Ninth Circuit Holds That California Labor Code Applies to Work Performed in California by Nonresidents

In a case with potentially far-reaching implications for California and non-California employers alike—Sullivan v. Oracle Corporation, 08 C.D.O.S. 13881 (9th Cir. Nov. 6, 2008)—the Ninth Circuit held that the requirements of the California Labor Code applied to work performed by non-California residents in California. The Ninth Circuit held that Oracle—a California employer—must pay out-of-state employees under California’s rules if they worked overtime in California. The court left open the question of whether its holding could also extend to non-California employers.

Oracle is a software company with its headquarters and principal place of business in California. It has employed numerous “instructors” across the country to train the company’s customers in the use of its software. These instructors did not have a fixed assignment; rather, they could be asked to perform work in any state. For a number of years Oracle classified its instructors as exempt from state and federal overtime provisions. However, Oracle reclassified those instructors who lived in California as nonexempt and began paying them overtime under the California Labor Code, including “daily” overtime. Oracle also reclassified its instructors outside of California as nonexempt and began paying them overtime under the federal Fair Labor Standards Act (FLSA).

For the full story, please view the PDF.