agreeing that they were exempt from the Labor Code provisions, and therefore were not subject to any subsequent penalties under PAGA.

On appeal, the Gomez argued the Regents pay practices violated Wage Order No. 4, section 4 which requires minimum wage to be paid for “all the hours worked.” In response, the Regents argued that they were exempt from the Wage Order because the Wage Order only specified that it applies to the state and its political subdivisions and the relevant Labor Code provisions, in its definition of employer, did not include the Regents.

The California Court of Appeals for the Fourth District upheld the decision by the trial court in favor of the Regents. The court held that under the California Constitution the Regents were considered a “public trust.” This grants them “full powers of organization and government” and also gives them “general immunity from legislative regulation.” While there are a number of exceptions to this immunity, the courts have consistently held that statutes regulating wages and benefits of employees are a matter of internal affairs. In coming to this decision, the Appeal’s Court leaned heavily on the precedent in Kim v. Regents of University of California (2000) 80 Cal.App.4th 160.

The court concluded that Regent’s time-keeping procedures are matters of internal affairs and don’t fall within any of the exceptions to the Regents’ constitutional immunity. The court regarded the Regents not to be a “public employer” as defined by the Wage Order No. 4. Instead, the University is “a separate arm of state government that is given constitutional power to govern its own internal affairs, such as the terms on which it employs its workers.” This means these provisions are not binding on the University.

Although the court ultimately sided with the University, they did not conclude that state minimum wage laws do not apply to the Regents. Instead, the nuanced opinion points out that Gomez did “not allege the Regents set her hourly pay below the minimum wage.” Instead, she challenged certain time-keeping proceduresthe Regents used. The court found that the way in which the Regents calculated the hours worked was a matter of internal governance and therefore not subject to the California Labor Codes or Wage Order in question.