New Case on Rules Governing Application of California Overtime Law to Non-California Residents

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On June 30, 2011, the California Supreme Court handed down the decision in Sullivan v. Oracle Corporation, No. S170577 (June 30, 2011), tackling the issue of whether California wage law should apply to non-resident employees. By way of background, a class action settlement had eliminated all but a small portion of class claims concerning the exempt misclassification of Oracle "Instructors." The only remaining claims involved Instructors who were not California residents. While Oracle's headquarters are located in California, Oracle employed Instructors in 20 states, including California. The two claims at issue were claims for overtime arising (1) whether non-California resident Instructors who came to work in California for at least a full day or full week needed to be paid overtime under California rules governing daily and weekly overtime; and (2) whether Instructors who worked entirely outside California and were denied overtime under Fair Labor Standards Act ("FLSA") rules could recover FLSA overtime under the California Unfair Competition Law ("UCL"), Bus. & Prof. Code, § 17200 et seq.

Plaintiffs pled the above claims in a complaint filed in the United States District Court for the Central District of California. The Central District granted Oracle's motion for summary judgment based on stipulated facts. On appeal, the Ninth Circuit affirmed in part and reversed in part, holding that the Labor Code and the UCL applied to plaintiffs' claims for overtime for days and weeks worked entirely in California. The Ninth Circuit rejected, however, Plaintiffs argument that they could use the UCL to borrow standards in the FLSA and sue on behalf of employees who worked outside California. Subsequently, however, the Ninth Circuit withdrew its opinion and certified questions for the California Supreme Court to resolve as a matter of state law.

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