Ward v. United Airlines, Inc. ( 2020 )

IN THE SUPREME COURT OF
CALIFORNIA
CHARLES E. WARD et al.,
Plaintiffs and Appellants,
v.
UNITED AIRLINES, INC.,
Defendant and Respondent.
S248702
Ninth Circuit
16-16415
Northern District of California
3:15-cv-02309-WHA
FELICIA VIDRIO et al.,
Plaintiffs and Appellants,
v.
UNITED AIRLINES, INC.,
Defendant and Respondent.
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
Opinion of the Court by Kruger, J.
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
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
operations, regardless of their place of residence or whether a
collective bargaining agreement governs their pay.
I.
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 Labor Code section 226
(section 226), in the format required by that provision. (See
§ 226, subd. (a).) Specifically, the flight crew members
complained that although United issues them at least two
wage statements a month, the wage statements do not (1) list a
street address for United, instead providing only a post office
box, or (2) include the hours worked and all applicable hourly
rates that make up employee pay for the pay period, instead
listing only the total amounts earned in various pay categories.
The crew members sought civil penalties under the Labor Code
Private Attorneys General Act of 2004 (Lab. Code, § 2698 et
seq.) on a representative basis; statutory penalties under
section 226, subdivision (e) on a classwide basis; and injunctive
2
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
relief (Ward v. United Airlines, Inc., supra, 889 F.3d at
p. 1071).
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 hour law—including
section 226—is governed by a “ ‘job situs test,’ which considers
where an employee ‘principally’ worked.” (Ward v. United
Airlines, Inc. (N.D.Cal., July 19, 2016, No. 3:15-cv-02309-WHA)
2016 U.S.Dist. Lexis 94803, p. *10.) Because it was
undisputed that under the district court’s test the members of
1
Under federal law, airline employees who work in more
than two states are subject to the income tax laws of either the
state where they reside or the state where they earn more than
50 percent of their airline pay. (49 U.S.C. § 40116(f)(2).) “For
pilots and flight attendants, United applies state income tax
laws based on the employee’s residence because it determined
that pilots and flight attendants ‘rarely, if ever, perform more
than half their work in any one state.’ ” (Ward v. United
Airlines, Inc., supra, 889 F.3d at pp. 1070–1071.)
3
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
the pilot class did not work principally in California, the court
ruled that section 226 did not apply.
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
4
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
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); 45 U.S.C. § 151 et seq.) United
pilots and flight attendants are parties to such a collective
bargaining agreement.
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 Cal. Rules of Court, rule 8.548(f)(5)), are:
(1) 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?
(2) 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
5
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
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. (§ 226, subd. (a).)
Violations may result in penalties of up to $4,000 for each
injured employee, as well as an award of costs and attorney’s
fees. (Id., subd. (e)(1).)
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., Cal. Code Regs., tit. 8, §§ 11010,
6
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
subd. 7(B), 11020, subd. 7(B), 11030, subd. 7(B).)2 As relevant
here, it also provides that, subject to certain exceptions not
pertinent here, “this order shall not be deemed to cover those
employees who have entered into a collective bargaining
agreement under and in accordance with the provisions of the
Railway Labor Act, 45 U.S.C. Sections 151 et seq.” (Wage
Order No. 9, § 1(E).)
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.,
§ 226, subds. (d) [personal services employees], (i) [government
employees], (j) [employees who are also exempt from minimum
wage and overtime].) But the statute contains nothing like
Wage Order No. 9’s Railway Labor Act exemption. This
2
For example, while both the wage orders and statute
require itemization of deductions from pay, only the statute
requires the employer to list gross and net wages, hours
worked, and applicable hourly rates of pay. (Compare § 226,
subd. (a) items (1), (2), (4), (5), (9) with Wage Order No. 9,
§ 7(B).)
7
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
omission is all the more telling because section 226 does
expressly reference several other IWC wage order exemptions.
