California Wage and Hour Laws Protect Nonresidents

Donald Sullivan was among many out-of-state employees who worked as software instructors for Oracle in California, training customers on the use of the company’s software products. Oracle classified its instructors as “teachers” and considered them exempt from overtime provisions of the Fair Labor Standards Act and the California Labor Code until 2003, when it reclassified employees nationwide as being eligible for overtime pay. Oracle settled claims brought by California resident instructors, but refused to pay any settlement to employees who had worked in the state of California but were not residents of California.
Sullivan and two other employees who worked either daily or weekly overtime for Oracle in California while living in another state filed suit in a California state court seeking overtime pay. The case was removed to U.S. District Court for the Central District of California. The court found in favor of Oracle, and Sullivan appealed.
The U.S. Court of Appeals for the 9th Circuit ruled that Sullivan and other out-of-state residents who worked in California were entitled to overtime pay under the FLSA and state law because California intended to apply its labor code to out-of-state residents working in the state.

    The court held that “California’s employment laws govern all work performed in the state, regardless of the residence or domicile of the worker.” The court also stated: “[W]e fail to see any interest Colorado or Arizona have in ensuring that their residents are paid less when working in California than California residents who perform the same work.”

    The 9th Circuit held that the company’s failure to pay overtime violated California unfair-competition law, but that it “does not apply to the claims of nonresidents of California who allege violations of the FLSA outside California.” Sullivan v. Oracle Corp., 9th Cir., No. 06-56649 (11/6/08).

    Impact: Overtime pay required by California law applies to California residents and residents of Colorado and Arizona.