Public Agencies Exempt From Most California Labor Code Provisions
The Fifth Appellate District recently confirmed that unless a statute specifically provides otherwise, public agencies are exempt from wage and hour provisions of California's Labor Code. In Johnson v. Arvin-Edison Water Storage District, Plaintiff Randell Johnson filed a putative wage and hour class action against the Arvin-Edison Water Storage District ("District"), a public agency, alleging violations of various provisions of the California Labor Code, including failure to pay overtime, failure to provide proper meal breaks, and failure to provide all wages due upon termination. The Court of Appeal upheld the trial court's granting of the District's demurrer that public agencies are exempt from the provisions of the Labor Code alleged by Plaintiff in the Complaint.
The Court of Appeal held that absent express statutory authorization, governmental agencies are not subject to a general statute like the Labor Code. For example, in Labor Code Section 555, the Legislature specifically stated that provisions of that chapter (sections 550-552 and 554) pertaining to maximum consecutive working days (generally stating that employees are entitled to one day of rest in seven days of work)," are applicable to cities which are cities and counties and to the officers and employees thereof." Because Labor Code sections 510 and 512 pertaining to overtime and meal periods do not expressly contain language applying these statutes to public agencies, they are held to apply only to the private sector. Moreover, Labor Code section 220(b) states that provisions in that chapter (including final pay provisions under Labor Code sections 201 and 202) do not apply to "employees directly employed by any county, incorporated city, or town or other municipal corporation." The Court held that the District exercises a governmental function and therefore qualified as an "other municipal corporation."
The Court of Appeal further noted that the District is also exempt under the "sovereign powers" maxim. Under the "sovereign powers" maxim, a statute infringes upon a public entity's sovereign powers if it affects the entity's governmental purposes and functions, and the Court held that setting employees' compensation was a fundamental function of the District. While public agencies like the District must still comply with the wage and hour laws set forth in the federal Fair Labor Standards Act ("FLSA"), this decision confirms that absent specific statutory authorization, most public agencies will not be subject to provisions of the California Labor Code.