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California Overtime Law Expanded to Non-Residents

California-based businesses previously could avoid paying non-residents overtime by claiming work was primarily done out of state.
  • Jul 22, 2011
  • Staff
  • Unpaid Overtime Lawsuits

The California Supreme Court ruled unanimously that employers based in the state must pay out-of-state residents overtime. Previously, California-based companies had avoided paying non-residents daily overtime by claiming that they were not eligible because their work was primarily in other states. The case against Orcale Corp. could have far-reaching implications, with many believing that this ruling could extend to companies that are not based in but have operations in California and that it could also possibly cover labor laws other than overtime compensation. 

The case against Oracle Corp., a software company based in Redwood Shores, California, was brought by three former employees who lived in Arizona and Colorado. These employees wanted to be compensated for working 10 to 15 hour days as instructors when they were required to work in California. Oracle maintained that these workers were not eligible for protection under California’s labor laws because Arizona and Colorado labor laws did not offer those same protections. Both states abide by the mandated time and a half pay after 40 hours in a week, but Colorado only requires overtime pay after 12 hours in a day and Arizona has no law on daily overtime. California law is much more generous, saying that nonexempt employees who work more than 8 hours a day or 40 hours a week are entitled to overtime at a rate of 1 1/2 times their normal pay, as well as double the normal rate for work over 8 hours on the seventh consecutive day in a workweek.

The California Supreme Court argued that this ruling was beneficial to both residents and temporary workers, arguing that allowing companies to pay non-residents less money would take jobs away from Californians and would infringe on the rights of temporary workers. "Not to apply California law would encourage employers to substitute lower-paid temporary employees from other states for California employees, thus threatening California's legitimate interest in expanding the job market," said Justice Kathryn Mickle Werdegar. The California Supreme Court was focused on ensuring that the state abided by laws designed to protect workers and to prevent "the evils associated with overwork."

The growing consensus is that this law could most likely be expanded to affect non-California employers, as well as state-mandated minimum wages, meal breaks and rest periods. Furthermore, California’s laws for exempt status are more stringent than the FLSA and other states, meaning that workers classified as exempt in other states may classify as non-exempt in California, which would require employers to pay them overtime and the minimum wage. With this ruling, it is likely that hundreds of lawsuits will be filed against California-based employers alleging a failure to properly compensate out-of-state residents for overtime work. 

If you or a loved one has worked in California for any period of time and your employer has not abided by California state overtime, minimum wage, and other labor laws because you were a non-resident, you may be entitled to receive back wages. Contact an experienced overtime lawyer to see if you were fairly compensated for your time worked, and to see if you are eligible to file a lawsuit to recover compensation for unpaid overtime. Fill out our free case review form on the right today to get in touch with an overtime attorney.