What law controls when a California worker works outside California?

California has a strong public policy of protecting its workers. And it's no secret that relative to other states' wage and hour laws, California's are some of the most protective of employees and strictest on employers. It's even possible that California's wage and hour laws may be applied to work beyond California's boundaries.

In 1996, in Tidewater Marine W., Inc. v. Bradshaw, 14 Cal. 4th 557 (1996), the California Supreme Court explained that an employee who resides in California, receives pay in California, and works exclusively, or principally, in California, presumptively enjoys the protections of California's wage orders. Also, the California Supreme Court held in Sullivan v. Oracle Corp., 51 Cal. 4th 1191 (2011), that nonresidents' full days and weeks of work in California for a California-based company are subject to the overtime provisions of the California Labor Code. But what happens when some of that work is performed outside of California? In other words, do California's wage and hour laws apply when a California employer sends its employee who lives, works and is paid in California to work in another state or states part of the time?

This scenario occurs more often today than it did a generation ago, especially in the transportation industry with its highly mobile work forces (e.g., long haul truck drivers, airline pilots and flight attendants), however, there is no authority that directly answers this question. While states may have the power to legislate concerning the rights of its citizens as to conduct that occurs outside its boundaries, there is a presumption that a state did not intend to impose its statutes extraterritorially, unless a contrary intent is clearly expressed or may reasonably be inferred from the act's language, purpose, subject matter, or history. The California Supreme Court has not decided whether the Labor Code's language or purpose impliedly suggests an intent to apply those laws to conduct occurring outside of California. And neither the California Supreme Court nor the 9th U.S. Circuit Court of Appeals has established a test for determining how to overcome the Tidewater presumption to apply the provisions of the Labor Code to work performed outside California.

Courts acknowledge that there is no clear test to apply in cases that involve this issue. Generally, California plaintiffs advocate for courts to apply a multi-factor test to work performed outside California, whereas defendants argue for the job situs test. Plaintiffs' multi-factor approach focuses on both the employer and employee. It examines the employer's connections to California, including where the employer is headquartered, how much of the employer's business and operations occur in California versus outside California, and whether the employer receives subsidies from California. As to the employee, the test examines how much of the employee's work was performed in versus out of California, the nature of the work, whether the employee receives pay in California, and where the conduct that gives rise to liability occurred. The job situs test on the other hand merely asks whether the employee works exclusively or principally in California, and if he or she doesn't, then the time spent working in California would not be subject to California law. One other angle to argue that California law applies is to assert that its application would not be extraterritorial because the underlying conduct did not occur outside California even though that conduct may be affected by worked performed outside California. For instance, this argument could be made in the instance of work by California residents performed both inside and outside California when the claim involves the issuance of wage statements or the payment of all wages every pay period and upon separation.

The Northern District of California in 2017 in Bernstein v. Virgin America, Inc., 15-CV-02277-JST (N.D. Cal., Nov. 7, 2016) and 2018 in Goldthorpe v. Cathay Pacific Airways Ltd., 279 F.Supp.3d 1001 (N.D. Cal. 2018), has held that California's wage and hour protections applied to work performed outside of California by California-resident and California-based employees whose job inherently involves out-of-state travel even though the majority of their work was performed outside California. Other cases from California district courts have ended the inquiry with the job situs test, finding dispositive the location where the work was performed, several of which are now on appeal. Considering prior courts' admitted confusion on the unsettled, competing standards and tests available for an employee to overcome the Tidewater presumption, this question seems ripe to be certified to the California Supreme Court.

Other states' cases may offer analytical guidance. The Washington Supreme Court has addressed the question as to the extraterritorial application of its overtime laws -- the Minimum Wage Act -- for Washington-resident truck drivers working for a California corporation both inside and outside Washington. In 2007, in Bostain v. Food Express, Inc., 159 Wash.2d 700 (2007), the Washington Supreme Court held that overtime laws under its Minimum Wage Act apply to Washington-based employees such that all hours of work, both inside and outside Washington, must be included in calculating overtime compensation. The fact that only 37 percent of driving time was in Washington and 63 percent out of state did not preclude the extraterritorial application of Washington's overtime laws to time worked out of state. Likewise, in Massachusetts, where there is no pronounced policy against extraterritoriality, the district court held in 2010 in Gonyou v. Tri-Wire Engineering Solutions, Inc., 717 F.Supp.2d 152 (D. Mass. 2010), that the Massachusetts' overtime laws applied in the case of one of its residents who worked out of state for a Massachusetts corporation with sufficient contacts, i.e., operations, in the state.

Several appeals to watch involving the extraterritorial application of California's wage and hour laws were just heard before the 9th Circuit on March 16. Two cases, Vidrio v. United Airlines, Inc. (17-55471) and Ward v. United Airlines (16-16415) involve the issuance of wage statements under California Labor Code Section 226 to flight attendants who live in California, are headquartered in California, and are paid their wages in California but work both inside and outside California. A third case, Oman v. Delta Air Lines, Inc. (17-15124) asks whether California Labor Code Sections 226 and 204 (timely payment of wages) apply to work performed outside California by California-resident flight attendants for a Georgia-headquartered corporation with substantial operations in California. And a fourth case also involving the extraterritorial application of California's rest break laws, Shook v. Indian River Transport Co. (17-15322), was heard but affirmed on unrelated grounds.