For example, the statute provides that an employer need not
specify total hours worked for salaried employees “exempt from
payment of overtime under . . . any applicable order of the
Industrial Welfare Commission.” (§ 226, subd. (j)(1).) The
same is true for several other categories of employees exempt
from payment of minimum wage and overtime under IWC
wage orders. (§ 226, subd. (j)(2)(A) [administrative exemption],
(B) [outside sales exemption], (D) [family member exemption],
(F) [commercial fishing exemption], (G) [national service
program exemption].) It would have been easy enough for the
Legislature to adopt the Railway Labor Act exemption as well,
but it did not. The Legislature’s incorporation of some (but not
all) wage order exemptions strongly suggests that any omission
was intentional.
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 enacted in 1943, section 226
was initially crafted to require only that employers provide
written statements showing any deductions from employees’
pay. (See Stats. 1943, ch. 1027, § 1, p. 2965.)3 Since then,
3
The original version provided: “Every employer shall
semimonthly or at the time of each payment of wages furnish
each of his employees either as a part of the check, draft, or
8
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
however, the Legislature has repeatedly expanded the scope of
both section 226’s requirements and the remedies for
noncompliance. In 1963, the Legislature amended the statute
to mandate that statements include the pay period and
identifying information for the employee and employer. (Stats.
1963, ch. 1080, § 1, p. 2541.) In 1976, the Legislature amended
section 226 to add a damages remedy for violations of the
statute. (§ 226, former subd. (b), as amended by Stats. 1976,
ch. 832, § 1, p. 1900.) The Legislature would later add
requirements that the statement show both gross and net
wages (Stats. 1978, ch. 1247, § 3, p. 4059), hours worked
(Stats. 1984, ch. 486, § 1, p. 1990) or piece-rate units earned
(Stats. 2000, ch. 876, § 6, p. 6508), and any applicable hourly
rates (ibid.). All told, the Legislature has revisited the statute
more than a dozen times since 1976. (See 44 West’s Ann. Lab.
Code (2019 supp.) foll. § 226, p. 231.) The end result is a
comprehensive statute that contains not only detailed
requirements for the contents of wage statements, but also
recordkeeping and inspection requirements (§ 226, subds. (a)–
(c)) and extensive remedies for noncompliance, including
statutory penalties recoverable by the Labor Commissioner
(id., subd. (f)) as well as injunctive relief, damages, statutory
penalties, and attorney’s fees for employee claimants (id.,
subds. (e)(1), (f), (h)).
voucher paying the employee’s wages, or separately, an
itemized statement in writing showing all deductions made
from such wages; provided, all deductions made on written
orders of the employee may be aggregated and shown as one
item.” (Stats. 1943, ch. 1027, § 1, p. 2965.)
9
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
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 version of section 226 the
Legislature adopted in 1963. (Compare Wage Order No. 9,
§ 7(B) with former § 226, as amended by Stats. 1963, ch. 1080,
§ 1, pp. 2540–2541.)
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
10
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
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 Labor Code section
204. (Lab. Code, § 204, subd. (c) [“However, when employees
are covered by a collective bargaining agreement that provides
different pay arrangements [than the prompt payment
deadlines imposed in § 204], those arrangements shall apply to
the covered employees”]; see Stats. 1970, ch. 1237, §§ 3–4,
pp. 2225–2226; Stats. 1970, ch. 1260, §§ 2–3, pp. 2279–2280.)
The Legislature has done likewise in Labor Code sections 510,
512, and 514. (See Lab. Code, §§ 510, subd. (a)(2) [exempting
from overtime statute work schedules “adopted pursuant to a
collective bargaining agreement”], 514 [exempting from
statutes regulating overtime and working hours “an employee
covered by a valid collective bargaining agreement” when
certain additional conditions are met]; Gerard v. Orange Coast
Memorial Medical Center (2018) 6 Cal. 5th 443, 456 [“Since
2000, the Legislature has amended [Labor Code] section 512
several times to exempt various classes of employees covered
by collective bargaining agreements from the prohibition
against the waiver of second meal periods for employees
working more than 12 hours”; citing examples].)
