Marquez v. City of Long Beach ( 2019 )

Filed 2/25/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
WENDY MARQUEZ et al., B282270
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. BC623334)
v.
CITY OF LONG BEACH,
Defendant and
Respondent.
APPEAL from a judgment of the Superior Court of Los
Angeles County, William F. Highberger, Judge. Reversed and
remanded with directions.
Weinberg, Roger & Rosenfeld, David A. Rosenfeld, Lisl R.
Soto and Alejandro Delgado for Plaintiffs and Appellants.
Rutan & Tucker and George W. Shaeffer, Jr., for Defendant
and Respondent.
__________________________
Plaintiffs Wendy Marquez and Jasmine Smith appeal from a
judgment of dismissal entered after the trial court sustained
without leave to amend the demurrer filed by the City of Long
Beach (City) to plaintiffs’ class action complaint. Plaintiffs alleged
causes of action for violations of the Labor Code and the Industrial
Welfare Commission’s (IWC) wage orders based on the City’s
alleged failure to pay workers employed as pages and recreation
leader specialists wages at or above the statewide minimum wage.
The trial court found the authority to determine employee
compensation was reserved to the City as a charter city under
article XI, section 5 of the California Constitution, and the state
could not impose a minimum wage for the City’s employees
because the City’s compensation of its employees was not a matter
of statewide concern. On appeal, plaintiffs contend the
Legislature’s interest in the provision of a living wage to all
workers is a matter of statewide concern, and the minimum wage
requirement is appropriately tailored to address that concern.
This case pits article XI, section 5 of the state Constitution,
which grants to charter cities authority over municipal affairs,
including “plenary authority” to provide for the compensation of
city employees, against article XIV, section 1 of the state
Constitution, which provides “[t]he Legislature may provide for
minimum wages and for the general welfare of employees . . . .”
Despite the century-long history of the home rule doctrine (see
Popper v. Broderick (1899) 123 Cal. 456 (Popper)) and the state’s
regulation of the minimum wage (see Stats. 1913, ch. 324, pp. 632-
637), the Supreme Court has not squarely resolved whether
charter cities must comply with state law minimum wage
requirements.
We conclude legislation setting a statewide minimum wage,
generally applicable to both private and public employees,
2
addresses the state’s interest in protecting the health and welfare
of workers by ensuring they can afford the necessities of life for
themselves and their families. Thus, the Legislature may
constitutionally exercise authority over minimum wages, despite
the constitutional reservation of authority in charter cities to
legislate as to their municipal affairs. We reverse.
FACTUAL AND PROCEDURAL BACKGROUND
A. The Complaint
On June 9, 2016 plaintiffs filed their putative class action
complaint asserting causes of action under Labor Code sections
1182.12 and 1194, 1 as well as under section 4 of IWC Wage Order
Nos. 4-2001 and 10-2001 (Cal. Code Regs., tit. 8, §§ 11040, 11100) 2
for the failure to pay the state minimum wage. The complaint
alleged the City is a charter city, and Marquez, Smith, and
approximately 200 employees have been employed by the City’s
1 All further undesignated references are to the Labor Code.
2 Section 1182.12 establishes the applicable state minimum
wage effective in each calendar year. Wage Order No. 4-2001
governs employees in the professional, technical, clerical,
mechanical, and “similar” occupations; Wage Order No. 10-2001
governs employees in the amusement and recreation industry.
The City does not dispute that section 1182.12 and Wage Order
Nos. 4-2001 and 10-2001 apply to plaintiffs’ work classifications.
Section 1194, subdivision (a), provides that “any employee
receiving less than the legal minimum wage . . . applicable to the
employee is entitled to recover in a civil action the unpaid balance
of the full amount of this minimum wage or overtime
compensation, including interest thereon, reasonable attorney’s
fees, and costs of suit.”
3
Library Services Department and Parks, Recreation, and Marine
Department during the relevant period. The City employed
Marquez as a page and Smith as a recreation leader specialist.
The complaint further alleged plaintiffs and the putative class are
classified as nonexempt, hourly employees, and from January 1,
2016 until approximately April 18, 2016 the City paid the class
members less than the legally mandated state minimum wage of
$10.00 per hour. The complaint sought damages, civil penalties,
and equitable relief.
B. The City’s Demurrer
In its demurrer, the City argued the plaintiffs’ claims were
barred under the home rule doctrine because wages set by charter
cities are municipal affairs, not subject to state regulation. The
City also asserted in its reply that charter cities did not come
within the statutory definition of employers subject to the
minimum wage requirement. Further, the wages to be paid to the
City’s pages and recreation leadership specialists were set by a
memorandum of understanding (MOU) between the union
representing those employees and the City, ratified by the City
Council. 3 According to the City, application of the minimum wage
to its employees would unlawfully impair the MOU.
After sustaining the City’s demurrer without leave to
amend, on March 2, 2017 the trial court entered a judgment
dismissing the action with prejudice. Plaintiffs timely appealed.
3 On February 25, 2018 we granted the City’s request for
judicial notice of the relevant MOU and related City Council
resolutions.
4
DISCUSSION
A. Standard of Review
“In reviewing an order sustaining a demurrer, we examine
the operative complaint de novo to determine whether it alleges
facts sufficient to state a cause of action under any legal theory.
[Citation.] Where the demurrer was sustained without leave to
amend, we consider whether the plaintiff could cure the defect by
an amendment.” (T.H. v. Novartis Pharmaceuticals Corp. (2017)
4 Cal.5th 145, 162; accord, Centinela Freeman Emergency Medical
Associates v. Health Net of California, Inc. (2016) 1 Cal.5th 994,
1010.) When evaluating the complaint, “we assume the truth of
the allegations . . . .” (Lee v. Hanley (2015) 61 Cal.4th 1225, 1230;
accord, McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412,
415.)
In our analysis of whether a state law applies to a charter
city, we “accord great weight to the factual record that the
Legislature has compiled,” but these factual findings “are not
controlling.” (State Building & Construction Trades Council of
California v. City of Vista (2012) 54 Cal.4th 547, 558 (City of
Vista); accord, County of Riverside v. Superior Court (2003)
30 Cal.4th 278, 286 (County of Riverside).) “[T]he question
whether in a particular case the home rule provisions of the
California Constitution bar the application of state law to charter
cities turns ultimately on the meaning and scope of the state law
in question and the relevant state constitutional provisions.
Interpreting that law and those provisions presents a legal
question, not a factual one.” (City of Vista, at p. 558; accord,
County of Riverside, at p. 286 [“The judicial branch, not the
legislative, is the final arbiter of this question.”].)
5
“We independently review the construction of statutes
[citation] and begin with the text. If it ‘is clear and unambiguous
our inquiry ends.’ [Citation.] Wage and hour laws are ‘to be
construed so as to promote employee protection.’ [Citations.]
These principles apply equally to the construction of wage orders.”
(Mendiola v. CPS Security Solutions, Inc. (2015) 60 Cal.4th 833,
840; accord, Kilby v. CVS Pharmacy, Inc. (2016) 63 Cal.4th 1, 11
[“IWC regulations are liberally construed to protect and benefit
employees.”].)
