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Law Alert: California Supreme Court Decides Key Wage and Hour Cases Impacting Interstate Workers

by Christopher J. Eckhart, Gregory M. Feary, James H. Hanson, Adam C. Smedstad

June 30, 2020

Yesterday, on a certified question from the Ninth Circuit Court of Appeals, the California Supreme Court decided a pair of cases that will certainly impact California wage and hour class actions against motor carriers.

In Oman v. Delta Air Lines, Inc. and Ward v. United Airlines, the California Supreme Court concluded that California Labor Code Section 226, which contains detailed requirements for wage statements, only applies to any pay period in which the employees’ principal place of work is in California. For interstate workers whose work is not primarily performed in any single state (i.e., more than 50%), the Court held Section 226 will apply if the workers have their base of work operations in California. The Court did not specifically define what would constitute a “base of work operations,” but suggested that designating an employee as assigned to/associated with a particular terminal or location would suffice. The Court did not create any exceptions for nonresident employees or companies based outside California. Therefore, all employers must give California-compliant wage statements to any employee whose principal place of work in a given pay period is California.

The Court left open the question of whether California’s minimum wage laws applied to interstate workers employed by non-California employers because it concluded Delta’s compensation policy complied with California law. Nevertheless, the Court’s analysis could prove helpful for motor carriers confronted with California minimum wage claims or crafting piece rate compensation policies. Importantly, the Court held that California’s minimum wage laws gave employers and employees the flexibility to broadly define the work paid by the piece-rate pay, subject to two requirements: (1) the average rate for the piece-rate work is at least the minimum wage and (2) under California Labor Code 226.2, the employer must still pay piece rate employees separate wages for “non-productive time” (i.e., work that is not directly related to the activity paid by the piece). Carriers that pay drivers on a piece-rate basis and dispatch those drivers to and from California should consider reviewing their compensation policies to make sure they comply with the Court’s interpretation of California’s minimum wage laws.

If you have questions about how these decisions might affect your workforce, please contact Greg Feary, Jim Hanson, Adam Smedstad, or Chris Eckhart.

News from Scopelitis is intended as a report to our clients and friends on developments affecting the transportation industry. The published material does not constitute an exhaustive legal study and should not be regarded or relied upon as individual legal advice or opinion.

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