All Employers of California Labor Are Duly Warned



Posted: Tuesday, January 13, 2009

by Crystal O'Brien
MMC Inc.

On November 6th, in Sullivan v. Oracle Corp., Inc., the Ninth Circuit decided a matter that is certain to long implications on employers nationwide.

Oracle, the software giant, hired hundreds of employees it classified as "teachers" to train customers in the use of its products. Apparently, in classifying the employees as "teachers" Oracle also treated the employees as "exempt" from overtime/meal/rest period laws. But in 2003, prompted by a court decision, Oracle reclassified the "teachers" as "non-exempt" and duly began paying employees overtime wages on a going-forward basis. Oracle, however, did not address past unpaid overtime.

Enter: three non-California resident employees who performed work occasionally in California with unpaid overtime claims. All three sued Oracle as a class and pursuant to California's stringent labor code protections. While Oracle responded to the action by removing it to federal court and arguing that the employees were not subject to the protections of California labor law, the Ninth Circuit disagreed.

In reversing the lower court's decision in favor of Oracle granting it a summary judgment against the employees, the federal appellate court held California has a substantial interest in assuring employers in the state comply with labor laws and not benefit from side-stepping labor laws by hiring out-of-state employees. Thus because Oracle gained the benefit of performing labor in California from its out-of-state employees, these employees were also entitled to the protections of California law prohibiting overtime violations.

The lesson to employers is ageless. Classify employees fairly and correctly as "exempt" or "non-exempt" and comply with labor laws regularly and when any question of non-compliance arises address the same promptly and as fairly as possible.

Crystal M. O'Brien, Esq. serves as MMC's Employment Law Manager/Corporate Counsel. After receiving a double-degree in psychology and sociology from Oberlin College in 1988, Ms. O'Brien earned a workers' compensation insurance claims adjusting license in 1991. She completed post-graduate studies in Human Resources Management at Portland State University's Graduate School of Urban & Public Affairs from 1996-1998 and earned a Juris Doctorate and Certificate in Dispute Resolution from Willamette University College of Law in 2001. Immediately following law school, Ms. O'Brien served as a judicial clerk to the Honorable Faith Ireland (ret.) of the Washington State Supreme Court. She is licensed to practice law in California Washington as well as before U.S. District Courts in each state. Collectively, Ms. O'Brien has 19 years of litigation experience.

To view her complete bio click here.

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