Do State Wage and Hour Laws Apply on the Outer Continental Shelf?

U.S. Supreme Court heard oral arguments in oil-rig worker’s proposed class action

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The U.S. Supreme Court recently heard oral arguments in a dispute about whether state or federal employment laws applied to an offshore drilling rig worker's wage and hour claims for time spent on a platform located more than three miles from the California coast.

In Parker Drilling Management Service, Ltd. v. Newton, the plaintiff worked 14 days at a time on the platform. He worked 12-hour shifts, which were followed by 12 hours of rest, though he needed to be on-call when off duty.  

While the federal Fair Labor Standards Act (FLSA) only requires workers to be paid for actual hours worked, California's more stringent wage and hour laws entitle workers to compensation for call-in or stand-by hours. The Golden State also mandates meal and rest breaks, a higher minimum wage than what federal law requires and additional overtime premiums.

The oil-rig worker filed a proposed class action arguing that he and other workers are due compensation under California law for all hours spent on the platform. The employer, however, asserts that federal law applies under the Outer Continental Shelf Lands Act (OCSLA) and that workers were properly paid under the FLSA.

We've rounded up the latest news on this topic from SHRM Online and other trusted outlets.

The Dispute

Under the OCSLA, states generally control the area within three nautical miles of the coast, whereas the outer continental shelf (where the oil platform in this case is located) is controlled by federal law. State law may be applied to the outer continental shelf under the act when it is "applicable" and "not inconsistent with" federal law. In the current case, the 9th U.S. Circuit Court of Appeals held that California wage and hour laws apply on the platform because the state laws are not inconsistent with or pre-empted by federal law. However, the ruling deviates from a 1969 5th Circuit ruling, where the court held that state law only applies under the OCSLA when there is an unanswered question under federal law and state law can fill in the gap.

(SCOTUSblog)

Does Federal Law Set the Floor?

At oral argument, the worker's attorney said that, just as states can set higher minimum wages than the federal standard, California's more-generous wage and hour standards should apply under the OCSLA. "It's quite sensible why Congress would have said … that the state law ought to apply, but, to the extent that the Secretary of Interior perceives there to be inconsistencies with the federal standard, we're going to give the secretary the … regulatory authority to displace that standard," the worker's attorney said. On the other side, the employer's attorney argued that state law doesn't apply because the FLSA sets a nationwide employment standard.

(Courthouse News)

[SHRM members-only how-to guide: How to Calculate Daily and Weekly Overtime in California]

Justices Seemed Doubtful that State Law Applies

The justices seemed reluctant to accept that state law would apply to the outer continental shelf. Justice Samuel Alito Jr. noted that the plaintiff's position would mean that "California then extends 200 miles out to sea." Justice Ruth Bader Ginsburg said that "a state is not sovereign" over the outer continental shelf, and Justice Stephen Breyer seemed concerned about how a ruling in favor of the worker would affect businesses that have been applying federal law for years. "I don't know if it's determinative, but I'm slightly worried about overturning a set of court of appeals decisions under which industry and labor and everyone have worked, 97 percent of them, for 50 years," he said.

(SFGate)

California Imposes Strict Wage and Hour Laws

Employers with operations off the coast of California would face complicated workplace compliance challenges if the higher court were to side with the worker in this case. The Golden State has long provided fertile ground for employment lawsuits, because the state has strict workplace rules that businesses must follow. And in the last year, several rulings by the California Supreme Court have made matters even more difficult for employers. Here are some of the key cases affecting employers in the state.

(SHRM Online)

6 FAQs on California's Meal and Rest Break Rules

California's meal and rest break rules are extremely technical and nuanced—and failing to y comply with them can result in penalties. Here are answers to six frequently asked questions regarding compliance with this intricate area of California labor and employment law. 

(SHRM Online)

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