B. The Trial Court Erred in Sustaining the City’s Demurrer
1. California’s minimum wage law
“Over a century ago, the Legislature responded to the
problem of inadequate wages and poor working conditions by
establishing the IWC, giving it authority to investigate various
industries and promulgate wage orders establishing minimum
wages, maximum work hours, and conditions of labor.” (Kilby v.
CVS Pharmacy, Inc., supra, 63 Cal.4th at p. 10.) The Legislature
created the IWC in 1913, and delegated to it the power to set
minimum wages and working conditions for women and children.
(Martinez v. Combs (2010) 49 Cal.4th 35, 50 (Martinez), citing
Stats. 1913, ch. 324, § 13, p. 637.) The 1913 act charged the IWC
with setting labor conditions in accordance with “‘the comfort,
health, safety and welfare of such women and minors’” and setting
“for each industry ‘[a] minimum wage to be paid to women and
minors . . . adequate to supply . . . the necessary cost of proper
living and to maintain [their] health and welfare.’” (Martinez, at
pp. 54-55, quoting Stats. 1913, ch. 324, §§ 3, subd. (a), & 6, subd.
(a), par. 1, pp. 633-634.)
The same year, the Legislature “propos[ed] to the voters a
successful constitutional amendment confirming the Legislature’s
6
authority” to regulate the minimum wage and to delegate
authority to the IWC, which the voters enacted as former article
XX, section 17 ½ of the California Constitution. (Martinez, supra,
49 Cal.4th at p. 54 & fn. 20; accord, Pacific G. & E. Co. v.
Industrial Acc. Com. (1919) 180 Cal. 497, 500.) The argument in
support of the constitutional amendment was that protected
employees “‘should be certain of a living wage—a wage that
insures for them the necessary shelter, wholesome food and
sufficient clothing,’” and “that substandard wages frequently led to
ill health and moral degeneracy.” (Martinez, at p. 54, quoting
Ballot Pamp., Gen. Elec. (Nov. 3, 1914) argument in favor of
Assem. Const. Amend. No. 90, p. 29.)
The IWC set the first statewide minimum wage in 1916 by
issuing industry- and occupation-wide wage orders, applicable to
women and children. (Brinker Restaurant Corp. v. Superior Court
(2012) 53 Cal.4th 1004, 1026 (Brinker); Industrial Welfare Com. v.
Superior Court (1980) 27 Cal.3d 690, 700.) The minimum wage for
women and children was raised from time to time. In 1972 the
Legislature extended the protections of the minimum wage to all
employees, and “expanded the IWC’s jurisdiction to include all
employees, male and female, in response to federal legislation
barring employment discrimination because of sex.” (Martinez,
supra, 49 Cal.4th at p. 55, citing Stats. 1972, ch. 1122, § 13,
p. 2156.) In the following year, the Legislature “‘restated the
commission’s responsibility in even broader terms,’” including an
ongoing duty to review the adequacy of the minimum wage.
(Martinez, at p. 55.)
Following this enlarged mandate, the voters “amended the
state Constitution to confirm the Legislature’s authority to confer
on the IWC ‘legislative, executive, and judicial powers.’”
(Martinez, supra, 49 Cal.4th at p. 55, quoting Cal. Const., art. XIV,
7
§ 1 [added by Assem. Const. Amend. No. 40 (1975–1976 Reg.
Sess.), as approved by voters (Prop. 14), Primary Elec. (June 8,
1976)], italics omitted.) The 1976 constitutional amendment
further provided “[t]he Legislature may provide for minimum
wages and for the general welfare of employees . . . .” (Cal. Const.,
art. XIV, § 1.)
“‘The IWC’s wage orders are to be accorded the same dignity
as statutes. They are “presumptively valid” legislative regulations
of the employment relationship [citation], regulations that must be
given “independent effect” separate and apart from any statutory
enactments [citation]. To the extent a wage order and a statute
overlap, we will seek to harmonize them, as we would with any
two statutes.’” (Mendoza v. Nordstrom, Inc. (2017) 2 Cal.5th 1074,
1082, quoting Brinker, supra, 53 Cal.4th at p. 1027.)
The IWC continued periodically to raise the minimum wage
by amendments to its wage orders. On October 23, 2000 the IWC
promulgated a wage order setting the minimum wage as of
January 1, 2001 ($6.25 per hour) and January 1, 2002 ($6.75 per
hour). (Wage Order No. MW-2001; Cal. Code Regs., tit. 8,
§ 11000.) That order also made the minimum wage provisions in
wage orders regulating certain industries applicable for the first
time to “employees directly employed by the State or any political
subdivision thereof, including any city, county, or special district.”
(Cal. Code Regs., tit. 8, §§ 11040, subd. 1(B) [Wage Order No. 4-
2001 governing employees in professional, technical, clerical,
mechanical, and “similar” occupations] & 11100, subd. 1(C) [Wage
Order No. 10-2001 governing employees in the amusement and
recreation industry].) 4
4 The wage orders are phrased in the negative to read that,
except as to specified sections, including the minimum wage
8
“The Legislature defunded the IWC in 2004, however its
wage orders remain in effect.” (Murphy v. Kenneth Cole
Productions, Inc. (2007) 40 Cal.4th 1094, 1102, fn. 4; accord,
Flowers v. Los Angeles County Metropolitan Transportation
Authority (2015) 243 Cal.App.4th 66, 74, fn. 2 (Flowers).) After
defunding the IWC, the Legislature began in 2006 to set a
statutory minimum wage, made applicable to employees through
amendment and republication of the IWC wage orders to be
consistent with the statutory minimum wage. (Stats. 2006, ch.
230, § 2, pp. 2078-2079 [Assem. Bill No. 1835]; see § 1182.13, subd.
(b) [“The Department of Industrial Relations shall amend and
republish the [IWC’s] wage orders to be consistent with . . . Section
1182.12.”].)
In 2013 the Legislature again enacted graduated increases
in the minimum wage, effective July 1, 2014 ($9.00 per hour) and
January 1, 2016 ($10.00 per hour). (Stats. 2013, ch. 351, § 1
[Assem. Bill No. 10].) Most recently, effective January 1, 2017 the
Legislature set a series of graduated increases in the minimum
wage to take effect each year on January 1, culminating in a
$15.00 per hour minimum wage for all covered employees effective
January 1, 2023, with limited exceptions. (See § 1182.12, subd.
(b)(1)-(2).) Section 1182.12, subdivision (b)(3), also provides that
“[f]or purposes of this subdivision [setting the minimum wage],
‘employer’ includes the state, political subdivisions of the state,
and municipalities.”
provisions in section 4, the wage orders do not apply to employees
of the state, cities, counties, or special districts. (See, e.g., Cal.
Code Regs., tit. 8, §§ 11040, subd. 1(B) & 11100, subd. 1(C).)
9
2. The home rule doctrine and state regulation of charter
city and county wages and other employment relations
The Government Code classifies cities as either charter
cities, organized under a charter (Gov. Code, § 34101), or general
law cities, organized under the general law of California (Gov.
Code, § 34102). (City of Vista, supra, 54 Cal.4th at p. 552, fn. 1;
People v. Chacon (2007) 40 Cal.4th 558, 571, fn. 13; Jauregui v.
City of Palmdale (2014) 226 Cal.App.4th 781, 794-795 (Jauregui).)
