Support through your toughest HR challenges: A network of 285,000 HR professionals.
Shawn Premer shows how doing the right thing for employees leads to positive business results.
Is your employee handbook keeping up with the changing world of work? With SHRM's Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Build competencies, establish credibility and advance your career—while earning PDCs—at SHRM Seminars in 12 cities across the U.S. this spring.
#SHRM18 will expand your perspective – on your organization, on your career, and on the way you approach HR. Join us in Chicago June 17-20, 2018
In wake of Sullivan v. Oracle Corp., employers could face claims by employees performing work in California
Members may download one copy of our sample forms and templates for your personal use within your organization. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRM’s permission. To request permission for specific items, click on the “reuse permissions” button on the page where you find the item.
The California Supreme Court issued a major wage and hour decision on June 30, 2011, against Oracle Corp., ruling that California companies must follow the state's law on overtime pay, with time-and-a-half for all hours above eight in a workday, for out-of-state residents working in California.
The unanimous decision, Sullivan v. Oracle Corp.,“will have significant implications for all California-based employers with employees who are residents of other states, but who perform work in California," said Laura Maechtlen, a labor and employment partner with law firm Seyfarth Shaw. "While the decision is limited to California-based employers, because it found that the overtime provisions of the labor code apply to non-resident employees, employers subject to the decision could face a slew of additional claims by nonresident employees alleging that they were improperly classified as exempt and/or owed overtime for work performed in California,” she noted.
Future plaintiffs are likely to push the envelope when alleging wage and hour law violations under California state laws, she warned, based on the court's reading of California Labor Code Section 510. Out-of-state employers could face claims by employees performing work in California, in an attempt to expand the holding of Sullivan.
"The Supreme Court decision does not address whether the overtime provisions of the Labor Code are applicable to out-of-state employers, noting 'we are not prepared, without more thorough briefing of the issues, to hold that IWC [Industrial Welfare Commission] wage orders apply to all employment in California...,' " Maechtlen said.
The case arose from an appeal of a 2008 federal Ninth Circuit Court ruling that California's wage and hour law applied to Arizona residents, in this case instructors who trained customers to use Oracle software. These Arizona employees had worked complete days in California, but were employed primarily in Arizona and were not residents of California. The Ninth Circuit also ruled that the plaintiffs could not sue under California's Unfair Competition Law for federal Fair Labor Standards Act (FLSA) violations that occurred outside of California.
However, the Ninth Circuit vacated its own opinion and punted the case to the California Supreme Court, certifying three questions for decision.
Maechtlen noted that perhaps the most interesting portion of the case was the third issue certified by the court. "Luckily, the California Supreme Court sided with Oracle on this issue," she said. “If the court had found that the UCL applied to overtime work performed outside of California for a California-based employer, a class action could have been filed on behalf of a nationwide class under the California Unfair Competition Law by borrowing the FLSA as a predicate act."
Stephen Miller, CEBS, is an online editor/manager for SHRM.
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Please sign in as a SHRM member before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Talent Attraction Study: What Matters to the Modern Candidate
Apply by March 23
SHRM’s HR Vendor Directory contains over 3,200 companies