According to the California Supreme Court in Sullivan v. Oracle Corporation, 51 Cal. 4th 1191 (June 30, 2011), California employers must now pay overtime to non-residents who periodically work in California, in accordance with California overtime laws. California law requires employers pay employees overtime (at time and one-half) for any day in which the employee works over 8 hours, and for any workweek in which the employee works over 40 hours. In contrast, most state laws only require employers pay overtime to employees who work over 40 hours in a workweek.
The defendant, Oracle Corp., is headquartered in California. It employed the three plaintiffs, who lived and performed most of their work out-of-state, but were also required to travel periodically to California. These employees worked between 20 and 110 days in California over a three-year period. The plaintiffs sued Oracle Corp. claiming they were denied pay for the overtime hours they worked in California.
The California Supreme Court held that California overtime laws applied to the plaintiffs for the time they worked in California. In doing so, the court reasoned that by its plain language, California’s overtime statute, Labor Code §510, 1194, applies to “any employee” and “any work.” The court also noted that to exclude out-of-state workers would undermine the purpose of the law, as California employers would avoid their obligations under California law by simply hiring non-resident employees to work in California.
The Sullivan ruling comes with two important caveats: First, the court explicitly noted that its decision only applies to “overtime compensation” claims and not to other wage issues, such as the content of paychecks or vacation time. Second, the court emphasized the fact that Oracle Corp. is headquartered in California, which leaves open the question of whether out-of-state employers must comply with California overtime laws. Non-California employers whose employees occasionally work in California should stay tuned as additional answers are sure to come.