Seyfarth Synopsis: Labor Day sales may be over, but some savvy California employers might still find a great deal. That’s because not all land inside California’s borders is actually within the legal jurisdiction of California. Rather, some areas are federal enclaves—territory California has ceded to the federal government and in which federal law largely applies. California employers operating within these enclaves are free of many peculiar California employment laws, and need only follow federal employment law. For this reason, employers who prefer federal employment law but love operating inside California’s borders—and who doesn’t?—may want to consider whether they can operate within a federal enclave.

The legal support for the federal enclave doctrine comes from the United States Constitution. Congress has the power to exercise exclusive legislation over “all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-yards, and other needful Buildings.” U.S. Const., Art. 1, § 8, cl. 17. But federal enclaves do not arise just because the federal government has bought some land from a state. Creation of a federal enclave requires an actual transfer of sovereignty from the state government to the United States.

A California employer operating within a federal enclave, may, depending on the circumstances, be free of many complex and onerous requirements imposed by California law. The extent to which California law applies within an enclave varies depending on three circumstances:

  • Reserved Jurisdiction. California law will apply to the extent the California government retained jurisdiction at the time of cession.
  • Congressional Authorization. California law will apply where Congress has specifically authorized its application within the enclave.
  • Laws In Effect At Cession. California laws in effect at the time the land became a federal enclave continue to apply within the federal enclave unless abrogated by Congress. Later-enacted California laws have no force within the enclave (though later state laws nevertheless can apply within an enclave if the “same basic scheme” was in effect at the time of cession).

As an example, both Yosemite National Park (in 1920) and San Francisco’s Presidio (in 1897) became federal enclaves well before California created most of the statutes that have made its employment law so peculiar. Many employers operate within enclaves such as these, and as a result may be shielded from many of the laws that afflict the common run of California employers.

Alas, a federal enclave is not a viable option for most California employers. Common federal enclaves typically are in national parks and on military bases, and most employers cannot simply pick up and relocate their operations to such sites. Those employers fortunate enough to operate within a federal enclave, however, may have a meaningful defense against many California employment law claims. Employers who believe they may be operating within an enclave should confirm their enclave status and review what laws apply within that enclave. This opportunity, unlike a Labor Day sale, does not expire.