Question:

As a human resources manager for a nationwide business headquartered in California, I understand when to pay overtime for employees who live and work in California, but I’m unclear about whether California’s overtime law applies to out-of-state employees who work in California every now and then.

Answer:

This is an important issue because California’s overtime laws differ from other states and federal law. The California Supreme Court recently addressed this issue in a case called Sullivan v. Oracle Corporation. While Oracle is based in California, the plaintiff employees in this case lived and worked primarily in Colorado and Arizona. They sometimes traveled to California to train customers on using Oracle’s software in their jobs as instructors. Each employee worked in California between 20 and 110 days over a three-year period. Oracle originally considered these instructors exempt from the overtime laws, but later reclassified them as non-exempt and began paying overtime. The instructors sued for overtime wages based on California law, and for the time period when they were misclassified as exempt.

The Court decided that California’s overtime law applied to the work the instructors performed in California. Given this new case, California employers should pay employees for any overtime worked in California regardless of where they reside. Employers should also be careful about misclassifying out-of-state employees who work in California as exempt when they are actually non-exempt employees under California law.

The Court limited its decision to the facts before it and declined to state whether other California wage and hour laws would apply to out-of-state employees working in California. It noted that California has a strong interest in its overtime law, due to the public policy of “guarding against the evils of overwork,” but may not have a similar interest in extending other employment laws to out-of-state employees, such as laws on pay stubs or vacation. These additional issues will likely be decided at some point. In the meantime, cautious employers based in California may decide to go ahead and afford out-of-state employees who work in California the more generous protections found in California wage and hour law.

In light of the Sullivan v. Oracle Corporation decision, you should check your company’s policies and practices to make sure that out-of-state non-exempt employees receive overtime pay under California law for days and weeks worked in California. Non-exempt employees who travel from out-of-state to work in California should record all time worked, along with the location of where the work was performed. As you know, California’s overtime law requires employers in most industries to pay one and a half times the regular rate for all hours worked over eight in a workday, 40 in a workweek, or the first eight hours on the seventh consecutive day worked in a workweek. Two times the regular rate must be paid for hours worked in excess of 12 in a workday or eight on the seventh consecutive day worked in a workweek. For more information about California’s overtime laws, visit the Industrial Welfare Commission’s web site at www.dir.ca.gov/iwc.
– – – – – – – – – – – – – – – – – – – – – – – – – –
Back to Menu- Work Place Law 2011 Articles