The parties agree the City is a charter city.
“Charter cities are specifically authorized by our state
Constitution to govern themselves, free of state legislative
intrusion, as to those matters deemed municipal affairs.” (City of
Vista, supra, 54 Cal.4th at p. 555; accord, Jauregui, supra,
226 Cal.App.4th at p. 795.) Article XI, section 5, subdivision (a), of
the California Constitution “represents an ‘affirmative
constitutional grant to charter cities of “all powers appropriate for
a municipality to possess . . .” and [includes] the important
corollary that “so far as ‘municipal affairs’ are concerned,” charter
cities are “supreme and beyond the reach of legislative
enactment.”’” (City of Vista, at p. 556.)
“However, a charter city’s authority to enact legislation is
not unlimited.” (Jauregui, supra, 226 Cal.App.4th at p. 795.)
“[T]he Legislature may regulate as to matters of statewide concern
even if the regulation impinges ‘to a limited extent’ [citation] on
powers the Constitution specifically reserves to counties ([Cal.
Const., art. XI,] § 1) or charter cities ([Cal. Const., art. XI,] § 5).” 5
5 Article XI, section 1, subdivision (b), of the California
Constitution, provides that counties “shall provide for the number,
compensation, tenure, and appointment of employees.” Article XI,
section 5, subdivision (b), similarly provides that charter cities
10
(County of Riverside, supra, 30 Cal.4th at p. 287; accord,
Professional Fire Fighters, Inc. v. City of Los Angeles (1963)
60 Cal.2d 276, 295 (Professional Fire Fighters) [“legislation may
impinge upon local control to a limited extent, but it is nonetheless
a matter of state concern”].) “‘Some portions of a local matter may
ultimately become of general state interest.’” (Lippman v. City of
Oakland (2017) 19 Cal.App.5th 750, 763 [uniformity in building
code is statewide concern]; accord, City of Vista, supra, 54 Cal.4th
at p. 557 [“‘“the constitutional concept of municipal affairs is not a
fixed or static quantity . . . [but one that] changes with the
changing conditions upon which it is to operate”’” (italics
omitted)].)
In areas considered “municipal affairs,” the general law of
the state prevails over local law only where the general law is
“‘reasonably related’” and “‘narrowly tailored’” to resolution of an
issue of statewide concern. (City of Vista, supra, 54 Cal.4th at
p. 556; accord, California Fed. Savings & Loan Assn. v. City of Los
Angeles (1991) 54 Cal.3d 1, 7 (California Fed. Savings) [“In the
event of a true conflict between a state statute reasonably tailored
to the resolution of a subject of statewide concern and a charter
have plenary authority over the “compensation, method of
appointment, qualifications, tenure of office and removal of [their]
deputies, clerks and other employees.” The cases addressing the
home rule doctrine have applied the same analysis to the authority
of charter counties under article XI, section 1, and charter cities
under article XI, section 5, to set the compensation for their
employees. (See City of Vista, supra, 54 Cal.4th at pp. 555-556
[applying home rule doctrine to charter city]; Sonoma County
Organization of Public Employees v. County of Sonoma (1979)
23 Cal.3d 296, 316 [“Similar rules apply to charter counties.”].)
11
city [ordinance], the latter ceases to be a ‘municipal affair’ to the
extent of the conflict and must yield.”].)
The Supreme Court has considered the extent to which the
state may regulate charter city employee compensation and other
employment issues many times. In Popper, the Supreme Court
addressed the constitutionality of two 1897 state statutes
specifying the salaries for various ranks of police officers and
firefighters employed by municipalities of the first class. 6 (Popper,
supra, 123 Cal. at pp. 456-457, 459.) The court invalidated the
statutes, concluding “the pay of firemen and policemen clearly falls
within the term ‘municipal affairs.’” (Id. at p. 462.)
In City of Pasadena v. Charleville (1932) 215 Cal. 384(Charleville), the Supreme Court held the City of Pasadena, as a
charter city, was not required to comply with the Public Works
Wage Rate Act of 1931, which required that any contract for public
works pay the prevailing wage for the type of work in the locality
in which the work was to be performed. (Charleville, at pp. 389-
390, 400.) The court concluded the Legislature lacked the
authority to bind the city to the statutory scheme because the
construction of public works projects was a municipal affair. (Id.
at p. 389; see San Francisco Labor Council v. Regents of University
of California (1980) 26 Cal.3d 785, 790 (San Francisco Labor
Council) [state could not compel the Regents of the University of
California to pay prevailing wages to university employees because
the requirement was “not a matter of statewide concern”].)
6 At the time of Popper, a municipality of the first class
“include[d] ‘all municipal corporations . . . having a population of
more than one hundred thousand’ (Stats. 1883, p. 24).” (Denman
v. Broderick (1896) 111 Cal. 96, 105.)
12
In Healy v. Industrial Acc. Com. (1953) 41 Cal.2d 118(Healy), the Supreme Court held the statewide system of workers’
compensation was a subject of statewide concern, and superseded
the City of Los Angeles’s charter provision requiring an injured
employee’s workers’ compensation award be offset by the worker’s
pension. (Id. at p. 122.) The Labor Code “prohibit[ed] an employer
from directly or indirectly taking any contribution from the
earnings of an employee to cover any part of the cost of
compensation,” but a conflicting provision of the city charter
mandated an employee’s pension be subtracted from the award.
(Id. at pp. 121-122.) Finding the workers’ compensation scheme to
be of “state-wide concern,” the Supreme Court held the provision of
the Labor Code was “paramount” to the inconsistent local law, and
remanded for the trial court to make factual findings as to the
employee’s contributions to the pension fund. (Id. at p. 122.)
The Supreme Court again considered the home rule doctrine
in Professional Fire Fighters. There, a union representing
firefighters working for the City of Los Angeles sued to establish
members’ right to join a labor union under the Labor and
Government Codes. (Professional Fire Fighters, supra, 60 Cal.2d
at pp. 279-280 & fn. 1.) The court concluded that because the
legislation was designed to “create uniform fair labor practices
throughout the state,” it “may impinge upon local control to a
limited extent, but it is nonetheless a matter of state concern.”
(Id. at p. 295.) The court reasoned that while “management and
control of [fire] department[s], in the general sense of that phrase,
is a municipal affair,” the “general law prevails over local
enactments of a chartered city, even in regard to matters which
would otherwise be deemed to be strictly municipal affairs, where
the subject matter of the general law is of statewide concern.” (Id.
at p. 292.) The court noted the legislation did not “deprive local
13
government (chartered city or otherwise) of the right to manage
and control its fire departments.” (Id. at p. 294; see Baggett v.
Gates (1982) 32 Cal.3d 128, 139-140 (Baggett) [upholding
imposition of state procedural protections for peace officers before
they could be removed or punished, finding the maintenance of
stable employment relations between police officers and their
public employers was a matter of statewide concern given the
impact a breakdown in relations would have on delivery of the
police’s essential public service]; see also People ex rel. Seal Beach
Police Officers Assn. v. City of Seal Beach (1984) 36 Cal.3d 591,
600-601 & fn. 11 (Seal Beach) [upholding state requirements that
cities “meet and confer” with employee representatives before
modifying employment terms and conditions for employees, but
concluding the requirements did not conflict with the charter city’s
authority].)
