CHARLES E. WARD et al., Plaintiffs and Appellants, v. UNITED AIRLINES, INC., Defendant and Respondent. FELICIA VIDRIO et al., Plaintiffs and Appellants, v. UNITED AIRLINES, INC., Defendant and Respondent.
S248702
Supreme Court of California
June 29, 2020
Ninth Circuit 16-16415; Northern District of California 3:15-cv-02309-WHA; Ninth Circuit 17-55471; Central District of California 2:15-cv-07985-PSG-MRW
June 29, 2020
This opinion precedes companion case S248726, also filed on June 29, 2020.
Justice Kruger authored the opinion of the Court, in which Chief Justice Cantil-Sakauye and Justices Chin, Corrigan, Liu, Cuéllar, and Groban concurred.
WARD v. UNITED AIRLINES, INC.
S248702
From the air, the borders that divide state from state disappear. But in our federalist system, those borders still matter—even for those who make their living flying the friendly skies. In these consolidated cases and Oman v. Delta Air Lines, Inc. (June 29, 2020, S248726) ___ Cal.5th ___, we confront questions about how the laws of a single state might apply to employees who perform duties across the country, on behalf of an employer in the business of connecting the world.
Plaintiffs are pilots and flight attendants for a global airline based outside California. Plaintiffs reside in California but perform most of their work in airspace outside California‘s jurisdiction. They are not paid according to California wage law, but instead according to the terms of a collective bargaining agreement entered under federal law. The United States Court of Appeals for the Ninth Circuit has asked us to decide whether, given these circumstances, the airline is required to provide plaintiffs with wage statements that meet the various requirements of California law.
We conclude that whether plaintiffs are entitled to California-compliant wage statements depends on whether their principal place of work is in California. For pilots, flight attendants, and other interstate transportation workers who do not perform a majority of their work in any one state, this test is satisfied when California serves as their base of work operations, regardless of their place of residence or whether a collective bargaining agreement governs their pay.
The consolidated cases before us arise from three class actions filed against defendant United Airlines, Inc. United is an air carrier that provides service between airports across the country and around the world, including to and from numerous airports in California. United is incorporated in Delaware and headquartered in Illinois, with a substantial administrative presence in Texas. Plaintiff Charles Ward is a pilot for United, while plaintiffs Felicia Vidrio and Paul Bradley are flight attendants. All three are California residents. (Ward v. United Airlines, Inc. (9th Cir. 2018) 889 F.3d 1068, 1071.)
Ward filed an action in state court on behalf of pilots, while Vidrio and Bradley each filed separate state court actions on behalf of flight attendants. All three flight crew members alleged that United‘s wage statements fail to provide them all the information required by
United removed all three actions to federal court. In the Ward case, the district judge certified a class consisting of pilots who reside in California and pay California income taxes.1 (Ward v. United Airlines, Inc. (N.D.Cal., Mar. 23, 2016, No. 3:15-cv-02309-WHA) 2016 U.S.Dist. Lexis 38896.) A different district judge consolidated the Vidrio and Bradley cases and certified a similarly defined class of California-based flight attendants. (Vidrio v. United Airlines, Inc. (C.D.Cal., Aug. 23, 2016, No. 2:15-cv-07985-PSG-MRW) 2016 U.S.Dist. Lexis 189537.)
In each case, the district court granted summary judgment to United. The district court in Ward held that the geographic reach of California wage and
Several months later, the district court in Vidrio reached the same conclusion. (Vidrio v. United Airlines, Inc. (C.D.Cal., Mar. 15, 2017, No. 2:15-cv-07985-PSG-MRW) 2017 U.S.Dist. Lexis 40609.) The Vidrio court noted that since Ward was decided, other federal courts had also considered whether flight crew members may bring claims under California‘s wage and hour laws when most of the work is performed outside the state. In some of these cases, the courts had interpreted relevant California precedent to call for a different approach from the “job situs” test applied in Ward; in determining whether California law applies, these courts had weighed various factors in addition to job situs, including the parties’ states of residence. (Vidrio, at pp. *12–*13.) The Vidrio court concluded that United would prevail under both the “job situs” test and the wider-ranging multifactor approach, since the Vidrio class members do not work principally in California and “United‘s ties to California are minimal relative to its overall business . . . .” (Id. at pp. *14–*15.) Absent greater employer ties to California, the court concluded, “[T]he class members’ residency and receipt of wage statements in California is insufficient to obtain the benefits of California wage and hour laws when the work is principally performed outside of the state.” (Id. at p. *15.)