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
11
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
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.
Despite all this, United argues that we must import the
Railway Labor Act exemption into section 226 in order to
harmonize the wage order and statute. United is correct that
courts must strive to harmonize the IWC’s wage orders and the
statutory provisions of the Labor Code where possible, just as
we would strive to harmonize any two sets of legal provisions
governing the same subject. (Brinker Restaurant Corp. v.
Superior Court, supra, 53 Cal.4th at pp. 1026–1027.) But we
are not persuaded that importing the wage order’s Railway
Labor Act exemption into section 226 is the right way to go
about that task. Notwithstanding United’s contrary claim, to
read section 226 in accordance with its plain terms creates no
necessary conflict with the IWC’s choice to exempt employees
covered by a relevant collective bargaining agreement from
virtually all of the provisions of the transportation industry
wage order. No one disputes that the exemption remains fully
operative with respect to matters other than wage statements
and thus continues to shield employers from wage order
provisions imposing recordkeeping requirements, uniform and
equipment requirements, suitable seating requirements, and
the like. (E.g., Wage Order No. 9, §§ 7(A), 9, 14.) Even as to
the wage order’s wage statement requirements, the exemption
has an important role to play insofar as it shields employers
from sanctions for any violation of these requirements that
might otherwise apply. (See Lab. Code, § 1199, subd. (c)
12
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
[making violation of an IWC wage order a misdemeanor].) In
short, it is entirely possible to give effect to both the plain
terms of the statute and to the terms of the wage order.
Because there is no necessary conflict between the two, there is
no reason to harmonize them in the manner United proposes.
(See, e.g., Dicon Fiberoptics, Inc. v. Franchise Tax Bd. (2012)
53 Cal. 4th 1227, 1236–1237.)
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 the
reverse of the history of wage statement regulation: The IWC
has long had overtime rules in place pursuant to its delegated
authority to regulate hours, pay, and working conditions (see,
e.g., IWC wage order No. 9–52, § 3(a) [defining overtime pay
13
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
obligations]), while the Legislature is a relatively recent
entrant to the field. That entry came in response to 1998 IWC
wage orders that weakened overtime protections; in 1999, to
reverse these changes, the Legislature codified certain
minimum protections (Lab. Code, § 510, as amended by Stats.
1999, ch. 134, § 4, p. 1821; §§ 511–515, as enacted by Stats.
1999, ch. 134, §§ 5–9, pp. 1821–1825; see Brinker Restaurant
Corp. v. Superior Court, supra, 53 Cal.4th at p. 1037), on which
the plaintiff truck drivers in Collins then relied. But the
Legislature also expressly ratified most existing exemptions to
overtime protections already contained in any wage orders,
including the motor carrier exemption, in newly enacted Labor
Code section 515. (See Lab. Code, § 515, subd. (b) [the IWC
need not revisit pre-1998 “exemption[s] from provisions
regulating hours of work”].) Because the new Labor Code
overtime provisions expressly ratified existing IWC
exemptions, and because to conclude otherwise would work an
implied repeal of a long-standing wage order provision, the
Collins court rejected the drivers’ argument that they were
entitled to statutory overtime notwithstanding the motor
carrier exemption. (Collins, supra, 105 Cal.App.4th at
pp. 179–180 & fn. 4.)
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
14
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
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 plaintiffs have asked for here.4 Even if the wage order
exemption could be read to excuse compliance with section 226
to the extent its requirements overlap the wage order’s, we
have no basis for concluding the IWC intended to exempt, or
the Legislature authorized it to exempt, employers from
additional requirements beyond those in the wage order. In
sum, we conclude the Legislature did not intend the wage
order exemption to foreclose plaintiffs’ section 226 claims.
