California Supreme Court-Pay Overtime to Employees From Other States
Issuing its decision in the long-pending Sullivan V. Oracle Corporation case, the California Supreme Court extended the protection ofCalifornia’s overtime laws to residents of the remaining 49 states who perform work inCalifornia for their California-based employers. The three plaintiffs were instructors for the California-based software giant, working primarily in their home states, but traveling to other states – includingCalifornia – to present training sessions as needed.
The Sullivan claims stretch back nearly a decade to misclassification disputes under federal and state law, resulting in the three questions answered in the recent ruling: 1) Can non-resident employees collect overtime compensation pursuant to California Labor 2) can these same employees seek restitution for the same claims pursued under California’s Unfair Competition Law (UCL) and finally 3) can the employees seek restitution for violations occurring outside of California’s borders? The short answers are yes, yes and no.
The long answers are hardly more encouraging forCaliforniaemployers. On the first question, the Court cited to the plain language of the statute, stating simply that “any work in excess of eight hours in one workday and . . . 40 hours in any one workweek . . . shall be compensated at the rate of no less than one and one-half times the regular rate of pay.” The Court ruled, in essence, that the regulations say what they mean and mean what they say: Californiaovertime laws apply to employees who work inCaliforniaregardless of where they live. Expressly left open, however, is the question of applicability of otherCaliforniawage and hour laws and employment regulations to visiting employees. “California’s interest in the content of an out-of-state business’s pay stubs, or the treatment of its employees’ vacation time, for example, may or may not be sufficient to justify choosingCalifornialaw over the conflicting law of the employer’s home state.” It is safe to assume that someCaliforniaemployer will face a lawsuit to settle these open questions.
The Court concluded further that since it has long held that theUCLapplies to overtime claims, it applies equally to overtime claims brought by non-Californians, extending the statutory limitations period from the Labor Code’s three years to theUCL’s four-year reach.
Lastly, the Court concluded that simply because an employer is headquartered inCalifornia, it is not subject toUCLclaims for Federal Fair Labor Standards Act violations occurring outside ofCalifornia’s borders.
Given the employment laws that regulateCalifornia’s employers and the open ended nature of the Court’s decision, similar claims based on the state’s numerous labor provisions are sure to be in the pipeline. Californiaemployers with non-resident employees performing some work withinCaliforniaare advised to review their pay practices applicable to these employees for compliance withCalifornialaw.