Both sets of plaintiffs sought review, and the Ninth Circuit consolidated the appeals for purposes of oral argument. After argument, the Ninth Circuit ordered supplemental briefing addressing the Industrial Wage Commission (IWC) wage order regulating the transportation industry, IWC wage order No. 9–2001 (Wage Order No. 9). That wage order extends various protections—including certain wage statement requirements—to transportation workers. But the wage order exempts from its protections employees who have entered into a collective bargaining agreement under and in accordance with the provisions of the Railway Labor Act, a federal statute governing labor relations in the railroad and airline industries. (See Wage Order No. 9, § 1(E);
After briefing was completed, the Ninth Circuit issued an order asking this court to resolve two unsettled questions of California law critical to the resolution of the crew members’ section 226 claims. (Ward v. United Airlines, Inc., supra, 889 F.3d at p. 1070.) Those questions, which we have reframed slightly (see
-
Wage Order No. 9 exempts from its wage statement requirements an employee who has entered into a collective bargaining agreement in accordance with the Railway Labor Act. (See Cal. Code Regs., tit. 8, § 11090, subd. 1(E) .) Does the Railway Labor Act exemption in Wage Order No. 9 bar a wage statement claim brought under section 226 by an employee who is covered by a collective bargaining agreement? - Does 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 his or her wages, but who does not work principally in California or any other state?
II.
Section 226 requires an employer to supply each employee, “semimonthly or at the time of each payment,” a written wage statement listing the employer‘s name and address; identifying the pay period; itemizing the total hours worked, applicable hourly rates, hours worked at each rate, gross and net wages earned, and any deductions taken; and disclosing other prescribed information. (
The Ninth Circuit‘s first question is whether, as United argues, the plaintiff crew members fall outside the protections of section 226 because they are parties to a collective bargaining agreement entered in accordance with the Railway Labor Act. United‘s argument is not based on the language of section 226—which says nothing at all about collective bargaining agreements—but on the language of the transportation industry wage order, Wage Order No. 9.
Wage Order No. 9 is one of 18 wage orders promulgated by the IWC in response to the Legislature‘s 1913 directive to “investigate various industries and promulgate wage orders fixing for each industry” rules governing wages, hours, and working conditions. (Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1026.) The wage orders remain in effect alongside the body of law enacted by the Legislature and codified in the Labor Code; the two sources of authority establish complementary regulations governing wage and hour claims. (Ibid.)
Like the other wage orders, Wage Order No. 9 sets out certain wage statement requirements that overlap with (but are narrower than) the requirements of section 226. (Wage Order No. 9, § 7(B); see, e.g.,
Because Ward and the other members of the certified classes have entered into such a collective bargaining agreement, it is undisputed that United need not comply with the itemized statement requirements of the wage order. But by its terms, the wage order exemption applies only to the requirements of “this order” (Wage Order No. 9, § 1(E)); the exemption does not purport to control application of any other provision of law. And, as already noted, section 226 itself contains no similar exemption. United nonetheless contends we should imply one. We reject the contention.