4
As noted, Wage Order No. 9 was last amended in 1976.
The three wage statement requirements at issue in this case
were added to section 226 after that time. (See Stats. 1978,
ch. 1247, § 3, p. 4059 [adding employer address requirement];
Stats. 1984, ch. 486, § 1, p. 1990 [adding hours worked
requirement]; Stats. 2000, ch. 876, § 6, p. 6508 [adding hourly
rates requirement].)
15
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
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
16
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
purpose of avoiding unintended conflicts with other sovereigns
(North Alaska Salmon Co., at p. 5; see Arabian American Oil
Co., at p. 248; Diamond Multimedia Systems, Inc. v. Superior
Court (1999) 19 Cal. 4th 1036, 1059–1060, fn. 20).
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,
17
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
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. (Lab. Code, §§ 3600.5, 5305
[California workers’ compensation law applies to workers hired
in California but injured out of state].) The Legislature may
have similarly intended extraterritorial enforcement of IWC
wage orders in limited circumstances, such as when California
residents working for a California employer travel temporarily
outside the state during the course of the normal workday but
return to California at the end of the day. On the other hand,
the Legislature may not have intended IWC wage orders to
govern out-of-state businesses employing nonresidents, though
the nonresident employees enter California temporarily during
the course of the workday.” (Tidewater, at pp. 577–578.) We
18
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
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
5
See, e.g., Dow v. Casale (2013) 83 Mass. App. Ct. 751, 756
[989 N.E.2d 909, 913] (Massachusetts wage law applied to
traveling salesperson of Massachusetts employer, even though
salesperson resided in Florida and performed work in more
than 19 states); Solouk v. European Copper Specialties, Inc.
(S.D.N.Y., May 2, 2019, No. 14cv8954 (DF)) 2019 U.S.Dist.
Lexis 81267, pp. *47–*50 (New York labor law could apply to
work performed in New Jersey incident to public works project
in Manhattan); Heng Guo Jin v. Han Sung Sikpoom Trading
Corp. (E.D.N.Y., Sept. 21, 2015, No. 13-CV-6789 (CBA) (LB))
2015 U.S.Dist. Lexis 125961, pp. *23–*26 (New York minimum
wage and overtime law might apply to New York-based
delivery truck driver who made deliveries both in and out of
state); Hernandez v. NJK Contractors, Inc. (E.D.N.Y., May 1,
2015, No. 09-CV-4812 (RER)) 2015 U.S.Dist. Lexis 57568,
pp. *121–*122 (presumption against extraterritorial
application of New York labor law would not preclude New
York-based workers’ recovery under that law for travel time to
and from job site in neighboring state); Bostain v. Food Exp.,
Inc. (2007) 159 Wash. 2d 700, 712–713 [153 P.3d 846, 852]
(Washington overtime law applied to Washington-based
interstate truck driver, even when driving out of state).
19
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
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
20
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
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 section 226. Again,
the statute regulates the information an employer must give
its employees when it pays wages. “An employer, semimonthly
or at the time of each payment of wages, shall furnish to his or
her employee” in connection with each wage payment “an
accurate itemized statement in writing” disclosing nine
categories of information, including the pay period, hours
worked, applicable hourly rates, gross and net wages earned,
and any deductions taken. (§ 226, subd. (a).) Section 226
contains no language specifying its intended geographic scope.
As earlier noted, the statute excludes certain employers,
including most government employers (id., subd. (i)), and
certain employees, including domestic childcare providers and
others providing some personal services (id., subd. (d)). There
are, however, no express inclusions or exclusions based on any
particular set of geographic considerations.
