In Krug v. Board of Trustees of California State University, published August 29, 2023, the Second District Court of Appeal, Division 1 affirmed the dismissal on demurrer of a suit by a university employee. In March 2020, the university ordered its teachers to teach classes remotely. The plaintiff began doing so, but was denied access to his workplace to retrieve his employer-provided computer and printer. He bought his own computer and printer, and sought reimbursement from the university for them under Labor Code section 2802, which obligates an employer to “indemnify [an] employee for all necessary expenditures . . . incurred . . . in direct consequence of the discharge of his or her duties . . . ." The university denied reimbursement. The plaintiff brought a class action and PAGA suit against the university on behalf of similarly-situated employees. The trial court sustained the university's demurrer on the ground that Labor Code section 2802 did not impose a duty on governmental agencies.
The appellate court affirmed. A three-part test is applied to a Labor Code statute to determine whether the sovereign powers doctrine overcomes a generally applicable Labor Code provision. First, the court looks for express words referring to governmental agencies. If
there are none, the court looks for positive indicia of a legislative intent
to exempt such agencies from the statute. If no such indicia appear, the court asks whether applying the statute would result in an infringement upon sovereign governmental powers. Here, Labor Code section 2802 contains no express words referring to government agencies and no legislative indicia of an intent to exclude them. Applying the statute to the university would infringe on the university's sovereign powers: It would limit the university's discretion under Education Code sections 89036 and 89500 to set rules for procuring equipment and establishing equipment allowances; potentially divert limited educational funds from CSU’s core function to pay not only legal judgments but potentially huge additional amounts to outside parties. Because the university did not violate section 2802, the plaintiff is not an "aggrieved" employee and so has no cause of action under PAGA.
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