In this proceeding we address, at the request of the United States Court of Appeals for the Ninth Circuit,
Plaintiffs Donald Sullivan, Deanna Evich and Richard Burkow formerly worked as "Instructors" for defendant Oracle Corporation, a large software
For years, Oracle did not pay its Instructors overtime. Oracle's practice in this regard followed the company's determination that its Instructors were exempt, as teachers, from California and federal overtime laws. (See generally Industrial Welfare Com., wage order No. 4-2001, § 1(A)(3)(a), codified as Cal. Code Regs., tit. 8, § 11040, subd. (1)(A)(3)(a); 29 C.F.R. § 541.303 (2010).) In 2003, Oracle's Instructors sued the company in a federal class action alleging misclassification and seeking unpaid overtime compensation. (Gabel & Sullivan v. Oracle Corp. (C.D.Cal. Mar. 29, 2005, No. CV-03-00348-AHS); see Sullivan III, supra, 557 F.3d 979, 981-982.) Shortly thereafter, Oracle reclassified its Instructors and began paying them overtime under the Labor Code (in 2003) and the FLSA (in 2004). In 2005, the federal action was settled and the claims of the plaintiff class dismissed with prejudice, except for the present claims concerning nonresident Instructors. (See Sullivan III, supra, 557 F.3d at p. 982.)
The present claims are three: First, plaintiffs claim overtime compensation under the Labor Code for days longer than eight hours, and weeks longer than 40 hours, worked entirely in California. (See Lab. Code, §§ 510, subd. (a), 1194.) Second, plaintiffs restate the same claim as one for restitution under the UCL. (Bus. & Prof. Code, § 17203.) Plaintiffs contend, in other words, that Oracle's failure to pay overtime for work performed in California was an "unlawful [or] unfair . . . business act or practice" (id., § 17200) for purposes of the UCL. Third, and again under the UCL, plaintiffs claim restitution in the amount of overtime compensation due under the FLSA (29 U.S.C. § 207(a)) for weeks longer than 40 hours worked entirely in states other than California. Plaintiffs thus seek to use Oracle's alleged violation of the FLSA in other states as the predicate unlawful act for a UCL claim under California law.
Plaintiffs pled the claims just described in a complaint filed in the United States District Court for the Central District of California. That court granted Oracle's motion for summary judgment based on stipulated facts. (Sullivan v. Oracle Corp. (C.D.Cal. Oct. 18, 2006, No. CV-05-00392-AHS).) On appeal,
We granted the Ninth Circuit's request. Accordingly, the following certified questions are now before us: "First, does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs in the circumstances of this case, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week? [¶] Second, does [Business and Professions Code section] 17200 apply to the overtime work described in question one? [¶] Third, does [section] 17200 apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs in the circumstances of this case if the employer failed to comply with the overtime provisions of the FLSA?" (Sullivan III, supra, 557 F.3d 979, 983.)
We note that, while plaintiffs' complaint contains class action allegations, the federal district court has not yet certified a class, and no question concerning class certification is before us. Also not before us is the question whether Oracle properly classified plaintiffs as exempt from the overtime laws during the relevant time period.
The question whether California's overtime law applies to work performed here by nonresidents entails two distinct inquiries: first, whether the relevant provisions of the Labor Code apply as a matter of statutory construction, and second, whether conflict-of-laws principles direct us to apply California law
That the overtime laws speak broadly, without distinguishing between residents and nonresidents, does not create ambiguity or uncertainty. The Legislature knows how to create exceptions for nonresidents when that is its intent. The Legislature has, for example, exempted certain out-of-state employers who temporarily send employees into California from the obligation to comply with the workers' compensation law (Lab. Code, § 3200 et seq.), on the conditions of compliance with the home state's compensation laws and interstate reciprocity (see id., § 3600.5, subd. (b)). In contrast, the Legislature has not chosen to authorize an exemption from the overtime law on the basis
Oracle, arguing that California's overtime law does exclude nonresidents, relies not on the language or history of the relevant statutes but on a misreading of our decision in Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557 [59 Cal.Rptr.2d 186, 927 P.2d 296] (Tidewater). Oracle reads Tidewater as holding that California overtime law follows California residents wherever they go throughout the United States; based on that premise, Oracle contends that other states' overtime laws must be allowed to follow their own residents into California to avoid an offense to interstate comity. The argument fails because the premise is incorrect: Tidewater says no such thing.