We begin with the text of the statute. Section 226 does contain exemptions for several categories of workers. (E.g.,
We may also look beyond the text to consider the functional relationship between the Legislature‘s and IWC‘s regulation of wage statements, but we find no basis for United‘s importation argument there either. Section 226, which predated the IWC wage order provision, has always been the primary source of employers’ obligations to supply compliant wage statements. First
With respect to wage statement regulation, the IWC wage orders have always played a background role relative to section 226. In 1957, more than a decade after section 226 was first enacted, the IWC incorporated the then-existing version of section 226 into its wage orders, requiring that employers supply “at the time of payment of wages an itemized statement in writing showing gross wages paid and all deductions from such wages.” (IWC wage order No. 9–57, § 7(b).) Later, in 1976, the IWC updated its wage orders to incorporate the additional requirements introduced by the 1963 amendments to section 226, including the requirement that a statement include the pay period and identifying information for the employee and employer. (See IWC wage order No. 9–76, § 7(B).) That was the last time the IWC altered the substance of the wage statement requirements. Although the Legislature has made many more changes to section 226 since then, the wage orders have not kept pace. Rather, the current version of the wage order still tracks the
The Railway Labor Act exemption was added to the transportation industry wage order in 1976. (IWC wage order No. 9–76, § 1(D); see Wage Order No. 9, § 1(E) [carrying forward the same language without amendment].) The IWC “found that it would be difficult to enforce standards for employees crossing state lines and that the exempted employees were better protected by their collective bargaining agreements pursuant to the Railway Labor Act.” (IWC, Statement of Findings by the IWC of the State of Cal. in Connection with the Revision in 1976 of Its Orders Regulating Wages, Hours, and Working Conditions (Aug. 13, 1976) p. 6 (IWC 1976 Statement of Findings).)
In other Labor Code provisions, the Legislature has demonstrated its willingness to craft exemptions for employees under collective bargaining agreements when it believes such exemptions are warranted. For example, in 1970, the Legislature added just such an exception to
Despite numerous opportunities, however, the Legislature has never followed the IWC‘s lead and enacted an exemption to section 226 for employees operating under a collective bargaining agreement entered under the Railway Labor Act. We see no basis for importing the Railway Labor Act exemption when the Legislature itself has not chosen to do so. Given the number of times the Legislature has revisited and revised section 226 since the Railway Labor Act exemption was first promulgated in 1976, we can be sure that the Legislature‘s failure to adopt the exemption is not for want of attention to the statute.
United‘s argument for importing the wage order exemption into section 226 relies principally on Collins v. Overnite Transportation Co. (2003) 105 Cal.App.4th 171 (Collins), in which the Court of Appeal held that a different wage order exemption operated to exempt an employer from compliance with statutory overtime requirements. But the statutory and regulatory context was meaningfully different for reasons thoroughly addressed in the Collins opinion, and Collins neither holds nor suggests that every wage order exemption must be read into every corresponding provision of the Labor Code in order to harmonize the two bodies of law.
The plaintiffs in Collins were a class of truck drivers who sought overtime compensation under the Labor Code. In its defense, their employer invoked the so-called motor carrier exemption contained in the transportation industry wage order. (IWC wage order No. 9–90, § 3(H); see Wage Order No. 9, § 3(L) [exempting truck drivers whose hours are regulated by the federal Department of Transportation].) That plaintiffs’ claim was an overtime claim matters, because the history of overtime regulation in California is essentially
Here, in contrast to Collins, the statutory provision at issue was not enacted to serve as an adjunct to the relevant IWC wage orders; section 226 both predated the wage statement requirements of the wage orders and has long exceeded them in its substantive and remedial scope. Unlike the statutory overtime provision at issue in the Collins decision, section 226 contains no indication that the Legislature intended to embrace all of the IWC exemptions wholesale; on the contrary, section 226‘s incorporation of certain IWC exemptions (but not others) suggests a different approach. And the presumption against implied repeals that played a central role in Collins has no relevance here; section 226, a statute enacted in 1943, could not have impliedly repealed a wage order exemption first created in 1976. Collins, in short, offers no support for United‘s argument for importing the Railway Labor Act exemption into section 226 when the Legislature has not chosen to do so.
Finally, and in any event, United‘s argument fails because plaintiffs’ claims relate solely to wage statement requirements that are not covered by the wage order. The wage order does not require employers to list their address or to state hours worked and applicable hourly rates, which is what
III.
We turn to the Ninth Circuit‘s second question: Whether plaintiffs are entitled to wage statements prepared in compliance with section 226 of California‘s Labor Code, even though they perform most of their work outside California.
A.