The Supreme Court returned to the question of state
regulation of public employee wages in Sonoma County
Organization of Public Employees v. County of Sonoma (1979)
23 Cal.3d 296 (Sonoma County). There, the court invalidated a
state law prohibiting the distribution of state surplus or loan funds
to any local public agency granting to its employees a cost-of-living
wage or salary increase that exceeded the increase the state
provided to its employees for the fiscal year. (Id. at p. 302.)
Relying on Popper and Charleville, the court concluded the state
law was an impermissible infringement on municipal affairs,
rejecting the Legislature’s express statutory finding that a
statewide fiscal emergency warranted the infringement. (Sonoma
County, at pp. 317-318.) 7
7 The Sonoma County court also invalidated the legislation as
an unconstitutional impairment of public agencies’ binding
14
In County of Riverside, the Supreme Court invalidated a
statute requiring certain public entities to submit disputes over
firefighter and law enforcement officer wages to binding
arbitration, rejecting the legislative findings that avoidance of
strikes in these sectors was a matter of statewide concern.
(County of Riverside, supra, 30 Cal.4th at pp. 282, 286.) The court
distinguished Professional Fire Fighters, Baggett, and Seal Beach
as involving the procedural regulation of labor relations, whereas
the state law at issue involved a substantive regulation with the
effect of “depriving the county entirely of its authority to set
employee salaries” by outsourcing that function to a private
arbitrator. (County of Riverside, at pp. 287-289.)
Most recently, the Supreme Court in City of Vista revisited
the issue of the constitutionality of state prevailing wage laws for
public works projects. (City of Vista, supra, 54 Cal.4th at p. 552.)
There, a federation of labor unions sought to compel the City of
Vista to pay the prevailing wage in the local construction industry,
as required by state law. (Ibid.) The court applied the four-part
test set forth in California Fed. Savings for determining whether a
matter falls within the home rule authority of a charter city.
Under this “analytical framework,” the court must consider (1)
“whether the city ordinance at issue regulates an activity that can
be characterized as a ‘municipal affair’”; (2) whether there is “‘an
actual conflict between [local and state law]’”; (3) “whether the
state law addresses a matter of ‘statewide concern’”; and (4)
“whether the law is ‘reasonably related to . . . resolution’ of that
concern [citation] and ‘narrowly tailored’ to avoid unnecessary
contracts with their employees. (Sonoma County, supra, 23 Cal.3d
at p. 314.)
15
interference in local governance.” (City of Vista, at p. 556, quoting
California Fed. Savings, supra, 54 Cal.3d at pp. 16-17, 24.)
“‘If . . . the court is persuaded that the subject of the state
statute is one of statewide concern and that the statute is
reasonably related to its resolution [and not unduly broad in its
sweep], then the conflicting charter city measure ceases to be a
“municipal affair” pro tanto and the Legislature is not prohibited
by article XI, section 5(a), from addressing the statewide
dimension by its own tailored enactments.’” (City of Vista, supra,
54 Cal.4th at p. 556, quoting California Fed. Savings, supra,54 Cal.3d at p. 17.)
Applying this analysis, the court reaffirmed its holdings in
Charleville and Sonoma County, finding “the wage levels of
contract workers constructing locally funded public works are a
municipal affair . . . , and that these wage levels are not a
statewide concern . . . subject to state legislative control . . . .”
(City of Vista, supra, 54 Cal.4th at p. 556.) However, the court
cautioned, “‘[C]ourts should avoid the error of
“compartmentalization,” that is, of cordoning off an entire area of
governmental activity as either a “municipal affair” or one of
statewide concern.’” (Id. at p. 557.) The court added, “‘When a
court invalidates a charter city measure in favor of a conflicting
state statute, the result does not necessarily rest on the conclusion
that the subject matter of the former is not appropriate for
municipal regulation. It means, rather, that under the historical
circumstances presented, the state has a more substantial interest
in the subject than the charter city.’” (Id. at pp. 557-558.)
After finding an actual conflict between the state statute and
the city’s prohibition on payment of prevailing wages in public
works contracts, the court turned to the issue of whether the
construction of public works was a statewide concern, considering
16
whether there was “‘a convincing basis’ for the state’s action—a
basis that ‘justif[ies]’ the state’s interference in what would
otherwise be a merely local affair.” (City of Vista, supra,
54 Cal.4th at p. 560.) The court rejected the unions’ arguments
that the benefit to the economic health of the construction industry
was a statewide concern sufficient to justify state infringement on
local authority over wages. (Id. at p. 561.) Reasoning that
“[a]utonomy with regard to the expenditure of public funds lies at
the heart of what it means to be an independent governmental
entity,” the court found the unions could not “justify state
regulation of the spending practices of charter cities merely by
identifying some indirect effect on the regional and state
economies.” (Id. at p. 562.)
The City of Vista court added, “our cases have suggested that
a state law of broad general application is more likely to address a
statewide concern than one that is narrow and particularized in its
application.” (City of Vista, supra, 54 Cal.4th at p. 564.) On this
basis, the Supreme Court distinguished its prior holdings in Seal
Beach and Professional Fire Fighters, in which it found generally
applicable procedural standards “impinged less on local autonomy
than if they had imposed substantive obligations.” (City of Vista,
at p. 564.)
The court concluded, “Here, the state law at issue is not a
minimum wage law of broad general application; rather, the law at
issue here has a far narrower application, as it pertains only to the
public works projects of public agencies. In addition, it imposes
substantive obligations on charter cities, not merely generally
applicable procedural standards. These distinctions further
undermine the Union’s assertion that the matter here presents a
statewide concern and therefore requires Vista, a charter city, to
comply with the state’s prevailing wage law on the city’s locally
17
funded public works projects.” (City of Vista, supra, 54 Cal.4th at
pp. 564-565.)
We take from these cases that article XI, section 5, of the
state Constitution limits the Legislature’s authority to determine
the wages of charter city employees, to cap those wages, and to
outsource to a third party the authority to determine employee
wages. However, the Legislature may enact laws of broad general
application that impact charter city compensation where the state
law’s infringement on local authority is reasonably related to an
important statewide concern.
3. The state minimum wage law is designed to address a
statewide concern for the health and welfare of workers
and is reasonably related to its purpose
To determine whether the state’s minimum wage law may
be applied to the City, as a charter city, we apply the four-part
analysis set forth by the Supreme Court in City of Vista, supra,
54 Cal.4th at page 556.
a. Compensation of charter city employees is a
municipal affair under section 5 of article XI of
the California Constitution
“‘[T]here is no question that “salaries of local employees of a
charter city constitute municipal affairs . . . .”’” (City of Vista,
supra, 54 Cal.4th at p. 564.) Article XI, section 5, subdivision
(b)(4), of the state Constitution, confers to charter cities “plenary
authority . . . , subject only to the restrictions of this article, to
provide . . . for the compensation . . . of [their] deputies, clerks and
other employees.” However, our inquiry does not end there. A
“‘general law prevails over local enactments of a chartered city,
even in regard to matters which would otherwise be deemed to be
18
strictly municipal affairs, where the subject matter of the general
law is of statewide concern.’” (Seal Beach, supra, 36 Cal.3d at
p. 600, quoting Professional Fire Fighters, supra, 60 Cal.2d at
p. 292; accord, Jauregui, supra, 226 Cal.App.4th at p. 803 [Even
“[t]he plenary authority identified in [the California Constitution,]
article XI, section 5, subdivision (b) can be preempted by a
statewide law after engaging in the four-step evaluation process
specified by our Supreme Court.”].)
b. The minimum wage requirement is in conflict
with the City’s resolution and MOU setting
wages
We must first determine the existence of an actual conflict
between the state and local laws at issue “before proceeding to the
difficult state constitutional question of which law governs a
particular matter.” (City of Vista, supra, 54 Cal.4th at p. 559;
accord, California Fed. Savings, supra, 54 Cal.3d at pp. 16-17 [“To
the extent difficult choices between competing claims of municipal
and state governments can be forestalled in this sensitive area of
constitutional law, they ought to be; courts can avoid making such
unnecessary choices by carefully insuring that the purported
conflict is in fact a genuine one, unresolvable short of choosing
between one enactment and the other.”].)
