Some California Labor Law Applies to Nonresidents

Sacramento, CA The Supreme Court ruled in July 2011 that residents of other states who work for California companies and are on business in California are protected by the California Labor Law. But some out-of-state employers may need to be reminded that their employees must be compensated for overtime pay - it's the price of doing business in California. And paying employees overtime in accordance with the California labor code would likely be more cost-effective than having to face a California labor lawsuit.

Last month, a group of nonexempt employees traveled to Sacramento, where their HQ is based, from New York to work on a project that lasted about 45 days. They all worked long hours, typically 60 hours per week. The workers were familiar with the Supreme Court ruling last June because when they returned to New York, they indicated on their time sheets that overtime pay was due, as well as meal and rest breaks.

Just like those employees at Oracle Corporation, the new ruling applies to the New York workers - at least on the overtime issue. The Oracle employees sued the company (Sullivan v. Oracle Corp) for unpaid overtime wages under California's overtime and unfair competition laws. The Ninth US Circuit Court of Appeals (which covers California) asked that the California Supreme Court weigh in, and it found that out-of-state employees working in California for a California-based employer are entitled to the protections of California's overtime laws.

The court further wrote that "To exclude nonresidents from the overtime law's protections would tend to defeat public policy goals by encouraging employers to import unprotected workers from other states."

But the California court's decision didn't include meal and rest breaks, nor did it address other California labor laws pertaining to nonresident employees working in California under the same circumstances as residents. Furthermore, the court didn't rule on whether or not the California overtime law applies to nonresident employees who are working temporarily in California but their employer has headquarters in another state.

It is understandable that employers, and even out-of-state employees, may not understand the new nonresident ruling. And it is very likely that a number of lawsuits regarding nonresidents and California labor law issues will be forthcoming. Regardless, employers should expect to incur overtime costs when sending employees to work on a temporary basis in California. If not, they may be facing possible liability. And before sending employees to California, it might be a good idea to seek legal advice from an experienced California employment attorney.