For a company that does 100 percent of its business in California and employs workers who perform 100 percent of their work in California, it would not be surprising for the workers' employment to be governed by California's labor laws. But what if the employer operates in multiple states and the employees work in multiple states, with only a small fraction of their work performed in California – do California's labor laws apply then? That is the question the California Supreme Court recently agreed to answer.
The California Supreme Court was presented with this question in three cases involving airlines – Oman v. Delta Air Lines (Case No. S248726), Ward v. United Airlines (Case No. S248702) and Vidrio v. United Airlines (Case No. S248702). Oman and Vidrio involve flight attendants, while Ward involves pilots. In Oman, a sampling of data revealed the four plaintiffs spent at most 14 percent of their time working in California. The class member flight attendants in Vidrio spent an average of 17 percent of their time at work in airspace above California, while the class member pilots in Ward spent an average of 12 percent of their work time in airspace above California. Additionally, the class members in Vidrio and Ward are California residents who pay California's state income tax on their income. Of the four plaintiffs in Oman, two resided in California and were based at California airports, a third was based at a California airport but was not a California resident, and a fourth was neither based at a California airport nor a California resident.
The three cases originated in federal court, and after the Ninth Circuit Court of Appeals was presented with briefing and heard the cases, the Ninth Circuit decided to ask the California Supreme Court to answer the questions presented, as the questions involved issues of substantive California law. The California Supreme Court has now agreed to answer the various questions presented by the three cases, which specifically involve the application of California Labor Code Section 226 and an employer's duty to provide certain information on employee wage statements issued to employees as well as the application of California's minimum wage and overtime laws.
The implications of a ruling that employees who work in California only 10 to 20 percent of the time are subject to California's labor laws could be significant. For example, California Labor Code Section 226 has nine requirements for wage statements, and penalties for noncompliance include $50 for the first violation and $100 for each subsequent violation, capped at $4,000 per employee.
It is unclear when the California Supreme Court will render a decision. The briefing has not yet begun, and the California Supreme Court has no set requirement for scheduling a fully briefed case for oral argument. Once the court hears argument and the matter is submitted, however, the court has three months to render a decision.
The Bottom Line
Companies employing workers who perform a minority of their work in California may soon be required to comply with California's labor laws.
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