In debating the coverage of section 226‘s wage statement requirements, the parties rely heavily on a pair of long-standing presumptions about the intended geographic reach of legislative enactments. The first of these is a presumption against extraterritoriality—that is, a presumption that state law is intended to apply only within state borders. Of course, legislatures can, and do, regulate beyond their territorial borders in appropriate circumstances. (Skiriotes v. Florida (1941) 313 U.S. 69, 77–79; Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 565–566 (Tidewater); People v. Weeren (1980) 26 Cal.3d 654, 666; cf., e.g., Rest.4th Foreign Relations Law, § 402 [describing certain recognized bases for the United States to regulate persons and conduct outside its territory].) But courts ordinarily will not give extraterritorial effect to legislative enactments absent an affirmative indication that such was the Legislature‘s intent. (See, e.g., Sullivan v. Oracle Corp. (2011) 51 Cal.4th 1191, 1207 (Sullivan); North Alaska Salmon Co. v. Pillsbury (1916) 174 Cal. 1, 4; cf. EEOC v. Arabian American Oil Co. (1991) 499 U.S. 244, 248 [describing similar presumption against extraterritoriality governing the acts of Congress].) The rule, which reflects an assumption that a legislature generally legislates with domestic concerns in mind (Foley Bros. v. Filardo (1949) 336 U.S. 281, 285), also serves the incidental
The presumption against extraterritoriality has a mirror-image relative in the form of a presumption in favor of intraterritorial application. Employing this presumption, courts ordinarily interpret California statutes to apply to conduct occurring anywhere within California‘s borders, absent evidence a more limited scope was intended. (See, e.g., Tidewater, supra, 14 Cal.4th at p. 578; People v. Weeren, supra, 26 Cal.3d at pp. 669–670.)
The parties dispute how these presumptions apply in this case. United argues that to apply any provision of California labor law to crew members who work primarily outside California would constitute an extraterritorial application of California law, which we presume the Legislature did not intend. The crew members, by contrast, implicitly rely on the mirror-image presumption: They argue that because they live in California and are paid in California (as evidenced by the fact they pay California income taxes), requiring United to send them California-compliant wage statements would not violate the presumption against extraterritoriality but would instead constitute a run-of-the-mill intraterritorial application of state law.
There is an element of truth to both views, which suggests that framing the issue solely as whether the crew members’ section 226 claims violate the presumption against extraterritoriality is not a particularly helpful way to approach the issue in this case. In our modern, interconnected economy, many legal transactions and relationships span multiple jurisdictions. That goes double for the claims of the employees here, whose very livelihoods consist of moving back and forth across state and international borders. From any given state‘s perspective, these employees’ claims may well have both extraterritorial and intraterritorial elements. Unless we are prepared to conclude that any extraterritorial effect at all is sufficient to bar application of California law, or, conversely, that any intraterritorial effect at all is sufficient to justify it, we cannot resolve this case based on territorial presumptions alone.
We made this very point in Tidewater, supra, 14 Cal.4th 557, in which we resolved a dispute over the application of IWC wage order overtime provisions to maritime workers employed in the Santa Barbara Channel. We there resisted the employers’ argument that the reach of the IWC‘s wage orders was necessarily limited by California‘s territorial boundaries. “In some circumstances,” we noted, “state employment law explicitly governs employment outside the state‘s territorial boundaries. (
therefore declared ourselves “not prepared . . . to hold that IWC wage orders apply to all employment in California, and never to employment outside California.” (Id. at p. 578.)
Because we ultimately concluded the employees in Tidewater did work exclusively in California, we had no need to press the issue further. But since Tidewater, a considerable body of out-of-state case law has done just that. Courts have concluded, for example, that in some circumstances one state‘s law may well govern work performed in another state—or, conversely, that another state‘s laws do not govern work performed partly in that state.5
In our most recent discussion of this issue, we held that California‘s overtime laws applied to nonresident employees of a California corporation who worked in California for “full days and weeks” at a time. (Sullivan, supra, 51 Cal.4th at p. 1201.) In so holding, we rejected the employer‘s argument that the overtime laws of the employees’ home state necessarily followed them into California, creating a conflict with California law. (Id. at p. 1198.) But we did not hold that the employment laws of another state can never apply to work performed in California. Nor, for that matter, did we hold either that California‘s employment laws always apply to every minute or hour of work performed in this state or that these laws never apply when work is performed in part out of state. (See id. at pp. 1199–1200 [discussing Tidewater, supra, 14 Cal.4th 557].) Finally, we did not suggest the same conclusion necessarily applies to every aspect of wage and hour law. While we held California‘s overtime law does apply to “full days and weeks of work performed here by nonresidents,” we declined to assume California law would also govern “the content of an out-of-state business‘s pay stubs, or the treatment of its employees’ vacation time.” (Sullivan, at p. 1201.) In such cases, California may well have a lesser interest in applying its own laws, and the laws of another jurisdiction might instead control. (Ibid.)