Plaintiffs and the City contend there is no conflict, but for
different reasons. They are both incorrect.
(i) The wage orders’ minimum wage
provisions apply to the City
The City contends sections 1182.12 and 1194 do not by their
terms apply to charter cities, thus obviating any conflict. We
disagree. “[W]age and hour claims are today governed by two
19
complementary and occasionally overlapping sources of authority:
the provisions of the Labor Code, enacted by the Legislature, and a
series of 18 wage orders, adopted by the IWC.” (Brinker, supra,
53 Cal.4th at p. 1026; accord, Vaquero v. Stoneledge Furniture,
LLC (2017) 9 Cal.App.5th 98, 105-106 [same].) Although the City
is correct that during the relevant period in 2016 former sections
1182.12 and 1194 were silent as to whether they applied to state
and local governments, the relevant IWC wage orders were not. 8
“In actions under section 1194 to recover unpaid minimum
wages, the IWC’s wage orders do generally define the employment
relationship, and thus who may be liable.” (Martinez, supra,
49 Cal.4th at p. 52; accord, Flowers, supra, 243 Cal.App.4th at
p. 74 [“Specific employers and employees become subject to the
minimum wage requirements only through and under the terms of
wage orders . . . . [Citation.] Accordingly, ‘an employee who sues
to recover unpaid minimum wages actually and necessarily sues to
enforce the wage order.’”].) As noted above, “[t]he IWC’s wage
orders are to be accorded the same dignity as statutes,” and “[t]hey
are ‘presumptively valid’ legislative regulations of the employment
relationship . . . .” (Brinker, supra, 53 Cal.4th at p. 1027.)
Here, the express terms of IWC Wage Order Nos. 4-2001,
section 1(B), and 10-2001, section 1(C), make their minimum wage
8 Addressing plaintiffs’ claims for prospective relief, the City
also argues we should not rely on the 2016 amendments to section
1182.12, effective January 1, 2017, that define “employer[s]”
subject to the section to include “the state, political subdivisions of
the state, and municipalities,” to conclude the minimum wage law
applies to charter cities. (§ 1182.12, subd. (b)(3).) Because we
conclude IWC Wage Order Nos. 4-2001 and 10-2001 make the
state minimum wage applicable to charter cities, we do not reach
this contention.
20
provisions applicable to “any city.” (See Cal. Code Regs., tit. 8,
§ 11040, subd. 1(B) [“Except as provided in Sections 1, 2, 4
[minimum wage], 10, and 20, the provisions of this order shall not
apply to any employees directly employed by the State or any
political subdivision thereof, including any city, county, or special
district.” (Italics added.)]; Cal. Code Regs., tit. 8, § 11100, subd.
1(C) [same].) Section 4 of both applicable wage orders requires
“[e]very employer” to pay a specified minimum wage to its
employees. And neither wage order contains an exception from
the minimum wage requirements for public entity employers such
as the City.
As the court explained in Sheppard v. North Orange County
Regional Occupational Program (2010) 191 Cal.App.4th 289(Sheppard) in concluding IWC Wage Order No. 4-2001 applied to
public school district employees, “[W]e interpret the language of
Wage Order No. 4-2001, by its terms, to impose the minimum
wage provision as to all employees in the occupations described
therein, including employees directly employed by the state or any
political subdivision of the state.” (Sheppard, at pp. 300-301;
accord, Stoetzl v. State of California (2017) 14 Cal.App.5th 1256,
1271 [concluding minimum wage provision of IWC Wage Order
No. 4-2001 applied to state employees absent superseding state
legislative enactment], review granted Nov. 29, 2017, S244751.)
The City seeks to distinguish Sheppard by noting it predates
the amendment to section 1197, effective January 1, 2016, which
the City asserts altered the applicability of the wage orders.
However, that amendment had no effect on the applicability of the
wage orders, but instead confirms their continuing operation. (See
§ 1197 [“The minimum wage for employees fixed by the
commission or by any applicable state or local law, is the minimum
wage to be paid to employees . . . .” (Italics added.)].) The
21
amendment to section 1197 was intended to authorize the Labor
Commissioner to investigate and enforce violations of local
minimum wage laws, not to abrogate the applicability of IWC
wage orders to specific entities. (See Legis. Counsel’s Dig., Assem.
Bill No. 970 (2015-2016 Reg. Sess.) Stats. 2015, ch. 783, Summary
Dig. [“This bill . . . authorize[s] the Labor Commissioner to
investigate and, upon a request from the local entity, to enforce
local laws regarding overtime hours or minimum wage
provisions . . . .”].)
We agree with Sheppard and Stoetzl, and likewise conclude
the minimum wage provisions of IWC Wage Order Nos. 4-2001
and 10-2001 apply to public employees. Further, their application
to “any city” under section 1 necessarily includes both charter and
general law cities.
(ii) The minimum wage requirement cannot
be reconciled with the City’s charter and
the enactments of its council
Plaintiffs contend there is no conflict between the state
minimum wage law and the City Charter because the City is free
to determine the wages of its employees, so long as those wages
are at or above the state minimum. However, the City’s charter
provides that wages for the City’s employees are to be set by the
City Council. (Long Beach City Charter, art. V, § 503.) And the
MOU setting plaintiffs’ wages was adopted by a City Council
resolution.
Thus, the City’s enactment setting subminimum wages
conflicts with the state’s minimum wage requirements. (See City
of Vista, supra, 54 Cal.4th at pp. 553, 559-560 [state law requiring
payment of prevailing wage on public works contracts conflicted
with city ordinance prohibiting any city contract from requiring
22
payment of prevailing wages unless authorized by city council];
Dimon v. County of Los Angeles (2008) 166 Cal.App.4th 1276, 1284
(Dimon) [finding conflict between state meal period requirements
and county charter where “MOU specifically covers meal periods”
in a different manner from state requirements]; Curcini v. County
of Alameda (2008) 164 Cal.App.4th 629, 648 (Curcini) [finding
conflict between state overtime and meal and rest period
regulations and county regulations, ordinances, and MOU’s
addressing employee compensation].)
