On July 11, 2018, the California Supreme Court accepted the Ninth Circuit’s request to answer several questions of California law relating to wage statements and payments of wages to certain classes of employees.
Arising out of two class actions against airlines – Vidrio v. United Airlines, Inc. and Oman v. Delta Air Lines, Inc. – the questions specifically concern employees who do not work primarily in California, and/or are covered by collective bargaining agreements, as well as certain classes of pay-averaging formulas. The California Supreme Court’s answers to these questions could have a great impact on employers doing business in California, particularly those who are based outside the state, and also those whose employees occasionally work in the state.
In United, the California Supreme Court will answer the following questions:
- Does California Labor Code section 226 apply to wage statements provided by an out-of-state employer to an employee who resides in California, receives pay in California, and pays California income tax on her wages, but who does not work principally in California or any other state?
- The Industrial Wage Commission 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). . . . Does the RLA exemption in Wage Order 9 bar a wage statement claim brought under California Labor Code section 226 by an employee who is covered by a CBA?
The answer to the first question is especially important to transportation companies like airlines, where employees do not regularly work in any one state but instead have heavily variable schedules. As to the second question, should that exception apply to section 226, employers with workers subject to any CBA, and not only those under the RLA, could potentially avoid extraordinary penalties for alleged wage statement violations.
In Delta, the California Supreme Court will answer the following questions:
- Do California Labor Code sections 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?
- 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?
- Does the [California Court of Appeal’s] 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?
The answers to the first two questions could have great consequences for out-of-state employers whose employees do not often work in California. As for the third, should the Court rule that such formulas are exceptions to the ban on wage averages, employers in industries where it is difficult to track and pay wages to an exact degree may wish to implement such a system. This would include employers whose workforces are not confined to a single office or retail area. This would provide greater flexibility to such employers when fashioning their payment policies.