To gain insight into the question, then, we consider
section 226’s aims and its role in the surrounding statutory
scheme. The core purpose of section 226 is “to ensure an
employer ‘document[s] the basis of the employee compensation
payments’ to assist the employee in determining whether he or
21
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
she has been compensated properly.” (Soto v. Motel 6
Operating, L.P. (2016) 4 Cal. App. 5th 385, 390, quoting Gattuso
v. Harte-Hanks Shoppers, Inc. (2007) 42 Cal. 4th 554, 574; see
Henry M. Lee Law Corp. v. Superior Court (2012) 204
Cal. App. 4th 1375, 1388 [the statute vindicates the public
policy in favor of full and prompt payment of earned wages];
Dept. of Industrial Relations, DLSE Opn. Letter
No. 2002.05.17 (May 17, 2002) p. 3 [§ 226 “is designed to
provide the employee with a record of hours worked, and to
assist the employee in determining whether he [or she] has
been compensated properly for all of his or her hours
worked”].) Section 226 is part of a matrix of laws intended to
ensure workers are correctly and adequately compensated for
their work. From this we reasonably infer that the relevant
geographic connection for purposes of determining what state
law applies is where that work occurs.
The increment of work covered by section 226 is also
relevant to the inquiry. Unlike, for example, the overtime laws
at issue in Sullivan, section 226 does not operate at an hourly,
daily, or even weekly level. (See § 226, subd. (a).) Section 226
does not dictate what the employee is paid for any given period
of time, but instead how the pay will be documented, requiring
that certain information be provided to the employee each pay
period (typically a period of about two weeks). (§ 226,
subd. (a); see Lab. Code, § 204, subd. (a).) Section 226 appears
to contemplate that the information supplied will be
comprehensive, embracing all hours, wages, and deductions for
the given pay period (see, e.g., § 226, subd. (a), item (2) [“total
hours worked”], item (4) [“all deductions”], item (6) [“the
inclusive dates of the period for which the employee is paid”],
item (9) [“all applicable hourly rates”]), and thus that a single
22
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
state’s law will govern what information must be furnished to
the employee about wages earned over the course of that
period. While Sullivan raises the possibility that an
employee’s substantive compensation might be governed by
different states’ laws depending on where and how much the
employee worked during a given pay period, the wage
statement statute does not admit of the same possibility. The
statute does not appear to contemplate, for example, that an
employee who works in 10 different jurisdictions over the
course of a single pay period should receive 10 different wage
statements, each prepared according to the laws of a different
state.6 Any work-location-based test for section 226 must
reconcile the possibility that some employees may perform
their work in more than one jurisdiction with the legislative
desire for a single statement documenting employee pay.
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 section 226, United says,
because the statute’s primary concern is with the general
6
Nor does Ward propose such an interpretation. The
plaintiffs in Oman v. Delta Air Lines, Inc., supra, ___ Cal.5th
___, do, however, and we address the argument in that case.
23
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
regulation of the payment of employees within the context of
an established employment relationship, and “the center of
[that] relationship is the job situs, the place where the work
that is the very raison d’être of the relationship is performed.”
(Oil Workers, at p. 417.)
We agree with the basic premise of this argument:
Application of section 226 logically depends on whether the
employee’s principal place of work is in California.7 That test
is certainly satisfied when the employee spends the majority of
his or her working hours in California. But this case
demonstrates why that answer is only a partial one. These
plaintiffs, like many transportation workers, do not perform
the bulk of their work in any one state.8 United argues that
that is the end of the story; they are not entitled to the
protections of California wage statement law. But if every
state were to adopt the same rule, then many transportation-
7
This aligns section 226 with the many Labor Code
provisions that by their terms reflect an overarching legislative
concern with regulating work performed in this state, as
opposed to elsewhere. (See, e.g., Lab. Code, §§ 1173, 1174,
1193.5.)
8
Neither Tidewater nor Sullivan dealt with such a
circumstance. In Tidewater, we determined that the
employees worked exclusively in California. (Tidewater, supra,
14 Cal.4th at pp. 578–579.) And in Sullivan, although the
employees worked in various states, for the specific period of
time at issue under the laws in question—days or weeks under
the overtime laws—they worked entirely in California.
