In three separate cases involving airline employers, the U.S. Ninth Circuit Court of Appeals recently certified five questions to the California Supreme Court for guidance on whether California’s labor code provisions apply to non-residents who may be temporarily working in the state for an out-of-state employer because of the mobile nature of a company’s operations.  See Vidrio et al. v. United Airlines Inc. et al., (Case No. 17-55471); Ward v. United Airlines Inc., (Case No. 16-16415); and Oman v. Delta Air Lines Inc., (Case No. 17-15124).  The rulings by the California Supreme Court will be critical to airlines because their workforces inherently cross state lines, potentially requiring compliance with a patchwork of state laws and regulations.   The importance of these decisions reaches beyond the airline industry to any out-of-state employer that has employees who work, at least in part, in California and could arguably be subject to California’s employment laws.

The Vidario and Ward cases

In the consolidated Vidrio and Ward cases, unionized pilots and flight attendants working for United Airlines (“United”) sued their employer, alleging various wage and hour violations under California law even though they did not principally work in California.  Indeed, the undisputed statistics showed that the plaintiff classes worked only 12-17% of their working time in California or California airspace. 

The Plaintiffs further alleged that United violated California Labor Code § 226 by issuing noncompliant wage statements.  Plaintiffs also brought a claim under the Private Attorneys General Act and sought penalties and other remedies under the California Labor Code.  The District Court certified the cases as class actions, then granted summary judgment in United’s favor after finding that the California Labor Code could not apply to employees who do not principally work in California and whose employer is not headquartered nor operating primarily in California.  Plaintiffs appealed to the Ninth Circuit, which heard oral argument in March 2018. 

After considering the issues raised and the lack of controlling California precedent on the extraterritorial application of California law under these circumstances, the Ninth Circuit certified two questions to the California Supreme Court:

(1) Wage Order 9 exempts from its wage statement requirements an employee who has entered into a collective bargaining agreement (CBA) in accordance with the Railway Labor Act (RLA). See 8 C.C.R. §11090(1)(E). Does the RLA exemption in Wage Order 9 bar a wage statement claim brought under California Labor Code §226 by an employee who is covered by a CBA?

(2) Does California Labor Code §226 apply to wage statements provided by an out-of-state employer to an employee who resides in California, and pays California income tax on her wages, but who does not work principally in California or any other state?

The Oman case

In the Oman case, the Plaintiffs sued Delta Airlines (“Delta”) in federal court, alleging that Delta’s flight pay calculation for its non-union flight attendants violated California minimum wage law by failing to pay the minimum wage “per hour for all hours worked.” They argued that the flight pay formula impermissibly averaged a flight attendant’s wages for paid, productive time and unpaid, unproductive time. They also contended that Delta failed to pay their wages on time, in violation of California Labor Code § 204, and failed to issue them wage statements that complied with California Labor Code § 226.

The Plaintiffs sought to apply California law to their claims based solely on the location of their work – work that lasted only for hours and minutes, not days, in California. They argued that California Labor Code §§ 204 and 226 apply to any pay period in which they performed work in California and the California minimum wage law applied to any work performed in California, however short the duration.  The District Court granted summary judgment to Delta and Plaintiffs appealed.  Following oral argument, the Ninth Circuit determined that there was no controlling California precedent that answered the legal questions in the case.  Accordingly, the Ninth Circuit asked the California Supreme Court for guidance on three questions:

(1) Do California Labor Code §§ 204 and 226 apply to wage payments and wage statements provided by an out-of-state employer to an employee who, in the relevant pay period, works in California only episodically and for less than a day at a time?

(2) Does California minimum wage law apply to all work performed in California for an out-of-state employer by an employee who works in California only episodically and for less than a day at a time? See Cal. Labor Code §§ 1182.12, 1194; C.C.R, § 11090(4).

(3) Does the Armenta/Gonzalez bar on averaging wages apply to a pay formula that generally awards credit for all hours on duty, but which, in certain situations resulting in higher pay, does not award credit for all hours on duty? See Gonzalez v. Downtown LA Motors, LP, 155 Cal Rptr. 3d 18, 20 (Ct. App. 2013); Armenta v. Osmose, Inc., 37 Cal. Rptr. 3d 460, 468 (Ct. App. 2005).

Employer Takeaways

While the California Supreme Court is considering these questions, out-of-state employers with employees who work at least some of the time in California should carefully consider whether to comply with California’s labor and employment requirements.