James F. Mahoney, Attorney

July 2011

California’s Overtime Law Applies to Nonresidents

Court decision should prompt California employer review of payroll practices for nonresident employees

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The California Supreme Court recently ruled the State’s overtime law applies to nonresidents. In Sullivan v. Oracle Corporation, (June 2011), the issue was about work performed in-state for California-based employers by nonresident employees. The Court said the legislature intended that the Labor Code is applicable to any employee who performs work in California.

The plaintiffs were residents of Arizona and Colorado who worked mainly in their home states but were required by Oracle to travel to work in California and other states.

Plaintiffs sought daily and weekly overtime compensation for days longer than 8 hours and weeks longer than 40 hours for any full day or any full week worked entirely in California. Also alleged was Oracle's purported failure to pay them overtime pursuant to California's overtime law as an "unlawful business practice."

This is a bad decision for California-based employers, who may see claims from nonresident employees performing work in California. Review of payroll practices for nonresident employees is needed.