Because there is an actual conflict between the state
minimum wage law and the City Charter, we consider whether the
minimum wage is a matter of statewide concern.
c. The minimum wage for California workers is a
matter of statewide concern
“When, as here, state law and the ordinances of a charter
city actually conflict and we must decide which controls, ‘the hinge
of the decision is the identification of a convincing basis for
legislative action originating in extramunicipal concerns, one
justifying legislative supersession based on sensible, pragmatic
considerations.’ [Citation.] In other words, for state law to control
there must be something more than an abstract state interest, as
it is always possible to articulate some state interest in even the
most local of matters.” (City of Vista, supra, 54 Cal.4th at p. 560,
quoting California Fed. Savings, supra, 54 Cal.3d at p. 18.) We
therefore consider the concerns the Legislature sought to address
by setting a statewide minimum wage.
“The minimum wage represents the Legislature’s and the
[IWC’s] best estimate of the minimum an employee working a full-
time job must be paid to sustain such employee as a resident of
this state and pay for the necessities of life.” (Vasquez v. Franklin
23
Management Real Estate Fund, Inc. (2013) 222 Cal.App.4th 819,
831 [concluding state minimum wage law was fundamental policy
for purposes of claims for wrongful termination and constructive
discharge in violation of public policy]; accord, Flowers, supra,
243 Cal.App.4th at p. 82 [“‘State wage and hour laws “reflect the
strong public policy favoring protection of workers’ general welfare
and ‘society’s interest in a stable job market.’”’”].) Indeed, the
Labor Code vests authority in the IWC to investigate whether “in
any occupation, trade, or industry, the wages paid to employees
may be inadequate to supply the cost of proper living” (§ 1178)
and, if it finds the wages are inadequate, to select a wage board to
“report to the commission its recommendation of a minimum wage
adequate to supply the necessary cost of proper living . . . , and
maintain the health and welfare of employees in this state”
(§ 1178.5, subd. (a)).
As discussed above, in 1913 the Legislature proposed a
constitutional amendment, later adopted by the voters, confirming
the Legislature’s authority to regulate the minimum wage and to
delegate authority to the IWC. The amendment reflected the
concern that workers “‘should be certain of a living wage—a wage
that insures for them the necessary shelter, wholesome food and
sufficient clothing,’” and “that substandard wages frequently led to
ill health and moral degeneracy.” (Martinez, supra, 49 Cal.4th at
p. 54, quoting Ballot Pamp., Gen. Elec. (Nov. 3, 1914) argument in
favor of Assem. Const. Amend. No. 90, p. 29.)
Legislative reports accompanying the Legislature’s statutory
increases to the minimum wage in recent years have consistently
stated the purpose to provide California workers with a living
wage to address poverty in the state. (See, e.g., Assem. Com. on
Labor and Employment, Off. of Assem. Floor Analyses, 3d reading
analysis of Assem. Bill No. 1835 (2005-2006 Reg. Sess.) as
24
amended April 5, 2006, p. 3 [minimum wage increase was part of
the “solution to the growing problem of poverty-level wages in our
state”]; Assem. Com. on Labor and Employment, Analysis on
Assem. Bill No. 10 (2013-2014 Reg. Sess.) September 12, 2013, p. 1
[legislation setting the $9.00 and $10.00 per hour minimum wages
reflects a concern that workers “‘at the bottom of the wage scale
[are] mired in poverty, [and] over recent decades the real value of
their earnings has collapsed’”]; Sen. Rules Com., Off. of Sen. Floor
Analyses, 3d reading analysis of Assem. Bill No. 10 (2013-2014
Reg. Sess.) Sept. 12, 2013, p. 5 [legislation was designed to provide
relief “to millions of struggling Californians”].) The 2016
amendment to the law reflects similar concerns. (Sen. Com. on
Labor and Industrial Relations, com. on Sen. Bill No. 3 (2015-2016
Reg. Sess.) Mar. 31, 2016, p. 5 [“Proponents argue that the
existing minimum wage is simply too little for a family to survive
on . . . . [Sen. Bill No.] 3 will ensure that the minimum wage is
sufficient to keep families above the poverty line . . . .”].)
The Legislature’s interest in the provision of a living wage
also directly implicates the state’s own coffers because employees
receiving wages below the statewide minimum are more likely to
receive state-funded public assistance. The legislative history
accompanying the 2013 statute setting the $10.00 per hour
minimum wage notes projected savings on state public assistance
spending. (See Sen. Appropriations Com., Fiscal Summary on
Assem. Bill No. 10 (2013-2014 Reg. Sess.) Aug. 30, 2013, p. 3 [“By
raising the earnings of some public assistance recipients, this
measure would result in reduced state costs.”].) The 2016
amendments reflect a similar concern. (Sen. Rules Com., Off. of
Sen. Floor Analyses, Analysis on Sen. Bill No. 3 (2015-2016 Reg.
Sess.) March 31, 2016, p. 6 [projecting “offsetting savings to Medi-
Cal and CalWORKS programs”].)
25
As the Supreme Court observed in Johnson v. Bradley (1992)
4 Cal.4th 389, 407, “We do not doubt that conservation of the
state’s limited funds is a statewide concern.” The court concluded,
however, that a state law ban on public funding of political
campaigns was not justified by a statewide interest because the
ban would impact the local funding of campaigns, not state
funding. (Ibid.)
While the views of the Legislature are not binding on this
court, they are relevant and entitled to “great weight.” (City of
Vista, supra, 54 Cal.4th at p. 565; accord, County of Riverside,
supra, 30 Cal.4th at pp. 286-287 [“‘[I]t may well occur that in some
cases the factors which influenced the Legislature to adopt the
general laws may likewise lead the courts to the conclusion that
the matter is of statewide rather than merely local concern.’”].) In
this case, the concerns that led the Legislature to adopt and
increase the statewide minimum wage justify application of the
minimum wage to all employees, including those of charter cities.
Beginning in 1913, the Legislature has consistently acted, whether
directly or through the IWC, to ensure those employed in
California are paid a wage sufficient to provide for their health
and well-being.
Our conclusion is bolstered by the scope of the state’s
minimum wage mandate. “[A] state law of broad general
application is more likely to address a statewide concern than one
that is narrow and particularized in its application.” (City of
Vista, supra, 54 Cal.4th at p. 564.) Here, the state’s minimum
wage requirement is of broad general application, applying to
every industry regulated by the IWC wage orders, and to the
private and public sectors alike. This is in contrast to the state
compensation laws the Supreme Court has invalidated under the
home rule doctrine. (See, e.g., ibid. [prevailing wage law applied
26
only to contracts for public works projects]; County of Riverside,
supra, 30 Cal.4th at p. 282 [statute requiring binding arbitration
of wage disputes with firefighter and police unions]; San Francisco
Labor Council, supra, 26 Cal.3d at p. 790 [law requiring Regents of
the University of California to pay prevailing wages]; Sonoma
County, supra, 23 Cal.3d at p. 302 [law nullifying agreements
between localities and their public employees for cost-of-living
wage increases]; Charleville, supra, 215 Cal. at pp. 389-390, 400
[prevailing wage law applied only to municipal contracts for public
works projects]; Popper, supra, 123 Cal. at pp. 456-457, 459 [laws
specifying salaries for police officers and firefighters in
municipalities with populations over 100,000].)