(Sullivan, supra, 51 Cal.4th at p. 1196.) Here, the relevant
time frame is a pay period, and in every pay period these
employees not only worked in many states, but also did not
work most of their time in any single state.
24
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
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: Effectively,
because these employees work in many jurisdictions, they
would receive the protections of none.
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 section 226’s
protections to interstate transportation workers would conflict
with what we know of the history preceding section 226’s 1943
enactment (Stats. 1943, ch. 1027, § 1, p. 2965), which reveals
that this class of workers was the inspiration for the new law
and its primary intended beneficiary. Specifically, the history
shows the measure was introduced at the behest of railroad
employees who, receiving checks that showed only the net
amount they were paid, had no way to verify whether this
amount was correct. (See, e.g., Sen. Gannon, author of Assem.
Bill No. 295 (1943 Reg. Sess.) letter to Governor Earl Warren,
May 13, 1943, p. 1 (Gannon Letter) [“A.B. 295 was introduced
by me at the request of thousands of employees of the Southern
Pacific Company”]; James H. Anderson, Dining Car Employees
Local 582 and Credit Union Ltd., letter to Governor Earl
Warren in support of Assem. Bill No. 295 (1943 Reg. Sess.)
May 21, 1943; Charles Elsey, The Western Pacific Railroad
Company, letter to Governor Earl Warren in opposition to
25
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
Assem. Bill No. 295 (1943 Reg. Sess.) May 18, 1943.) The
author of the bill represented that these workers were among
“the comparatively few working men in California” who did not
already receive such statements. (Gannon Letter, at p. 2.)
This background suggests the Legislature intended to extend
section 226’s protections—within reason—to workers who
perform at least some of their work in California, even if they
do not perform all or most of their work in California.
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 section 226 to apply to
workers whose work is not performed predominantly in any
one state, provided that California is the state that has the
most significant relationship to the work. For interstate
transportation workers and others who do not work more than
half the time in any one state, we conclude this principle will
be satisfied if the worker performs some work here and is
based in California, meaning that California serves as the
physical location where the worker presents himself or herself
to begin work. This is not a new concept in labor law; this is,
in fact, the same general test that has been applied for some
decades in the field of unemployment insurance, where the
Legislature has paid focused attention to the problem of
coverage for employees whose work is not localized in any one
26
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
state. (See Unemp. Ins. Code, §§ 602–603.)9 Applied to section
226, it means that workers are covered if they perform the
majority of their work in California; but if they do not perform
the majority of their work in any one state, they will be covered
if they are based for work purposes in California. This familiar
test supplies clarity and certainty for employers and
employees, while also appropriately balancing the Legislature’s
weighty interest in the protection of California workers,
including interstate transportation workers, with similarly
9
More than half a century ago, to “avoid conflicts and
overlapping coverage between States with respect to the
service of a single individual for a single employer performed
in two or more States,” the United States Department of Labor
described a series of sequential considerations for determining
an employee’s place of work for purposes of unemployment
insurance coverage. (U.S. Dept. of Labor, Manual of State
Employment Security Legislation (1950) p. C–12; see id. at
pp. 10–11.) Drawing on this guidance, the Legislature adopted
a test that reaches both employees whose work occurs
exclusively or primarily in California and those whose work is
not localized in any one state, but who do some work in
California and have their base of operations in the state. (See
Unemp. Ins. Code, §§ 602–603.)
The test identifies additional considerations to consult
for employees whose work is not localized in any state and who
have no base of operations. (Unemp. Ins. Code, § 602,
subd. (b).) Because plaintiffs here appear to have a base of
operations in a state where they perform some of their work,
we need not express any view as to whether these or other
similar considerations should be consulted to determine section
226’s application for employees who are neither localized nor
have any established base of operations in any state.
27
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
weighty considerations of interstate comity and avoidance of
conflicts of laws.10
C.
