How State Labor Laws May Impact Your Engagement and Pay Check

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In the last year we’ve seen several firms in the news for employment breaches of labor laws.  It was just a year ago this week that we saw Arrington vs Optimum Healthcare all over the news. That lawsuit was impacted by 7 different state labor laws for just two consultants. I wanted to share some thoughts specifically on California labor laws, as an example, in this article. This is just a small glimpse of what firms and consultants have to be aware of.

The question I hear all the time is simply, as an out-of-state employee on an assignment in California, do overtime provisions of the California Labor Code apply to me during the assignment? Working for a San Francisco based company with a lot of client’s in the state of California, I’ve become all too familiar with the states labor laws there.  The answer to that question by the way, according to the California Supreme Court case, Sullivan v. Oracle Corp., is “yes.”

That answer has daunting implications to consulting firms. The California Labor Code is unlike any other. The California Supreme Court decided that California overtime law applies to visiting employees. As many consultants are hourly and non-exempt, these may apply to you as a consultant.  When I worked for a different firm a few years ago, we spent months identifying exempt vs non-exempt roles.  We paid everyone that was identified as non-exempt past pay for the last 2 years for any overtime worked.  Precautionary steps to obviously assure alignment with state and federal employment laws.

California’s Labor Code is all inclusive. California’s overtime laws apply by their terms to all employment in the state, without reference to the employee’s place of residence. A section of the wage law confirms that CA employment laws apply to “all individuals” employed in this state. The overtime statute, Labor Code section 510, declares simply that “any work in excess of eight hours in one workday and/or . . . 40 hours in any one workweek . . . shall be compensated at the rate of no less than one and one-half times the regular rate of pay . . . .”

Employers with non-exempt out of state employees traveling to California should reinforce California’s overtime rules. The most significant difference between California overtime law and most other states is that in California, overtime is owed hours in excess of 8 in a workday.  As a consultant we often work Monday – Thursday for 10 hours a day.  That’s 2 hours of OT for each day based on the law.  Most clients will not pay that…so you are forced to work 4 days onsite at 8 hours and Friday is either remote, or you lose those hours.

It is truly imperative that as a consultant you be aware of the laws and requirements of the state you are currently working in.  You should also check with you firm on whether your position is considered a non-exempt role.

A couple other general (non-California specific) items below.

  • The law of the state where you are physically working is the law that applies, no matter where your company is located or based.
  • Residency tax laws are based on where you live.
  • States with no income tax are for full time residents only and does not apply to those working in the state that live elsewhere.
  • You may be responsible for paying state taxes in both your home state and those you’ve worked in if your contract is over a year.
  • The Fair Labor Standards Act (FLSA) prescribes standards for wages and overtime pay, which affect most private and public employment.

Read more from the Department of Labor…(Click Here)


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