From these cases, we derive two general lessons. First, when it comes to the regulation of interstate employment, it is not sufficient to ask whether the relevant law was intended to operate extraterritorially or instead only intraterritorially, because many employment relationships and transactions will have elements of both. The better question is what kinds of California connections will suffice to trigger the relevant provisions of California law. And second, the connections that suffice for purposes of one statute may not necessarily suffice for another. There is no single, all-purpose answer to the question of when state law will apply to an interstate employment relationship or set of transactions. As is true of statutory interpretation generally, each law must be considered on its own terms.
B.
With this background in mind, we consider the geographic scope of the labor protection in
To gain insight into the question, then, we consider
The increment of work covered by
Based on these considerations, United proposes we adopt a “job situs” test, borrowing a phrase from federal case law interpreting a provision of federal labor law. (See Oil Workers v. Mobil Oil Corp. (1976) 426 U.S. 407, 414 (Oil Workers) [under federal labor law, “it is the employees’ predominant job situs rather than a generalized weighing of factors or the place of hiring” that determines whether a state‘s right-to-work law may apply].) Under this test, a jurisdiction‘s labor laws would apply to workers who perform all or most of their work in the jurisdiction. This makes sense for
We agree with the basic premise of this argument: Application of
That conclusion would conflict with the approach we traditionally have taken to the employee protections of the Labor Code. California‘s wage and hour laws are remedial in nature and must be liberally construed in favor of affording workers protection. (Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903, 953; Brinker Restaurant Corp. v. Superior Court, supra, 53 Cal.4th at pp. 1026–1027; Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1103.) But equally important, to deny
To determine how far these protections extend, we return to the central insight that has long guided courts seeking to discern the geographic scope of legislative enactments: that the Legislature ordinarily does not intend for its enactments to create conflicts with other sovereigns. We can infer from this that the Legislature intended for
C.
In adopting this approach, we reject several alternative approaches proposed by the parties. First, United suggests our interpretation of
But this case differs from Oil Workers because that case concerned the proper interpretation of a federal law that evinced the federal government‘s independent interest in regulating the subject of the employment law at issue. (Oil Workers, supra, 426 U.S. at pp. 420–421.) There was no particular reason to conclude Congress would have been averse to a test that created an
Implicit in United‘s argument is the idea that the federal government‘s interests, too, should factor into our consideration of which jurisdiction has the most significant connection to the employment relationship for purposes of applying
Ward, for his part, contends that
Nor is residence alone significant. We have already established that being a nonresident does not exclude an employee from the state‘s labor protections, as the employer in Sullivan, supra, 51 Cal.4th 1191, had argued. We looked for instruction to
The proposition Ward argues here—residence should imply protection—is the inverse of the proposition the employer advanced and we rejected in Sullivan, supra, 51 Cal.4th 1191 (that nonresidence implies nonprotection). Just as
Ward‘s proposed application of
Finally, Ward proposes
There are two difficulties with this argument. First, Ward supplies no citation, and upon our independent review we discern nothing in the record, to support the assertion that United, a corporation incorporated and headquartered elsewhere, prepares and issues wage statements in California (as opposed to such statements simply being received here by employees who may reside here). Second, a test based on the location of the conduct giving rise to liability is hopelessly indeterminate when applied to
Instead, to determine whether
IV.
We answer the Ninth Circuit‘s questions as follows:
- (1) The Railway Labor Act exemption in Wage Order No. 9, section 1(E), does not bar a wage statement claim brought under
section 226 by an employee who is covered by a collective bargaining agreement. - (2)
Section 226 applies to wage statements provided by an employer if the employee‘s principal place of work is in California. This test is satisfiedif 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.
KRUGER, J.
We Concur:
CANTIL-SAKAUYE, C. J.
CHIN, J.
CORRIGAN, J.
LIU, J.
CUÉLLAR, J.
GROBAN, J.