In adopting this approach, we reject several alternative
approaches proposed by the parties. First, United suggests our
interpretation of section 226 should take into account the fact
that plaintiffs perform most of their work in airspace subject to
the exclusive jurisdiction of the federal government. (See 49
U.S.C. § 40103(a) [“The United States Government has
exclusive sovereignty of airspace of the United States”].)
United’s argument relies heavily on Oil Workers, supra, 426
U.S. 407, which interpreted a federal labor law authorizing
union or agency shops but allowing individual states to enact
“right-to-work” laws prohibiting such shops. The specific
question in Oil Workers concerned how this law should apply to
employees who spent the majority of their time on oil tankers
on the high seas. (Id. at p. 420.) There, applying the “job
situs” test, the high court concluded no state “right-to-work”
law applied, and the authority to enter an agency shop
agreement was instead governed exclusively by federal law.
(Id. at pp. 420–421.) United argues that here, too, no state
wage statement law should apply to workers who spend the
majority of their time in federally regulated airspace, and the
10
Consistent with our statute-by-statute approach to
determining the scope of employment protections (Sullivan,
supra, 51 Cal.4th at p. 1201), what we say is specific to section
226 and would not necessarily apply to the state’s minimum
wage, equal pay, or antiharassment laws, for example.
28
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
matter should instead be left to federal law (which currently
imposes no wage statement requirements).
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 occasional state law vacuum, for in its
absence, federal law would continue to apply. Here, in
contrast, we have reason to believe the Legislature would have
been concerned about providing no protection to employees
who work in California, with whom California has the most
significant relationship to the employee’s work, and for whom
no other law would otherwise apply. And unlike in Oil
Workers, which involved the potential application of state law
concerning union shop agreements, a matter also regulated
under federal law (see 29 U.S.C. § 164(b); Oil Workers, at
p. 409), Congress has not seen fit to enter the area of wage
statement regulation.
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 section 226, at least when it comes to interstate
transportation workers who perform most of their work in the
air instead of on the ground. But as the Legislature that
enacted the statute undoubtedly understood, in our system of
federalism, federal law and state law ordinarily coexist. When
the two overlap, tensions between them are resolved not by
interstate comity and choice of law principles but by the
29
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
supremacy clause and preemption principles. If the federal
government prefers that no state law on a particular subject
apply to workers who spend their time primarily in federal
airspace, it can legislate and preempt. But in the absence of
any federal action, we have no reason to think applying
California law would encroach on federal prerogatives, nor any
reason rooted in considerations of comity to conclude the
Legislature would have preferred that workers based in
California go unprotected by section 226.
Ward, for his part, contends that section 226 should
apply to employees who perform significant work in California
and are “headquartered” here. But Ward also relies on a
federal case, Bernstein v. Virgin America, Inc. (N.D.Cal. 2017)
227 F. Supp. 3d 1049, to argue that three additional factors
should play a role: where the employee resides, pays taxes,
and receives wage payments. Bernstein adopted this
multifactor test based on its reading of Sullivan, supra, 51
Cal. 4th 1191. It inferred from Sullivan that in deciding
whether a state labor protection applies, a court should
consider, inter alia, where work was performed, where pay was
received, where the employer and employee resided, and
whether work outside the state was of a temporary nature.
(Bernstein, at p. 1060.) Sullivan, however, did not establish an
all-purpose multifactor test of this sort. It considered only
“whether California’s overtime law applies to work performed
here by nonresidents” (Sullivan, at p. 1196, italics added) and
answered that question by carefully construing the specific
statute at issue and determining whether that statute should
apply to the plaintiffs’ work (id. at pp. 1197–1198), rejecting
any inference that the conclusion it reached should extend to
30
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
other statutes (id. at p. 1201), each of which would require
their own statutory analyses.
