Saying that, “in our federalist system, [state] borders . . . matter — even for those who make their living flying the friendly skies,” the Supreme Court today explains the circumstances under which some California employment laws can apply to some multi-state employees.  The rules are stated in two unanimous companion opinions — one in Ward v. United Airlines, Inc. and one in Oman v. Delta Air Lines, Inc. — written by Justice Leondra Kruger and that answer questions asked by the Ninth Circuit.

In Ward, involving airline pilots and flight attendants who work mostly in non-California airspace, the court holds the employer airline must provide wage statements that comply with a California statute if an employees’ principal place of work is in California.  “Principal place of work” means “if the employee works a majority of the time in California or, for interstate transportation workers whose work is not primarily performed in any single state, if the worker has his or her base of work operations in California.”  And “base of work operations” means “California serves as the physical location where the worker presents himself or herself to begin work.”

The court rejects a rule that would have applied California law only if an employee performed their work entirely or mostly in California because, “if every state were to adopt the same rule, then many transportation-sector employees — from interstate truck drivers to train conductors to the airline employees here — would not be entitled to the protections of any state’s law.”

In Oman, involving flight attendants working primarily outside California’s jurisdiction, the court applies the same “base of work operations” rule to laws governing the timing of wage payments.  The court also concludes the pay scheme that the plaintiffs challenge “complies with the state requirement that employers pay their
employees at least the minimum wage for all hours worked,” and thus doesn’t decide whether “California’s minimum wage laws apply to work performed on the ground during the flight attendants’ brief and episodic stops in California.”

The minimum wage issue concerns a practice the court calls “wage borrowing” (also known as “wage averaging”), which is allowed under federal but not under California law.  The court gives an example:  “if an employer agrees to pay a particular amount for say, 20 hours of work in a week, but then demands the employee work an additional 10 hours for free, the minimum wage law is satisfied so long as the total wages, divided by 30, equal or exceed the applicable minimum wage.”  In California, the court says, “For all hours worked, employees are entitled to the greater of the (1) amount guaranteed by contract for the specified task or period, or (2) the amount guaranteed by the minimum wage.”  The court holds that employers comply with that principle if they “promise to compensate all hours worked at a level at or above the minimum wage, even if particular components of [compensation] schemes fail to attribute to each and every compensable hour a specific amount equal to or greater than the minimum wage.”

Besides signing the court’s Oman opinion, Justice Goodwin Liu — with Justice Mariano-Florentino Cuéllar — writes separately to stress that “[c]ourts should be careful not to allow employers to characterize their contractual commitments in ways that would effectively circumvent the no-borrowing rule.”  Justice Liu says, “Correctly identifying an employer’s contractual commitment is critical to ensuring that employers do not circumvent the no-borrowing rule simply by inserting into employment agreements a minimum wage floor — i.e., an agreement to make up the difference if an employee’s promised pay, averaged over all hours worked, falls below the applicable minimum wage.”