Recently, in Johnson v. Arvin Edison Water Storage Dist. (2009) 174 Cal.App.4th 729, the 5th District Court of Appeal in California held that a water district, which is a municipal corporation organized as a sort of quasi-governmental entity for the purpose of storing and delivering water to its community, is in fact exempt from the more stringent State overtime and meal period regulations contained in the California labor code.

The plaintiff argued that the water district was  not only subject to the Fair Labor Standards Act (FLSA – 29 U.S.C. Section 201, et seq.), but also to the more stringent wage and hour regulations contained in the California Labor Code, unless expressly exempted in the code itself.  According to the Plaintiff, under statutory construction rules, the Legislature intended that water storage districts provide their employees with overtime and meal periods in conformance with Labor Code Sections 510 (OT provision) and 512 (meal period provision), and the relevant IWC Wage Order. Plaintiff argued that these Labor Code requirements do not infringe on the execution of the District’s sovereign powers.

The plaintiff also stated that the District was not exempt as a “municipal corporation” under Section 220 of the Labor Code, which would have required the district to immediately pay wages due upon an employee’s termination or resignation under sections 201 and 202 and for penalties for failure to do so under section 203.

In affirming the judgment that dismissed the plaintiff’s complaint, the Court held that unless the Labor Code provisions are specifically made applicable to public employers, they only apply to employers in the private sector. Pointing out that because sections 510 and 512 of the Labor Code do not expressly apply to public entities, they are not applicable to water districts.

Additionally, the Court noted that applying sections 510 and 512 of the Labor Code to the District would infringe on its sovereign power to regulate its workforce and would violate the established rule recognized by the Legislature, that public entities are not subject to a general statute unless expressly included.  Finally, the court clarified that a Water District is a “municipal corporation” as that term is used in the Labor Code and, therefore, exempt from Sections 201, 202 and 203.

Although not as stringent as California wage and hour requirements, the water district employees are not without some protection, such districts should still comply with wage and hour laws set forth in the FLSA.