On June 30, 2011, the California Supreme Court ruled, in Sullivan v. Oracle Corporation (2011) 51 Cal. 4th 1191, that California employment laws apply to out-of-state employees working for California employers when those out-of-state employees perform work inside California. The plaintiffs in Sullivan were three employees of a California-based employer who lived in Colorado and Arizona, but who occasionally performed work in California (110 days, 74 days and 20 days, respectively). The employees claimed they were not paid overtime in accordance with California law for the days they worked in California. The California Supreme Court issued three specific holdings in the Sullivan case:
(1) the California Labor Code applies to overtime work performed in California for a California-based employer by its out-of-state workers;
(2) California’s Unfair Business Practices law (Business and Professions Code section 17200) also applies to such overtime work; and
(3) California’s Unfair Business Practices law does not apply to overtime work performed outside California for a California-based employer by non-resident workers even if the employer failed to comply with the overtime provisions of the federal Fair Labor Standards Act.
Left unresolved by Sullivan are the following issues:
(A) whether the ruling would be the same if an employee works only a partial day in California, and the rest of the day in a different state;
(B) whether the ruling would be the same if an employee is denied rights under California employment law other than overtime pay (e.g., meal and rest periods or vacation pay); and
(C) whether the ruling would be the same if an out-of-state employee working for an out-of-state employer performs some work in California.
Thus, given the rulings of Sullivan, California employers who employ non-California workers should consider being careful to comply with California employment law with respect to such workers whenever they perform work inside of California’s borders. –Adam K. Treiger