Employee or Independent Contractor?

AB 5 and the out-of-state worker 

Image by C Morrison from Pixabay

From The San Diego Tribune, Dan Eaton reports on a California Supreme Court case in which the court declined to extend the protections of California labor law to Louisiana residents working for a Louisiana employer in California territorial waters. Dan writes:

In Gulf Offshore Logistics, LLC v. Superior Court, the California Court of Appeal declined to extend California wage laws to former out-of-state crew members of a vessel that provided maintenance services to oil platforms in the Pacific Ocean off the California coast. The seamen (1) worked for companies headquartered in Louisiana (2) traveled to Louisiana to apply for, and accept employment (3) received training and orientation in Louisiana, where all administrative aspects of their employment also were performed, even though (4) they performed much of their work “within the territorial boundaries of California . . . on a boat at sea.”

The court ruled that California’s interests in the workers’ wage dispute were weaker than Louisiana’s interests because “although the crew members performed some of their work in this state, neither the employees nor the employers are residents or taxpayers of this state.” The court decided Louisiana’s less worker-friendly wage laws therefore governed the dispute.

The Court of Appeal acknowledged the California Supreme Court’s 2011 holding in Sullivan v. Oracle Corp. that an employee who resides in California, receives their pay in California, and works exclusively or principally in California presumptively is entitled to the protection of California’s generous overtime rules. The Sullivan court also concluded that non-residents who work “entire days or weeks” in California are covered by California wage rules:

Not to apply California law to non-residents working in this state “would encourage employers to substitute lower paid temporary employees from other states for California employees, thus threatening California’s legitimate interest in expanding the job market.”

That would apply equally to employers that use out-of-state independent contractors to avoid AB 5.

In addition to the Gulf Offshore workers being non-residents, however, they also almost never left the vessel on which they worked, even when it was docked at a California port. After completing their weeks-long stint, “the crew members almost immediately leave the state, again without interacting in any meaningful way with its residents, economy, or civic life.”

Work performed by non-residents outside of California, even for California-based companies, generally is not subject to California wage rules. The Gulf Offshore ruling suggests there may be unusual circumstances where companies may avoid AB 5 by engaging non-residents to perform occasional contract work even in California.

Read the full story at AB 5 and the out-of-state worker – The San Diego Union-Tribune

Back to Top