Do you have to pay out-of-state employees for the overtime work they perform in state? After weighing in on a recent overtime lawsuit, it’s clear two major courts think so.

The U.S. Court of Appeals for the 9th Circuit, after asking for guidance from the California Supreme Court, revived a class-action overtime lawsuit against Oracle Corp.

The company is being sued by Arizona and Colorado residents who claim they traveled to California and worked more than eight hours per day for Oracle and were not paid for it.

California’s overtime laws are more employee-friendly than the Fair Labor Standards Act’s overtime requirements. The California Labor Code says employers must pay non-exempt workers overtime for any hours they work over eight in a day. The FLSA only requires that employees pay overtime for any hours worked over 40 in a week.

Oracle fought the suit, claiming the California Labor Code’s overtime requirements don’t cover overtime work performed in the state by non-residents.

A federal district court ruled in favor of the company. It agreed with Oracle, saying the state’s labor code didn’t cover workers who primarily lived and worked outside the state.

Overruled

But that ruling was overturned by the appeals court, which has sent the case back down to the district court for further proceedings.

According to the appeals court, Oracle could be liable for unpaid wages if it’s proven the company didn’t pay the employees for overtime work.

During the appeal, the 9th Circuit court asked the California Supreme Court for guidance on whether California law applies to non-resident employees who perform work in the state.

The state’s high court ruled it did, saying that by not applying California law to non-residents performing work in the state, employers would be encouraged to bypass state residents and look for lower-paid temporary out-of-state workers.

In a nutshell, the court ruled Cali employers can’t treat out-of-state workers differently than they treat residents.

Business groups and lawyers on Oracle’s side had argued the ruling would drive business away from California and lead to a spike in wage-and-hour claims, but neither the state supreme court nor the appeals court were swayed by that argument.

Do you think the appeals court and state supreme court got this right? Share your opinions in the Reply box below.

Tags: Arizona, Colorado, court, lawsuit, Oracle, overtime, residents