Decision resets wage suit and voids two appeals over missing bonds
A California appeals court reinstated wage claims against the San Francisco Zen Center and dismissed two leaders’ appeals for not posting undertakings.
On November 21, 2025, the Court of Appeal for the First Appellate District, Division Five, reversed a trial court’s summary judgment for the San Francisco Zen Center in a wage-and-hour case brought by former Work Practice Apprentice and staff member Annette Lorenzo. The trial judge had relied on the First Amendment’s ministerial exception to dismiss Lorenzo’s minimum wage and overtime claims. The appellate court held the ministerial exception does not automatically bar wage claims where deciding those claims will not require courts to resolve ecclesiastical questions. It emphasized that, absent evidence of ecclesiastical entanglement, wage-and-hour claims can proceed.
The Zen Center is a nonprofit religious corporation operating three training temples – City Center, Tassajara, and Green Gulch Farm. It generates income by renting rooms at all three temples to overnight guests and conference and event space at Green Gulch Farm to corporations such as Facebook and Google. Tassajara is open to the public; guests may use the hot springs and baths and need not practice Buddhism. The organization offers residential training programs in which participants live at a temple full time as a monk. Work practice is described as an integral and indivisible part of Zen training.
Lorenzo participated from 2015 to 2019, first as a Work Practice Apprentice and later as staff. At City Center, she cleaned guest rooms, did laundry, gave tours, and checked guests into their rooms. At Tassajara, she worked in both the kitchen and the bathhouse – preparing and chopping vegetables, cleaning the kitchen, washing pots and pans, cleaning bathrooms and showers, sweeping patio walkways, checking bath temperatures, and organizing supplies. As staff, she served as assistant to the executive chef, taking inventory and ordering and organizing supplies, and prepared and bagged guest lunches during the guest season. She later worked as a librarian at City Center. Her final monthly stipend was $198.33.
In July 2020, Lorenzo filed a claim with the Labor Commissioner alleging unpaid regular and overtime wages, meal period premium wages, and liquidated damages. Following a hearing, the Labor Commissioner issued an order in her favor against all three defendants: the Zen Center, Linda Galijan, and Mike Smith. The total award was $149,177.15, consisting of unpaid minimum wages, unpaid overtime wages, liquidated damages, interest, and waiting time penalties. The Commissioner found Galijan and Smith individually liable under Labor Code section 558.1 as persons “liable as the employer.”
The defendants appealed to the trial court, resulting in a de novo action. The Zen Center posted an undertaking in the full amount of the award. The undertaking did not, by its terms, include Galijan or Smith. The Labor Commissioner moved to dismiss Galijan’s and Smith’s appeals under Labor Code section 98.2, subdivision (b), arguing each “employer” must post an undertaking as a condition of filing an appeal. The trial court denied the motion and granted summary judgment to defendants based on the ministerial exception.
The Court of Appeal reversed. It concluded the ministerial exception does not bar Lorenzo’s minimum wage and overtime claims where defendants presented no evidence that adjudicating those claims would require resolving matters of faith, doctrine, or internal church governance. Separately, it held the trial court lacked jurisdiction over Galijan’s and Smith’s appeals because they did not post undertakings as required by section 98.2, subdivision (b). The court reasoned that because the Labor Commissioner found them “liable as the employer” under section 558.1, each was required to post an undertaking to perfect an appeal, and the Zen Center’s undertaking did not cover them.
The case returns to the trial court for further proceedings. The appellate decision notes that this ruling does not foreclose the Zen Center from presenting evidence at trial that applying wage-and-hour laws to ministers like Lorenzo raises an ecclesiastical concern under the Religion Clauses.
For HR leaders in religious or mission-driven nonprofits that operate guest services, retreats, or other revenue-generating programs, roles that mix spiritual practice with operational duties such as guest check-in, housekeeping, kitchen work, and inventory are assessed under neutral wage-and-hour rules unless adjudication requires resolving religious questions. Stipends and training labels do not substitute for compliance with minimum wage, overtime, meal and rest breaks, and recordkeeping when employees perform substantial operational work. Leadership should also note that Labor Code section 558.1 can expose certain individuals – owners, directors, officers, and managing agents – to personal liability “as the employer” for wage violations, and that each appellant deemed an “employer” must post the required undertaking; an organization’s bond does not automatically cover individual appellants.
