Do state wage laws apply to workers here for just a day?

The California Supreme Court is expected to decide whether state laws governing wage statements and minimum wage apply to employees who perform work both inside California and outside the state. The case, Oman v. Delta Airlines, Inc/ involves flight attendants who regularly perform pre-flight and post-flight work in California. They sued their employer, Delta Airlines, alleging it failed to pay them for this work, failed to make timely wage payments, and failed to provide wage statements reflecting their actual work time.

Delta sought to avoid liability by asserting employees were paid enough that their average hourly rate exceeded the minimum wage even if the unpaid hours of California work constituted compensable time. However, California bars averaging all hours worked in any work week to compute an employer's minimum wage obligations. Delta also argued that California's wage laws, including those governing timely payment and accurate wage statements, did not apply because the employees spent most of their time performing work out of state.

The district court granted summary judgment against the employees, ruling that Delta had complied with California's minimum wage law, and holding that Labor Code Sections 204 and 206, which govern wage statements and the timing of payments, do not apply because the plaintiffs only worked de minimis hours in California. The plaintiffs appealed to the 9th U.S. Circuit Court of Appeals.

In 2018, the 9th Circuit certified three questions to the California Supreme Court: (1) Do Labor Code Sections 204 and 226 apply to wage payments and wage statements provided by an out-of-state employer to an employee, who works in California only episodically, and for less than a day at a time; (2) does California's minimum wage law apply to such work; and (3) does the bar on averaging wages apply to a pay formula that generally awards credit for all on duty hours, but which, in certain circumstances, does not award credit for all hours on duty? Oman v. Delta Air Lines, Inc., 889 F.3d 1075 (9th Cir. 2018). The California Supreme Court granted the request and the case has been fully briefed.

Based on previous rulings that California's overtime rules applied to non-residents who worked in California for entire days or weeks at a time, the Supreme Court will likely apply California's minimum wage laws apply to all work performed in the state. See Sullivan v. Oracle Corp., 254 P.3d 236 (Cal. 2011). Sullivan held California possesses a "strong interest" in applying its overtime law to all nonexempt workers, and all work performed, within its borders. Exempting non-residents from minimum wage laws undermines those protections and incentivizes employers to use non-residents to perform work at lower hourly rates. The court is anticipated to apply the same rationale to California's minimum wage laws.

Similarly, the court will likely prohibit payments exceeding the minimum wage made for work outside of California from being used to offset minimum wage liability for all hours worked in California. In Troester v. Starbucks, 5 Cal. 5th 839 (2018), the Supreme Court ruled that California law required payment of a minimum wage for every hour worked -- not merely weekly compensation sufficient to average out to an hourly rate over the minimum wage. Recognizing California's interest in ensuring all hours worked in California must be paid at the statutory or agreed upon rate, lower state courts have consistently rejected attempts to apply the FLSA "averaging" method to determine minimum wage liability for work performed in California. The Supreme Court is unlikely to sanction "averaging" or crediting compensation for time spent working on flights outside California against unpaid work performed in California, as Troester is dispositive.

Whether California's wage statement requirements apply to employees performing work in and out of the state is a closer question. Arguably complying with California wage statement requirements, as well as other states' laws, could result in employers being forced to provide multiple wage statements to individual employees. However, the court may find these concerns overblown, as employers could develop a single wage statement that complies with the laws of all applicable states. Moreover, the information required on wage statements does not vary greatly among states. The wages statement claims at issue are largely derivative of the plaintiffs' other claims, i.e., whether the statements accurately indicate all work performed and compensation owed.

The anticipated ruling that California's minimum wage requirements apply to any work performed in the states, even by employees largely working outside California, will have notable impacts nationally and internationally. Employers will have to comply with California minimum wage rates and calculation methods for time they suffer or permit employees to work in California. Employers only willing to pay each state's bare minimum wage, will have to closely track work time and apply different wage rates and work definitions for time worked in each state.

Such a ruling would also provide precedent to protect employees in other industries, such as professional sports. Just last year, the 9th Circuit in Senne v. Kansas City Royals Baseball reversed a district court decision denying class certification for minimum wage and overtime claims minor league baseball players brought for work they performed in California, Arizona, and Florida. Relying on Sullivan, the court determined that players could pursue class claims for the work they performed in California. As a federal court decision, Senne is merely persuasive authority on the issue. A similar ruling in Oman would establish binding precedent on the issue in California.

A ruling in favor of Delta would effectively strip employees who work in California and other states of California's labor protections. Employers would be incentivized to require token work outside California in order to evade its labor protects. Such schemes may become prevalent in cities near California's border, in companies doing business outside California and in the transportation and shipping industries.

Given the significance of the issues raised in Oman for employees and employers across the country, this is a case that employment lawyers should watch with keen interest. 