California-based employers must pay overtime to out-of-state employees who work in California, a federal appeals court has ruled in a case involving Oracle Corp.
The 9th U.S. Circuit Court of Appeals in San Francisco court also held, however, that California-based employers do not have to pay overtime for work that is performed outside the state by out-of-state workers.
The case involving three employees of Redwood Shores, California-based Oracle, who lived in Colorado and Arizona but also worked in California and elsewhere. The employees, classified as instructors by Oracle, trained customers to use Oracle software.
The Dec. 13 ruling in Donald Sullivan et al. vs. Oracle Corp. et al. is the second time the 9th Circuit has ruled on the issue. In 2008, the appeals court withdrew a 2008 decision in the case that was essentially the same as its ruling Tuesday and asked the state Supreme Court to decide the underlying questions of California law. The California Supreme Court issued its ruling June 30.
In its decision Tuesday, the 9th Circuit agreed with the Supreme Court ruling in overturning a lower court ruling, and held that workers domiciled in other states who worked complete days in California are entitled to overtime.
"The contacts creating California interests are clearly sufficient to permit the application of California's labor code in this case," the three-judge appeals court panel ruled unanimously. "The employer, Oracle, has its headquarters and principal place of business in California; the decision to classify plaintiffs as teachers and to deny them overtime pay was made in California; and the work in question was performed in California."
The appeals court's ruling in favor of Oracle on the issue of out-of-state plaintiffs working outside of California upheld the district court's ruling.
The case was remanded for further proceedings.