California Overtime Laws Trump Oracle Overtime Lawsuit

Sacramento, CAIn an about-face, the Ninth Circuit court confirmed that nonresident employees are subject to California Overtime Law when they perform work in California.

The Supreme Court sided with Oracle employees' class-action lawsuit this past summer. They lived in states other than California but were often employed in California as instructors, assisting Oracle customers in the use of Oracle software. (Plaintiffs and former Oracle employees Donald Sullivan and Deanna Evich resided in Colorado, and plaintiff Richard Burkow resided in Arizona.)

Oracle classified the plaintiffs as "instructors" who were exempt from the overtime provisions of California's Labor Code when they performed work in California, but California's overtime laws, which are not the same as those set by The Fair Labor Standards Act (FLSA) and are more employee-friendly, mandates that employers pay non-exempt employees overtime for the time over eight hours per day that the employees work. In most other states, employers are only required to pay employees overtime if the employees work more than 40 hours in a week, but California overtime laws go above and beyond those of the FLSA. And because of these laws, the plaintiffs claimed that they were misclassified as exempt, which meant they were entitled to overtime when working in California.

For much of December, confusion reigned regarding the Sullivan v. Oracle Corporation case. First, a federal district court ruled in favor of Oracle, but on December 13, 2011, a federal appeals court for the 9th Circuit reversed the ruling. The appellate court found that indeed the California labor code applies to nonresident employees when they perform work in the state. Now Oracle can be held liable to pay its out-of-state computer instructors for unpaid overtime wages when they worked in California.

That's the cost of doing business in California, according to the plaintiffs' attorney. "If you're a business in California, you will have to comply with California's overtime laws. You can't treat people differently because they live in a different state," said attorney Charles Russell. Last June, the California high court found that not applying California law would encourage employers to substitute lower-paid temporary employees from other states for California employees. And that would open up a whole other can of California labor law violations.