83.9 F
San Fernando
Friday, Mar 29, 2024

California Wage Laws May Apply to Non-Resident Workers

If your business brings out-of-state employees into California from time to time, you need to familiarize yourself with a new California Supreme Court ruling handed down recently, involving Oracle Corporation. Everyone knows that California’s wage and hour regulations are some of the toughest and costliest to business in the nation. In a case involving the Bay Area software maker, the court ruled that these protections extend to any out-of-state resident who works in California even for just one full day. The Supreme Court’s ruling in the Oracle case will affect any business that brings out-of-state employees into California from time to time. The court’s decision is very similar to one that the Ninth Circuit issued in the same case in December 2008. Oracle has hundreds of employees throughout the United States who train Oracle customers to use its software. Many of these instructors travel around the country to perform work in multiple states, including California. Until 2003, Oracle considered all of its instructors exempt from overtime pay laws. The company changed this practice once it faced a class-action lawsuit for overtime pay violations under state and federal law. Oracle ended up settling many of these claims. However, Oracle continued to face overtime claims from three instructors who live in Colorado and Arizona. These plaintiffs claim to represent a class of instructors who live outside California, but perform some of their work in this state. Each plaintiff worked anywhere from 20 to 110 days in California over a three-year period. They claim they are entitled to California overtime when they worked in California more than eight hours in a day or 40+ hours in a week. A federal judge in Orange County ruled in favor of Oracle and dismissed the lawsuit. The plaintiffs appealed. The Ninth Circuit U.S. Court of Appeals initially sided with the plaintiffs and we reported on that decision in our December 22, 2008 issue. The Ninth Circuit later withdrew that ruling and asked the California Supreme Court to decide whether out-of-state workers are entitled to overtime pay for entire days and weeks in which they work in California. The Supreme Court wound up coming to the same conclusion that the Ninth Circuit initially reached: California’s overtime pay laws apply to any worker, even an out-of-state resident, who performs work in California for an entire day or an entire week. Oracle argued that this interpretation of California law conflicts with the laws of states such as Colorado and Arizona. The Supreme Court, however, said it was “doubtful” that there was any conflict in these laws. The court added that neither Colorado nor Arizona had any strong interests that outweighed California’s “important public policy goals of protecting health and safety and preventing the evils associated with overwork.” The Supreme Court also ruled that the employees could make out a claim against Oracle under the California unfair competition law. The key advantage to doing so is that the employee can sue for an additional year (totaling four years) of compensation. However, the nonresident employees cannot use California’s unfair competition law to sue for overtime work performed outside California. The Supreme Court’s decision clears the way for the employees to go back to federal court and pursue their overtime pay claims on behalf of nonresidents who performed work in California. The Court left for another day whether any of the state’s other wage hour laws apply to out of state workers who do some work in California. The Supreme Court said that those issues were not before the court in this case and that it would not venture into those matters until specifically confronted with the issue. The Oracle decision is yet another reminder that California’s tough overtime pay laws are much more employee-friendly than those of other states and even the federal government. Businesses will have to weigh the costs of complying with California wage and hour law against the benefits of bringing out-of-state employees to California to perform work. In light of the Oracle decision, any business that brings out-of-state workers into the state ought to take a close look at their wage hour law compliance. Businesses are urged to thoroughly review their wage and hour policies, make sure their employees are correctly classified for overtime pay purposes and that these employees receive all of the overtime pay to which they are entitled. Richard S. Rosenberg is a founding partner of Ballard Rosenberg Golper & Savitt LLP, a management side labor law firm in Glendale. Rosenberg was selected as one of the 25 best lawyers in the San Fernando Valley. He may be reached at (818) 508-3700 or [email protected].

Featured Articles

Related Articles