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California Employers Must Pay Nonresident Employees Overtime

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By Stephanie Rabiner, Esq. on July 01, 2011 1:05 PM

In a unanimous decision, the California Supreme Court ruled in favor of plaintiffs in the Oracle overtime lawsuit, finding that state overtime laws apply to nonresidents who work in California.

However, the court also said that employees are not protected by the state's wage and hour laws when they work out of state, even if they are paid by a California-based employer.

Both conclusions have huge implications for employees and companies that conduct business within California.

The Oracle overtime lawsuit was brought by a group of Arizona and Colorado employees who travel, mostly to California, to teach customers how to use Oracle products.

They contend that, while on-site in California, they should have been paid according to the state's overtime rules, which limit time worked to 8 hours a day and 40 hours a week.

The California Supreme Court agreed, finding that overtime laws exist to protect "the health and safety of workers and the general public," and to exclude nonresident employees working in-state would defeat their purpose.

It would also "encourag[e] employers to import unprotected workers from other states."

This last statement nicely sums up what this decision means for the California labor market.

Though it's unclear whether the ruling applies to other workplace health and safety laws, it is clear that California employers cannot import temporary workers or employees from an out-of-state office to avoid paying overtime.

While it may seem as though this will translate into work remaining in-state, remember that the court also told the Oracle overtime lawsuit plaintiffs that California businesses can avoid paying overtime if their employees never actually work within the state.

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