Co-authored by Fred Sanderson and Simon Yang

Today, in Sullivan v. Oracle (S170577), the California Supreme Court held that California’s overtime laws apply to nonresident employees of California-based companies who temporarily perform work in California.  The Court further concluded the overtime claims by nonresident employees can serve as predicates for claims under California’s unfair competition law (UCL).

The Oracle employees in question were Colorado and Arizona residents who temporarily worked in California.  During the three years in question, they worked anywhere from 20 to 110 days in California.  These employees sued Oracle, claiming they were not paid overtime according to California law when they worked in California.  Oracle claimed it was not required to pay California overtime because the laws of Colorado and Arizona followed the employees during the brief periods they worked in California.  The Ninth Circuit Court of Appeals initially ruled against Oracle, but later withdrew its order and asked the Supreme Court of California to answer the questions presented in the case.

The Supreme Court reached the same result, holding that California overtime laws applied to these nonresident Oracle employees during the brief periods they worked in California.  However, the Court did indicate that California overtime laws might not apply to nonresidents who enter California temporarily during the course of the workday, but would apply to any nonresident employee of a California-based employer who worked in California for entire days or weeks.

While the Court’s holding indicates this rule applies only to “California-based employers,” it is likely that lawyers for out of state plaintiffs will argue that the California overtime rules also apply to non-resident employees working for non-California employers when they work in California.

The Court also did not decide whether other California wage and hour laws such as those relating to meal and rest breaks and the format of pay stubs apply to nonresident employees working temporarily in California.  That, according to the Court, would depend on whether California has “expressed a strong interest in governing [that wage and hour law] for work performed in California.”

How far-reaching will Sullivan be?  Time will tell.  In the interim, it can be expected that employers throughout the country will think twice before sending an employee to work in California, even for a short period of time. 

Please see Seyfarth Shaw’s Management Alert for further information.