As pointed out by the City, it is true the Supreme Court has
countenanced procedural laws encroaching on local authority more
readily than substantive measures like the minimum wage law at
issue here. (See Seal Beach, supra, 36 Cal.3d at pp. 600-601 &
fn. 11; Baggett, supra, 32 Cal.3d at pp. 139-140; Professional Fire
Fighters, supra, 60 Cal.2d at pp. 294-295.) However, the
distinction between substantive and procedural measures is not
determinative, and substantive laws displacing local authority
over municipal affairs have been upheld by the courts. (See Healy,
supra, 41 Cal.2d at p. 122 [upholding Legislature’s “complete
system of workmen’s compensation which obviously is a subject of
state-wide concern”]; Jauregui, supra, 226 Cal.App.4th at pp. 788,
799-801 [upholding application of California Voting Rights Act of
2001 to enjoin certification of at-large city council election results
on basis of statewide concerns of race-based vote dilution and local
election integrity].)
Like the workers’ compensation law in Healy, minimum
wage requirements are substantive regulations that directly
implicate municipal interests in compensation of their employees.
27
But also like the statewide workers’ compensation scheme, the
statewide minimum wage requirement serves the fundamental
purpose of protecting the health and welfare of workers. (See
§ 3202 [Workers’ compensation provisions of the Labor Code “shall
be liberally construed by the courts with the purpose of extending
their benefits for the protection of persons injured in the course of
their employment.”]; Andersen v. Workers’ Comp. Appeals Bd.
(2007) 149 Cal.App.4th 1369, 1375-1376 [“The purpose of workers’
compensation is to extend its benefits for the protection of persons
injured on the job.”].)
The City attempts to distinguish Healy by reference to the
constitutional provision granting the Legislature its workers’
compensation authority. (Cal. Const., art. XIV, § 4 [“The
Legislature is hereby expressly vested with plenary power,
unlimited by any provision of this Constitution, to create, and
enforce a complete system of workers’ compensation . . . .”].)
However, the Constitution also provides express authority to the
Legislature to set a minimum wage. (Id., § 1 [“The Legislature
may provide for minimum wages and for the general welfare of
employees . . . .”].)
The City also contends the Supreme Court’s opinions
invalidating the prevailing wage laws in City of Vista, San
Francisco Labor Council, and Charleville mandate the same result
here because prevailing wage laws are a form of minimum wage
laws, pointing to the language in our opinion in Reyes v. Van Elk,
Ltd. (2007) 148 Cal.App.4th 604, 612, that “[i]t is well established
that California’s prevailing wage law is a minimum wage law.”
But this statement in Reyes was in the context of whether an
employee has a private right to recover unpaid prevailing wages
28
from an employer under section 1194, not the home rule doctrine. 9
(Reyes, at p. 612.) We distinguished the statement in San
Francisco Labor Council to the contrary as inapplicable to the
issue in Reyes. (Id. at p. 612, fn. 6.) As the Supreme Court
observed in San Francisco Labor Council, “Prevailing wage
regulations are substantially different from minimum wage
statutes.” (San Francisco Labor Council, supra, 26 Cal.3d at
p. 790.)
Indeed, a prevailing wage law has a greater impact on local
control than the minimum wage law because by requiring
payment of wages prevailing in an industry locally, the law is
“effectively a salary setting statute.” (San Francisco Labor
Council, supra, 26 Cal.3d at p. 790.) By contrast, the minimum
wage requirement does not effectively determine the wage for all
employment relationships it regulates, but rather, sets as a floor
the lowest permissible hourly rate of compensation. 10 Thus, the
9 The City also cites to similar dicta in Kirby v. Immoos Fire
Protection, Inc. (2012) 53 Cal.4th 1244 that “in some instances, the
Legislature has enacted prevailing wage statutes that have been
construed as minimum wage laws.” (Id. at p. 1252, citing to
Metropolitan Water Dist. v. Whitsett (1932) 215 Cal. 400, 417-418.)
However, Kirby did not address the home rule doctrine, nor did it
concern prevailing wages. Rather, the court considered whether
an employee prevailing on a claim for compensation for missed
rest periods could recover attorneys’ fees under section 1194.
(Kirby, at p. 1254.)
10 That the minimum wage requirement would not function as
a salary setting statute for the City is illustrated by the record.
The salary schedule attached to the City’s 2015 salary resolution
reveals that out of hundreds of employee classifications just six
classifications were scheduled to be paid an hourly rate less than
the $10.00 minimum wage during the subject period. The City
29
impact of the minimum wage law is consistent with the Supreme
Court’s conclusion “the Legislature may regulate as to matters of
statewide concern even if the regulation impinges ‘to a limited
extent’” on local control of municipal affairs. (County of Riverside,
supra, 30 Cal.4th at p. 287; accord, Professional Fire Fighters,
supra, 60 Cal.2d at pp. 294-295.)
The Court of Appeal opinions relied on by the trial court,
analyzing whether counties are required to comply with state
labor laws governing overtime pay and meal and rest periods, do
not address whether the minimum wage law relates to a matter of
statewide concern. In Curcini, the First District considered
whether provisions of the Labor Code and IWC wage orders
requiring payment of overtime wages and compensation for missed
meal and rest periods were issues of “compensation” reserved to
county control. (Curcini, supra, 164 Cal.App.4th at pp. 642-645.)
Although the plaintiffs (former jail chaplains) alleged the County
of Alameda denied them meal breaks and rest periods, which they
argued related to their working conditions, the court observed the
plaintiffs were “actually seeking monetary compensation for
having been required to work through meal and rest breaks.” (Id.
at p. 644.) On this basis the court concluded the plaintiffs’ claims
for overtime and premium wages for missed meal and rest periods
were “compensation matters . . . of local rather than statewide
concern.” (Id. at pp. 643, 645.) The court did not reach whether
there was a statewide interest in the regulation of worker meal
and rest periods, as opposed to the payment of premium wages.
later enacted a resolution mandating that as of September 13,
2016 its employees be paid no less than the statewide minimum
wage, and setting a range of salaries above this level.
30
In Dimon, our colleagues in Division Four addressed a
deputy probation officer’s claim against the County of Los Angeles
for failure to provide her meal periods or premium pay for missed
meals, as required by state labor laws. (Dimon, supra,
166 Cal.App.4th at p. 1279.) The court adopted the reasoning of
Curcini that the plaintiff’s claim was “‘actually seeking monetary
compensation,’” and therefore was a matter of local, rather than
statewide concern. (Dimon, at pp. 1282-1283.) The court then
analyzed whether the Legislature could regulate meal breaks as a
matter of statewide concern on the asserted basis that meal breaks
“‘increase worker safety.’” (Id. at p. 1289.) The court rejected this
argument because the complaint did not allege a state interest in
worker safety, nor did the plaintiff offer any evidence to support
her claim. 11 (Ibid.) Further, the court observed, “there clearly is a
material distinction between a manual laborer denied rest and
meal periods and a deputy probation officer denied a meal period.”
(Ibid.) Thus, neither Curcini nor Dimon considered the statewide
interest in a living wage addressed by the state minimum wage
law.
