HR Management & Compliance

Employers Whose Employees Work in California Are Subject to State Overtime Laws

By Chris McFadden

CaliforniaEmployers that require workers to travel to and work within California may be subject to the state’s overtime laws even though their employees are nonresidents. The California Supreme Court decided last week that the California Labor Code applies to the overtime claims of three nonresident instructors who performed work within the state. The employees, who worked for Oracle, worked mainly in their home states (Arizona and Colorado) but were required to travel to California as part of their positions. The instructors alleged that Oracle’s failure to pay overtime for work performed in California was a violation of the state’s Labor Code as well as an unlawful business act under the state’s unfair competition law.

The court determined that California’s overtime law applies to all work performed in the state in excess of eight hours in one workday and 40 hours in one workweek regardless of the employee’s place of residence. The court noted that the state’s overtime laws were designed to serve important public-policy goals such as protecting the health and safety of employees from “the evils associated with overwork” and providing an incentive to spread employment to a greater number of individuals. These policies would not be served by excluding nonresidents from the state’s overtime laws. In addition, any extra burden on employers as a result of complying with California’s overtime laws would be incidental. The court held that the state’s overtime laws don’t apply to work performed outside California.

As a result of the ruling, Arizona employers that send nonresident employees to California should familiarize themselves with the state’s overtime laws and be prepared to comply with provisions that are different from those to which they may be accustomed. For instance, Arizona, which doesn’t have state overtime laws — generally, the Fair Labor Standards Act’s (FLSA) federal overtime laws will apply — doesn’t require overtime premium rates for work in excess of eight hours in one workday. In California, employers may be required to pay one and a half times the regular rate of pay for hours in excess of eight per day. Hours in excess of 12 per day may require double the regular rate.

Chris McFadden is an associate with Ford & Harrison LLP. If you have a question about this alert or other workplace issues, contact him directly at (602) 627-3524. We’ll have more on the effect of this ruling in the next issue of Arizona Employment Law Letter.

50 Employment Laws in 50 States provides a state-by-state comparison of state employment laws, including overtime and wage and hour