Nonresidents are Entitled to Overtime for Work Performed in California: Sullivan v. Oracle

On November 6, 2008, the U.S. Court of Appeals for the Ninth Circuit issued an opinion of concern to all employers who utilize California nonresidents to perform work in California. In Sullivan v. Oracle, the court was asked to determine whether an employer who employs out-of-state residents to perform work in California is required to pay overtime pursuant to the California Labor Code. In an opinion by Judge Fletcher, the court concluded that employees who reside out of the state, but work in California, are entitled to overtime wages as prescribed by California law.

The plaintiffs were three employees of Oracle who resided outside of California. They were employed as instructors who trained customers to use Oracle’s software. Two of the three plaintiffs were residents of Colorado, and the third was a resident of Arizona. Each worked in California from 15 to 33 days a year during the relevant time period. The plaintiffs alleged that Oracle had misclassified them as exempt from overtime and sought compensation for unpaid overtime.

The plaintiffs brought three claims against Oracle under California law: (1) violation of California Labor Code section 510 (failure to pay overtime); (2) violation of California’s Unfair Competition Law (UCL), Business and Professions Code section 17200; and (3) violation of the UCL stemming from violations of the federal Fair Labor Standards Act (FLSA). The first two claims were based upon work performed in California, while the third claim was based upon work performed anywhere in the United States. The district court granted summary judgment to Oracle on all three claims, finding that relevant provisions of California law did not, or could not, apply to the work performed by the plaintiffs. The Ninth Circuit reversed claims (1) and (2), and affirmed claim (3).