Court of Appeal holds MOUs may not bar contract claims for public employee wages: Bath v. State of California

In Bath v. State of California,           Cal.App.5th           (Oct. 14, 2024), the Court of Appeal (First Appellate District, Division Two) held that a public employee’s right to compensation, upon completion of their work, ripens into a contractual right that can be pursued independently of Labor Code claims and potentially notwithstanding provisions of an MOU.

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Plaintiffs, non-exempt hourly dental professionals working at a state prison, sued the State for unpaid wages related to pre- and post-shift activities, including security procedures and travel time. The trial court sustained the State’s demurrer, finding that the federal Portal-to-Portal Act, incorporated into the parties’ MOU, barred such claims. Plaintiffs appealed.

The Court of Appeal reversed in part and remanded. It held that the trial court erred in resolving factual issues about the employees’ duties at the demurrer stage. Notably, the court relied on Stoetzl v. Department of Human Resources (2019) 7 Cal.5th 718 to hold that while an MOU might preclude Labor Code claims, it did not extinguish the employees’ independent contractual right to be paid for completed work. This right, the court explained, matures into a contractual obligation upon performance, allowing employees to pursue a breach of contract claim for unpaid wages. However, the court agreed with the State that Stoetzl barred plaintiffs’ claims under Lab. Code §§ 1182.11, 1182.12, and 1194. It also rejected plaintiffs’ claim under § 222, holding that the statute does not apply to public employees.

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