At issue in Tidewater, supra, 14 Cal.4th 557, was whether wage orders promulgated by the Industrial Welfare Commission (IWC) applied to California residents who worked for California employers on boats that transported workers and supplies from the California coast to oil-drilling
Our opinion in Tidewater, supra, 14 Cal.4th 557, includes language intended to caution against overly broad conclusions about the extraterritorial application of employment laws. Ironically, this is the language Oracle reads as holding that a state's employment laws follow its residents wherever they go. In fact, our remarks were more limited. We wrote: "In some circumstances, state employment law explicitly governs employment outside the state's territorial boundaries. (Lab. Code, §§ 3600.5, 5305 [California workers' compensation law applies to workers hired in California but injured out of state].) The Legislature may have similarly intended extraterritorial enforcement of IWC wage orders in limited circumstances, such as when California residents working for a California employer travel temporarily outside the state during the course of the normal workday but return to California at the end of the day. On the other hand, the Legislature may not have intended IWC wage orders to govern out-of-state businesses employing nonresidents, though the nonresident employees enter California temporarily during the course of the workday. Thus, we are not prepared, without more thorough briefing of the issues, to hold that IWC wage orders apply to all employment in California, and never to employment outside California." (Tidewater, at pp. 577-578.)
We thus foresaw in Tidewater, supra, 14 Cal.4th 557, as a possibility, only limited extraterritorial application of California's employment laws, precisely balanced by interstate comity: California law, we suggested, might follow California resident employees of California employers who leave the state "temporarily . . . during the course of the normal workday" (id., at p. 578), and California law might not apply to nonresident employees of out-of-state businesses who "enter California temporarily during the course of the workday" (ibid., italics added). In contrast, plaintiffs here claim overtime only for entire days and weeks worked in California, in accordance with the
Oracle attempts to bolster its argument with a Washington decision, Bostain v. Food Express, Inc. (2007) 159 Wn.2d 700 [153 P.3d 846], but the case offers Oracle no assistance. Bostain involved a claim for unpaid overtime brought by an interstate truckdriver hired in Washington and based at the Washington terminal facility of a California motor carrier. The court held the plaintiff was entitled to overtime compensation under Washington law for the time he spent driving outside that state. (Id., 153 P.3d at pp. 851-854.) The question before the court was not whether another state's overtime law applied, but whether the plaintiff would be paid overtime under Washington law, or not at all. Bostain says nothing about a case such as this, in which nonresident employees seek to apply the overtime law of the state in which they worked and in which the employer is based, and the employer seeks to avoid that law by applying the less favorable law of plaintiffs' home states. Such disputes are resolved under the applicable conflict-of-laws analysis, which we address below. (See post, at p. 1202 et seq.)
Speaking further to the issue of statutory construction, Oracle contends the Legislature would not likely have intended that California's wage law apply to visiting, nonresident employees if compliance imposed practical burdens on employers. Such burdens, Oracle suggests, might arise not just from the effort and expense of complying with the overtime law, but from complying as well with other provisions of California wage law governing such matters as the contents of pay stubs, meal periods, the compensability of travel time, the accrual and forfeiture of vacation time, and the timing of payment to employees who quit or are discharged. Because the laws on these subjects vary from state to state, Oracle argues, to require an employer to comply with the laws of every state in which its employees work might amount to an undue burden on interstate commerce and, thus, violate the commerce clause. (U.S. Const., art. I, § 8, cl. 3.) Oracle analogizes the situation to that of a trucking company required to comply with the conflicting laws of various states governing such matters as trailer length and mud flaps. (See generally, e.g., Raymond Motor Transportation, Inc. v. Rice (1978) 434 U.S. 429 [54 L.Ed.2d 664, 98 S.Ct. 787]; Bibb v. Navajo Freight Lines (1959) 359 U.S. 520 [3 L.Ed.2d 1003, 79 S.Ct. 962].) We should, Oracle contends, construe
First, the case before us presents no issue concerning the applicability of any provision of California wage law other than the provisions governing overtime compensation. While we conclude the applicable conflict-of-laws analysis does require us to apply California's overtime law to full days and weeks of work performed here by nonresidents (see post, at pp. 1201-1202), one cannot necessarily assume the same result would obtain for any other aspect of wage law. California, as mentioned, has expressed a strong interest in governing overtime compensation for work performed in California. In contrast, California's interest in the content of an out-of-state business's pay stubs, or the treatment of its employees' vacation time, for example, may or may not be sufficient to justify choosing California law over the conflicting law of the employer's home state. No such question is before us.
Second, the asserted burdens on out-of-state businesses to which Oracle refers are entirely conjectural. The stipulated facts contain nothing supporting Oracle's assertions, and no out-of-state employer is a party to this litigation; Oracle itself is based in California.
