Although state employment laws generally do not have extraterritorial application, what constitutes an extraterritorial application when it comes to the California Labor Code is not clearly settled. As such, employers that are not headquartered in California but have employees who work in the state from time to time should take into account California law — and its potential applicability — when developing and reviewing employment policies and practices.
Currently before the Ninth Circuit is the question of whether Section 226 of the California Labor Code, which specifies the type of information that must be listed on an employee’s wage statement, applies to California-based employees of a non-California employer, who spend the majority of their time working outside of California. A district court found that United Airlines was not required to comply with respect to a class of flight attendants because the flight attendants performed less than 18% of their work in California. The court also considered (1) the residence of the parties; (2) whether the pay was received in California; (3) the principal place of work; and (4) if the employee’s absence from California was temporary in nature. Finding that the employer is neither based nor headquartered in California, its operations in the state constitute less than 20% of its overall business, and the employees’ principal place of work was out-of-state, the court held that California law did not apply under that multi-factor analysis either.
Whether the Ninth Circuit will agree with the District Court is yet to be seen. In the meantime, employers that are not based in California but have employees performing work in that state may be well-served to review the amount of work those employees are doing in California as compared to other locations, the amount of business the employer has in California, and California’s employment laws, including, for example, those regarding wage statements, minimum wage, overtime (e.g., provisions for daily overtime and premiums of at least twice the regular rate), meal and rest breaks, and leaves.