Ninth Circuit Holds Non-Resident Employees Are Covered by California Wage Laws
By David Greco
Last week, the Ninth Circuit issued its decision in Sullivan v. Oracle Corp. and held that non-California residents are covered under California labor laws for any work performed within the state of California. The plaintiffs in the case were instructors who traveled to different states, including California, to train customers on the use of Oracle software. The plaintiffs worked between approximately five and thirty-five days per year in California. The rest of time they worked in other states. The plaintiffs alleged that Oracle misclassified them as exempt and failed to pay them daily and/or weekly overtime. The Ninth Circuit held that California wage and hour law, including its daily overtime requirement, applied to the days and weeks the plaintiffs worked in California.
In reaching its decision, the Ninth Circuit relied on Tidewater Marine Western, Inc. v. Bradshaw, 14 Cal.4th 557 (1996) wherein the California Supreme Court stated that "California employment laws implicitly extend to employment occurring within California's state law boundaries." The issue presented to the court in Tidewater was whether federal law or wage orders of California's Industrial Welfare Commission should apply to California resident crew members who perform work off the coast of California in the Santa Barbara Channel. The Tidewater Court held that California's wage orders apply to those employees who worked in the Santa Barbara Channel because they were California wage earners as they resided in California, received pay in California, and essentially worked in California as the waters of the Santa Barbara Channel are within California's jurisdiction. The Tidewater Court, however, specifically noted that it was not prepared to apply California law to all employment in California.
The Ninth Circuit’s decision in Sullivan appears to hold that California law applies to an employee who works even one full day in California. Therefore, all employers who send non-California employees to California to perform any work should be aware of and familiar with the Sullivan case. It is not clear whether a California court would reach the same decision as the Ninth Circuit on the applicability of California wage and hour laws to non-resident employees performing varying degrees of work in California. However, in light of the Sullivan decision, employers are cautioned to obtain legal advice with respect to application of and compliance with California labor laws insofar as non-resident employees are concerned.