164 Litigating CA Wage & Hour and Labor Code Class Actions (22nd Edition) Seyfarth Shaw LLP | www.seyfarth.com taken a literal view of the statute. They have held that owners, directors, and managing agents are liable under section 558.1 only if they, acting on behalf of the employer, either (i) had personal involvement in the alleged Labor Code violations or (ii) had sufficient participation in the activities of the employer—including, for example, over those responsible for the alleged wage and hour violations—such that they contributed to, and thus “caused” the violations.932 XX. Out of State Employees Working Sporadically in California Traditionally, when employers pay their employees, they expect to apply the wage and hour law of the state where the employee resides or most often works, even if the employee occasionally works in another state. The California Supreme Court upset that expectation in a 2011 decision, Sullivan v. Oracle Corp.,933 opining that that non-California residents working in California for a California-based employer were subject to California daily overtime laws if they performed their in-state work for entire days. Sullivan left open such questions as whether California law would apply in other contexts, such as (a) when nonCalifornia residents work partial days in California, (b) when the employees worked for non-California based employers, or (c) when the wage and hour provisions at issue were something other than California rules on daily overtime. Further, Sullivan held that overtime work performed by out-of-state employees within California can serve as the basis for a claim under California’s unfair competition law. Cal. Bus. & Prof. Code § 17200. But Sullivan also held that FLSA violations as to out-of-state employees outside California cannot serve as the basis for a California UCL claim. Sullivan explicitly limited its holding to “the circumstances of this case, which entailed employees that worked “full days and weeks” in California.934 New cases raising issues under Sullivan arose in the airline industry. In three airline cases brought in federal court under California law (two cases against United Airlines, one against Delta), the Ninth Circuit requested that the California Supreme Court address five questions, paraphrased below: (1) Does the federal Railway Labor Act exemption found in Wage Order 9 bar a wage-statement claim (Labor Code § 226) by an employee who is covered by a collective bargaining agreement?935 (2) Does Section 226 apply to wage statements that an out-of-state employer provides to an employee who resides in California, who receives pay in California, and who pays California income tax on her wages, but who does not work principally in California or any other state?936 932 Usher v. White, 279 Cal. Rptr. 3d 281 (Cal. Ct. App. 2021) (affirming dismissal of wage and hour claims against an individually named owner of a company in a misclassification action because the owner did not participate in the decision to classify plaintiffs as independent contractors, and did not otherwise participate in the alleged misconduct). 933 51 Cal. 4th 1191 (2011). 934 Id. at 1201. 935 Ward v. United Air Lines, 2018 WL 10809385, at *1 (Cal. July 11, 2018). 936 Id.
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