Plaintiffs, as mentioned, contend California's overtime law governs their work in this state, while Oracle contends the laws of plaintiffs' home states (Colo. and Ariz.) govern. For over four decades, California courts have resolved such conflicts by applying governmental interest analysis. (See, e.g., McCann v. Foster Wheeler LLC (2010) 48 Cal.4th 68, 83, 87-88 [105 Cal.Rptr.3d 378, 225 P.3d 516]; Kearney v. Salomon Smith Barney, Inc. (2006) 39 Cal.4th 95, 100 [45 Cal.Rptr.3d 730, 137 P.3d 914] (Kearney); Offshore Rental Co. v. Continental Oil Co. (1978) 22 Cal.3d 157, 163-170 [148 Cal.Rptr. 867, 583 P.2d 721]; Bernhard v. Harrah's Club (1976) 16 Cal.3d 313, 320-321 [128 Cal.Rptr. 215, 546 P.2d 719]; Reich v. Purcell (1967) 67 Cal.2d 551, 554-556 [63 Cal.Rptr. 31, 432 P.2d 727].) Section 196 of the Restatement Second of Conflict of Laws, which Oracle suggests might also be relevant, has nothing to do with this case. Section 196 identifies the state whose law governs the validity of an employment contract. The right to overtime under California law is unaffected by contract. (See Lab. Code, § 1194, subd. (a) ["Notwithstanding any agreement to work for a lesser wage, any employee receiving less than . . . the legal overtime compensation . . . is entitled to recover . . . the unpaid balance . . . ." (italics added)]; see also Gentry v. Superior Court, supra, 42 Cal.4th 443, 456 [statutory right to overtime compensation is unwaivable].)
We determine, first, "whether the relevant law of each of the potentially affected jurisdictions with regard to the particular issue in question is the same or different." (Kearney, supra, 39 Cal.4th 95, 107.) California's overtime law clearly differs from that of Colorado and Arizona, plaintiffs' home states. California law requires overtime compensation at the rate of one and one-half times the regular rate of pay for work in excess of eight hours in one workday, 40 hours in one workweek, and the first eight hours on the seventh workday in one week. Overtime compensation increases to twice the regular rate for work in excess of eight hours on the seventh workday. (Lab. Code, § 510, subd. (a).) In contrast, Colorado requires pay at one and one-half times the regular rate for work in excess of 40 hours in one workweek, 12 hours in one workday, and 12 consecutive hours without regard to when the workday starts and ends. (7 Colo. Code Regs. § 1103-1(4) (2011).) Arizona has no overtime law, so the federal FLSA applies by default, requiring overtime compensation at one and one-half times the regular rate for hours worked in excess of 40 hours in one workweek. (29 U.S.C. § 207(a)(2)(C).) Unlike California law, neither Colorado law nor the FLSA requires double pay for any work.
Whether a true conflict exists under the circumstances of this case is doubtful, at best. California has, and has unambiguously asserted, a strong interest in applying its overtime law to all nonexempt workers, and all work performed, within its borders. (See Lab. Code, § 1171.5, subd. (a) ["All
Arguing against this conclusion, Oracle points out that Colorado's and Arizona's workers' compensation statutes, like California's, expressly have extraterritorial effect for certain resident employees who suffer industrial injuries outside their home states. (See Colo. Rev. Stat. § 8-41-204 [discussed in Hathaway Lighting v. Industrial Claim Appeals Office (Colo.Ct.App. 2006) 143 P.3d 1187, 1189]; Ariz. Rev. Stat. § 23-904.A [discussed in DiMuro v. Industrial Com. of Arizona (Ct.App. 1984) 142 Ariz. 57 [688 P.2d 703, 707]]; cf. Lab. Code, § 3600.5, subd. (a).) Broadly extrapolating from these statutes, Oracle argues that Colorado and Arizona have an interest in extending the protection of their employment laws to their residents who work in other states. Certainly a state has such an interest, at least in the abstract, when the traveling, resident employee of a domestic employer would otherwise be left without the protection of another state's law. (Cf. Tidewater, supra, 14 Cal.4th 557 [Cal. overtime law protects residents working offshore within Cal.'s state law boundaries]; Bostain v. Food Express, Inc., supra, 153 P.3d 846 [Wn. overtime law protects resident interstate truckdriver; no other state's law claimed to apply].) But the statutes on which Oracle relies speak narrowly to the subject of workers' compensation. Accordingly, those statutes for present purposes show only that Colorado and Arizona know how to assert an interest in applying their laws extraterritorially, and thus highlight the same states' failure to assert any extraterritorial interests with respect to overtime compensation. In any event, Colorado and Arizona have expressed no interest in disabling their residents from receiving the full protection of California overtime law when working here, or in requiring their residents to work side-by-side with California residents in California for lower pay. (Cf. Phillips Petroleum Co. v. Shutts (1985) 472 U.S. 797, 822 [86 L.Ed.2d 628, 105 S.Ct. 2965]
