What’s California Got to Do With Me?
Although state employment laws generally do not have
extraterritorial application, what constitutes an extraterritorial application
when it comes to the California Labor Code is not clearly settled. As such,
employers that are not headquartered in California but have employees who work
in the state from time to time should take into account California law — and
its potential applicability — when developing and reviewing employment policies
Currently before the Ninth Circuit is the question of whether
Section 226 of the California Labor Code, which specifies the type of
information that must be listed on an employee’s wage statement, applies to
California-based employees of a non-California employer, who spend the majority
of their time working outside of California. A district court found that United
Airlines was not required to comply with respect to a class of flight
attendants because the flight attendants performed less than 18% of their work
in California. The court also considered (1) the residence of the parties; (2)
whether the pay was received in California; (3) the principal place of work;
and (4) if the employee’s absence from California was temporary in nature.
Finding that the employer is neither based nor headquartered in California, its
operations in the state constitute less than 20% of its overall business, and
the employees’ principal place of work was out-of-state, the court held that
California law did not apply under that multi-factor analysis either.
Whether the Ninth Circuit will agree with the District Court
is yet to be seen. In the meantime, employers that are not based in California
but have employees performing work in that state may be well-served to review
the amount of work those employees are doing in California as compared to other
locations, the amount of business the employer has in California, and
California’s employment laws, including, for example, those regarding wage
statements, minimum wage, overtime (e.g., provisions for daily overtime and
premiums of at least twice the regular rate), meal and rest breaks, and leaves.