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California Supreme Court: Nonresident-Employees Entitled to State Overtime When Working in State

By Mark S. Askanas and Cynthia L. Filla
  • August 16, 2011

Nonresidents of California are entitled to overtime pay under state law for work performed in California, the California Supreme Court has held, answering questions about California law at the request of the U.S. Court of Appeals for the Ninth Circuit.  Sullivan v. Oracle Corp., 51 Cal. 4th 1191 (Cal. 2011).

The following state law questions were asked of the California Supreme Court about the application of the Labor Code and the Unfair Competition Law (Cal. Bus. & Prof. Code § 17200) to nonresident workers:

1. Does the California Labor Code apply to overtime work performed in California for a California-based employer of out-of-state plaintiffs so that overtime pay is required for work in excess of eight hours per day or in excess of 40 hours per week?

2. Does the UCL apply to the overtime work described in Question 1?

3. Does the UCL apply to overtime work performed outside of California for a California-based employer of out-of-state plaintiffs if the employer failed to comply with the overtime provisions of the federal Fair Labor Standards Act?

In response, the California Supreme Court held as follows:

1. The California Labor Code applies to overtime work performed in California for “a California-based employer” by out-of-state plaintiffs “in the circumstances of this case”;

2. The UCL applies to such overtime work performed in California by out-of-state plaintiffs; and

3. The UCL does not apply to overtime work performed outside of California for a California-based employer by out-of-state plaintiffs in the circumstances of the case if the employer failed to comply with FLSA overtime provisions.

The Court explained that if the state legislature intended to create exceptions to the law for nonresidents working in California for state-based firms, it could have done so.  Further, the Court determined that no conflict of state laws existed. 

The Court expressly limited its holding to Labor Code provisions governing overtime.  It stated California’s interest in the content of out-of-state pay stubs or treatment of vacation time was not at issue.  The apparently careful phrasing of “California-based employers” in the decision appears to indicate the application of the case should be limited to companies, like defendant Oracle, who are headquartered in California.  Thus, whether an out-of-state employee working in California for a non-California-based company is covered is still an open question.

All employers who send non-exempt employees residing in other states to work in California should seek legal counsel regarding the impact of this decision on the way they calculate overtime during the duration of such California assignments.

Jackson Lewis attorneys are available to answer inquiries regarding this and other workplace developments.

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