In a unanimous opinion, the California Supreme Court has ruled that California's overtime laws apply to workers from out of state who perform work in California for a California-based employer. Sullivan v. Oracle Corp., No. 06-56649 (9th Cir. June 30, 2011). Answering certified questions from the U.S. Court of Appeals for the Ninth Circuit, the court ruled that California laws on overtime pay applied to software trainers employed by California-based Oracle Corporation with respect to work they performed in California, even though the employees resided in Colorado and Arizona. The court noted that "California's overtime laws apply by their terms to all employment in the state, without reference to the employee's place of residence. . . . To exclude nonresidents from the overtime laws' protection would tend to defeat their purpose by encouraging employers to import unprotected workers from other states." The court rejected Oracle's argument that interstate comity required that the employee's resident state's wage law traveled with the employee, as well as Oracle's complaints about the practical burdens on employers that might result from requiring them to apply California law to such employees.
Answering two other certified questions, the court also held that California's Business & Professions Code section 17200 applies to the overtime work issue (providing a four-year limitations period for such claims), but that time-barred FLSA wage claims that had accrued as to work performed in other states could not be resurrected in California under that longer limitations period.
While Sullivan specifically addresses a California-based employer's obligation to follow California's wage and hour laws for its out-of-state-resident employees who perform work in California, the case has implications for all employers with employees working in California who do not reside there. All employers with employees working in California, even on a transient basis, should be prepared to observe the state's wage and hour rules for work performed in the state.