Finally, any doubt in this area “‘must be resolved in favor of
the legislative authority of the state.’” (City of Vista, supra,
54 Cal.4th at p. 582; accord, California Fed. Savings, supra,54 Cal.3d at p. 24 [“we defer to legislative estimates regarding the
significance of a given problem and the responsive measures that
should be taken toward its resolution”].) Considered in light of the
Legislature’s goal of ensuring workers earn a sufficient wage to
11 Dimon was decided four years before the Supreme Court in
City of Vista clarified the analysis under the home rule doctrine is
a legal, not a factual determination. (City of Vista, supra,
54 Cal.4th at p. 558.)
31
provide the necessities of life and raise them above the poverty
level, we conclude the minimum wage law addresses a statewide
concern “that ‘justif[ies]’ the state’s interference in what would
otherwise be a merely local affair.” (City of Vista, at p. 560; accord,
California Fed. Savings, at p. 18.)
d. The minimum wage is appropriately tailored to
address the statewide concern in the health and
welfare of workers
Under the fourth and final inquiry, we “determine whether
the law is ‘reasonably related to . . . resolution’ of [the statewide]
concern [citation] and ‘narrowly tailored’ to avoid unnecessary
interference in local governance [citation].” (City of Vista, supra,
54 Cal.4th at p. 556; accord, California Fed. Savings, supra,54 Cal.3d at pp. 17, 24.) “[T]he state law must be reasonably
related to the issue at hand and limit the incursion into a city’s
municipal interest.” (Lippman v. City of Oakland, supra,
19 Cal.App.5th at p. 765; California Fed. Savings, at p. 25 [“‘the
sweep of the state’s protective measures may be no broader than
its interest’”].)
Here, the statewide concern in worker health and welfare is
reasonably related to the imposition of a minimum wage. As
discussed above, the minimum wage law does not deprive the City
completely of its authority to determine wages. Rather, the law
sets a floor based on the Legislature’s judgment as to the
minimum income necessary for a living wage within this state.
The City retains authority to provide wages for its employees
above that minimum as it sees fit. The minimum wage
requirement therefore intrudes less on local authority than the
prevailing wage laws, mandatory binding arbitration
requirements, and prohibitions on cost-of-living pay increases held
32
invalid by the Supreme Court. (See City of Vista, supra,
54 Cal.4th at p. 564; County of Riverside, supra, 30 Cal.4th at
p. 282; Sonoma County, supra, 23 Cal.3d at p. 302.) As such, the
balance struck is “‘sensible and appropriate fashion as between
local and state legislative bodies.’” (California Fed. Savings,
supra, 54 Cal.3d at p. 17.) This “limited interference . . . is
substantially coextensive with the state’s underlying regulatory
interest.” (Id. at p. 25.)
The City contends the minimum wage requirement is not
tailored to the state’s interest because it does not exclude charter
cities from its ambit. But this merely restates the City’s argument
that the state interest in the minimum wage should not prevail
over the City’s local interest in setting its own employees’ wages.
Further, the statewide concern that workers earn a living wage
implicates the wages of the City’s employees, who, like other
employees in the state, must provide sustenance for themselves
and their families. The City has not offered any alternative
regulation that would address this statewide concern without
applying the minimum wage to its employees.
4. Application of the minimum wage requirement does not
unconstitutionally impair the MOU between plaintiffs
and the City
The City contends in the alternative that enforcement of the
state minimum wage against it would unconstitutionally impair
the negotiated MOU between the City and plaintiffs. This
argument lacks merit. Both the United States and California
Constitutions prohibit laws impairing the obligation of contracts
under certain circumstances. (See U.S. Const., art. I, § 10, cl. 1
[“No State shall . . . pass any . . . Law impairing the obligation of
Contracts . . . .”]; Cal. Const., art. I, § 9 [“A . . . law impairing the
33
obligation of contracts may not be passed.”].) “It has long been
settled, however, that the contract clause does not absolutely bar
all impairments.” (Chorn v. Workers’ Comp. Appeals Bd. (2016)
245 Cal.App.4th 1370, 1392; accord, Deputy Sheriffs’ Assn. of San
Diego County v. County of San Diego (2015) 233 Cal.App.4th 573,
578-581 [contract clause did not bar Public Employees’ Pension
Reform Act of 2013 from subjecting new members of union to less
favorable benefit formula].) “As is particularly relevant here, the
contract clause protects only vested contractual rights.” (Chorn, at
pp. 1392-1393 [statute prospectively restricting payment of lien
awards to assignees did not unconstitutionally impair existing
contractual obligations].)
The City’s claim fails because it has identified no valid
contract existing at the time of the legislative action at issue.
When the relevant MOU was enacted by resolution of the City
Council in September 2015, the statute setting the minimum wage
at $10.00 per hour effective January 1, 2016 had already been
enacted by the Legislature two years earlier. (See Stats. 2013, ch.
351 [Assem. Bill No. 10 filed with the Secretary of State on
Sept. 25, 2013].) In short, the legislation could not impair the
contract because at the time of the legislation’s enactment the
contract had not yet been entered into by the parties.
The City relies solely on Sonoma County, which invalidated
a state law that “declared null and void any provision of ‘a
contract, agreement, or [MOU] between a local public agency and
an employee organization or an individual employee which
provides for a cost of living wage or salary increase’ in excess of the
increase provided for state employees.” (Sonoma County, supra,
23 Cal.3d at pp. 305, 314.) Sonoma County is distinguishable—the
law there expressly retroactively voided the specified contract
provision. Here, the law has no retroactive application, and
34
instead sets a schedule for minimum wage increases in the future.
(See Stats. 2013, ch. 351, § 1 [increasing minimum wage to $9.00
on July 1, 2014 and $10.00 on January 1, 2016].)
We recognize the MOU between plaintiffs and the City is a
binding contract. Nonetheless, as plaintiffs contend, they are
entitled to be paid at or above the minimum wage regardless of
any agreement to work for less, because their right to the
minimum wage cannot be waived by contract. Under California
law, “employees may not agree to waive their entitlement to the
minimum wage [citations], nor may a collective bargaining
agreement waive that right.” (Flowers, supra, 243 Cal.App.4th at
p. 82 [concluding Los Angeles County Metropolitan Transportation
Authority must comply with minimum wage law notwithstanding
operative collective bargaining agreement]; accord, § 1194
[“Notwithstanding any agreement to work for a lesser wage, any
employee receiving less than the legal minimum wage or the legal
overtime compensation applicable to the employee is entitled to
recover in a civil action . . . .”]; Gentry v. Superior Court (2007)
42 Cal.4th 443, 455 [“By its terms, the rights to the legal minimum
wage . . . conferred by [the statute] are unwaivable.”], disapproved
on another ground in Iskanian v. CLS Transportation Los Angeles,
LLC (2014) 59 Cal.4th 348, 360; Hoover v. American Income Life
Ins. Co. (2012) 206 Cal.App.4th 1193, 1208 [rights accorded by
§ 1194 “may not be subject to negotiation or waiver”].) Thus, any
agreement by plaintiffs to work for less than the minimum wage
does not relieve the City of its duty to pay plaintiffs at or above the
minimum wage.
35
DISPOSITION
The judgment is reversed. The trial court is directed to
vacate the order sustaining the City’s demurrer and to enter an
order overruling the demurrer. Appellants are to recover their
costs on appeal.
FEUER, J.
WE CONCUR:
PERLUSS, P. J.
SEGAL, J.
36