When Employees Work Out Of State 19:56, November 22, 2016

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When Employees Work Out Of State

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California employers often send employees to work temporarily in other states. For example, California workers may attend a trade show in a Las Vegas for a few days, travel to New Orleans for a week-long training, work in a company’s facility in Ohio for a few weeks, or staff a temporary project in New York for a few months.

When California employees work in another state, which employment laws apply? Do they earn overtime after eight hours in a day (as they do in California)? Do they have to get meal and rest breaks (or extra pay) as required by the California Wage Orders? Must the employer follow California laws – or the other state’s laws?
Unfortunately, it’s not always clear which state laws apply to workers when they cross state lines.
A few principles provide guidance: employees are typically subject to the laws that apply where they work. Generally, state laws and agencies govern all employment within their state lines, including workers who are only temporarily present. Moreover, state laws usually do not control what occurs across their borders.
The US Supreme Court wrote, “A basic principle of federalism is that each State may make its own reasoned judgment about what conduct is permitted or proscribed within its borders, and each State alone can determine what measure of punishment, if any, to impose on a defendant who acts within its jurisdiction.” [State Farm v. Campbell (US 2003), which also cited Huntington v. Attrill (US 1892) (“Laws have no force of themselves beyond the jurisdiction of the State which enacts them….”)]
As a result, most basic employment rights (such as minimum wage, overtime, safety issues, etc.) are usually governed by the laws where an employee works. For example, Oracle Corporation learned that California’s overtime rules applied to its traveling instructors when they worked in California. The instructors lived in Arizona and Colorado, but California’s overtime law governed Oracle’s overtime obligations for labor performed within the Golden State. [Sullivan v. Oracle (CA 2011)]
Similarly, the National Labor Relations Act (NLRA), a US federal law, didn’t apply when a US-based tree company temporarily sent its workers to Ottawa, Canada, after a severe ice storm. Because the tree workers were working on trees in Canada, Canadian labor law – and not the US law – applied to the US-based workers. [Asplundh Tree v. NLRB (3rd Cir. 2004)]
Even so, it may be possible for employment contracts to designate which state’s laws apply as to other employment issues.
For example, an employer and employee may agree that a stock option plan will be interpreted using the state law where the company is located, even if the employee works in another country. In another case involving Oracle Corporation, a Swiss executive who worked in its Geneva offices sued Oracle after he was denied $85 million in stock options when he was terminated. The Court ruled against the executive, even though Swiss law would have prevented his firing (thus making him entitled to the payment), because the stock option plan stated that it was governed by California and US law. [Oracle v. Falotti (9th Cir. 2003)]
Likewise, New York-headquartered BMG Entertainment could prevent a record-company attorney who lived in California from suing under California’s age-discrimination law because his employment contract designated the New York courts as the “mandatory forum” for resolving job disputes. [Olinick v. BMG Entertainment (CA 2006)]
Additionally, it’s possible that out-of-state work may be covered by the laws of both the state where it is performed as well as the state where the employee is based. In a 2007 case, a Washington-based truck driver was entitled to overtime under Washington law for all hours worked, including the time he spent driving outside of Washington State. “The statute makes no distinction between the hours spent driving in state and those spent driving outside Washington,” the Court wrote. [Bostain v. Food Express (WA 2007)]
Applying California’s laws outside its borders is also indicated in a California Labor Commissioner (DLSE) Opinion Letter, which suggests that California overtime laws might apply to California-based workers while they’re overseas.
As a result, although the local state law likely covers work done in that state, California law may also be applied to a California employee temporarily working in another state.

Finally, when employees work both in and out of a state, their work/benefits may be allocated for specific purposes (e.g., unemployment or other state benefits). To learn more about an employee’s eligibility for state benefits when they also work out of state, please see the California EDD’s multistate employment bulletin.

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