The final step in governmental interest analysis requires us "`to determine which state's interest would be more impaired if its policy were subordinated to the policy of the other state'" and to apply "`the law of the state whose interest would be the more impaired if its law were not applied.'" (Kearney, supra, 39 Cal.4th 95, 108, quoting Bernard v. Harrah's Club, supra, 16 Cal.3d 313, 320.) Assuming for the sake of argument a genuine conflict does exist (see ante, at pp. 1203-1204), to subordinate California's interests to those of Colorado and Arizona unquestionably would bring about the greater impairment. To permit nonresidents to work in California without the protection of our overtime law would completely sacrifice, as to those employees, the state's important public policy goals of protecting health and safety and preventing the evils associated with overwork. (Gentry v. Superior Court, supra, 42 Cal.4th 443, 456.) Not to apply California law would also
With the second certified question, the Ninth Circuit asks us in effect to decide whether Oracle's alleged violations of the overtime provisions of California law (Lab. Code, §§ 510, 1194) constitute unlawful acts potentially triggering liability under the UCL (Bus. & Prof. Code, § 17200 et seq.). We have already decided that the failure to pay legally required overtime compensation falls within the UCL's definition of an "unlawful . . . business act or practice" (Bus. & Prof. Code, § 17200; see Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 177 [96 Cal.Rptr.2d 518, 999 P.2d 706] [UCL authorizes, as restitution, order for payment of unlawfully withheld wages]), and the parties offer no argument on the point.
Our discussion thus far has exclusively concerned Oracle's alleged failure to compensate plaintiffs according to California law for overtime worked in this state. We turn now to the third certified question, which concerns plaintiffs' claim that Oracle has also failed to compensate them according to
Plaintiffs' claim implicates the so-called presumption against extraterritorial application.
The Ninth Circuit has asked us to decide whether the UCL applies to plaintiffs' FLSA claims "in the circumstances of this case" (Sullivan III, supra, 557 F.3d 979, 983), which we understand to mean in accordance with the
In contrast to the abstract classification decision, the failure to pay legally required overtime compensation certainly is an unlawful business act or practice for purposes of the UCL. (Bus. & Prof. Code, § 17200; see Cortez v. Purolator Air Filtration Products Co., supra, 23 Cal.4th 163, 177 [UCL authorizes, as restitution, order for payment of unlawfully withheld wages].) Thus, the UCL might conceivably apply to plaintiffs' claims if their wages were paid (or underpaid) in California, but the stipulated facts do not speak to the location of payment. The parties invite us to speculate about the place of payment as a basis for holding the UCL does, or does not, apply. We decline to do so. Whether the parties are entitled to rely on facts or assertions beyond the stipulated facts to support or defeat the motion for summary judgment is a question of federal procedure for the federal courts. Given the limitations of the certified question procedure, which does not confer on us plenary jurisdiction over cases pending in the courts of other sovereign entities, our answer must be confined to the circumstances of this case as established by the stipulated facts.
Cantil-Sakauye, C. J., Kennard, J., Baxter, J., Chin, J., Corrigan, J., and Boren, J.,
The immediate impetus for Labor Code section 1171.5's enactment was the Legislature's desire to protect undocumented workers from sharp practices in the wake of Hoffman Plastic Compounds, Inc. v. NLRB (2002) 535 U.S. 137 [152 L.Ed.2d 271, 122 S.Ct. 1275], in which the high court held the National Labor Relations Board could not award backpay to a foreign national not legally entitled to work in the United States. (See, e.g., Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading analysis of Sen. Bill No. 1818 (2001-2002 Reg. Sess.) as amended Aug. 22, 2002, pp. 2-6; Assem. Com. on Labor & Employment, Analysis of Sen. Bill No. 1818 (2001-2002 Reg. Sess.) June 22, 2002, pp. 2-3.) Section 1171.5, however, cannot reasonably be read as speaking only to undocumented workers, given that it was drafted and codified as a general preamble to the wage law and broadly refers to "all individuals" employed in the state. (Id., subd. (a).) More importantly, no reason exists to believe the Legislature intended to afford stronger protection under the employment laws to persons working illegally than to legal, nonresident workers.