California Labor Code Protects Non-Residents Too

Let's assume you have a business that operates is several states. You have employees that live someplace other than California, say Arizona. But your employees travel to California to do business.

Now, Arizona has no state law regulating overtime, but California does. Will your company have to comply with California's overtime laws when your Arizona based employees perform work in California? In Sullivan v. Oracle Corp (9th Circuit November 6, 2008), the court held that it does.

California Labor Code section 510(a) requires overtime pay of one and one-half time regular pay beyond 8 hours worked in a single day, 40 hours in one week, and the first 8 hours of work on the seventh day worked of any one workweek. It additionally requires double pay for hours worked beyond 12 in a day or 8 on the seventh day of one workweek.

This overtime requirement is intended to apply to all work done in California, whether by a resident or a non-resident - it makes no distinction between place of residence in the statute. If companies were able to circumvent the California overtime pay requirements by importing workers living in neighboring states, this would have a negative effect on the availability of jobs for California residents as well as on their compensation.

In reaching this decision, the Ninth Circuit Court of Appeals performed what is called a choice of law analysis in which it found that the laws of California and Arizona on overtime were materially different, but that California had a strong interest in applying its law, even to non-residents, and Arizona had no interest in making sure its residents are paid less when working in California than California residents who perform the same work.

Now, this does not mean that California labor laws will be applied when those same non-resident employees perform work in yet another state - only when they perform work in California. Because California has no interest in those non-resident workers unless they are in California.