Under section 226, we decline to place weight on the
three additional factors—residence, receipt of wages, and
payment of taxes—Ward proposes. To begin with, the extra
factors he cites beyond residence are entirely derivative of the
underlying fact of residence: “The California [employees’]
receipt of wages and wage statements in California is simply a
consequence of the [employees’] California residency if their
wage statements are mailed to their mailing addresses in
California. Similarly, California [employees’] payment of
California income taxes . . . is also a result of the [employees’]
California residency.” (Shook v. Indian River Transport Co.
(E.D.Cal. 2017) 236 F. Supp. 3d 1165, 1172.)
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 Labor Code section 1171.5, subdivision (a), which
guarantees that “[a]ll protections, rights, and remedies
available under state law, except any reinstatement remedy
prohibited by federal law, are available to all individuals
regardless of immigration status who have applied for
employment, or who are or who have been employed, in this
state.” We acknowledged that the provision had been adopted
“to protect undocumented workers from sharp practices.”
(Sullivan, at p. 1197, fn. 3.) We rejected, however, the
inference that the Legislature sought only to protect
undocumented workers from outside the United States:
“Section 1171.5 . . . cannot reasonably be read as speaking only
to undocumented workers, given that it was drafted and
31
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
codified as a general preamble to the wage law and broadly
refers to ‘all individuals’ employed in the state. (Id., subd. (a).)
More importantly, no reason exists to believe the Legislature
intended to afford stronger protection under the employment
laws to persons working illegally than to legal nonresident
workers.” (Sullivan, at p. 1197, fn. 3.) We interpreted section
1171.5 as expressing an intent to afford all those working in
California the benefit of the state’s worker protections, without
regard to residence.
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 Labor Code section 1171.5 weighs against finding
nonresidence disqualifying for purposes of applying state labor
protections, it also weighs against finding residence to be the
sine qua non for purposes of applying those protections. The
Legislature expressed a clear intent not to have the
availability of labor protections turn on legal residency in the
state. And if we were to read section 1171.5 more narrowly as
extending California law without regard to residence for those
working inside the state, while not speaking to the relevance of
residence for those living here but who work primarily out of
state, we would still need to find some basis for concluding the
Legislature intended to extend section 226 to the latter
category of employees. Application of section 226 to those who
work primarily outside the state, based only on their choice to
reside here, would create overlap and potential conflict-of-laws
concerns when California law and the law of the state in which
the employee primarily worked differed. The test we apply
instead, limiting a California employment statute’s scope to
32
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
circumstances in which California’s relationship to the work is
more significant than any other state’s, avoids such concerns.
Ward’s proposed application of section 226 based on
residence would also create significant complications for some
out-of-state employers. For example, the statute requires that
“a copy of the [wage] statement and the record of the
deductions shall be kept on file by the employer for at least
three years at the place of employment or at a central location
within the State of California.” (§ 226, subd. (a), italics added.)
The requirement that records be maintained within California,
and hence within the geographic area over which the
Department of Labor Standards Enforcement and other state
agencies have jurisdiction, doubtless is intended to facilitate
investigation and enforcement of compliance.11 For a business
that operates, for instance, only in Stateline, Nevada, this
would require the establishment of a separate records depot in
California if, for reasons beyond the employer’s control, one or
more employees elected to reside in the immediately adjacent
City of South Lake Tahoe, on the California side of the same
community. If an employee principally works in and is based
11
This language was added in 1987. (Stats. 1987, ch. 976,
§ 1, p. 3266.) It mirrors similar language that has appeared in
the IWC’s wage orders since 1968. (See, e.g., IWC wage order
No. 9–68, § 7(c); Wage Order No. 9, § 7(C).) Explaining the
requirement, the IWC has said, “With regard to the meaning of
‘central’ location, the [IWC] will allow required records to be
kept together at any single location within California, provided
that they are available to the Division [of Labor Standards
Enforcement]. Enforcement experience has proved this
requirement to be necessary.” (IWC 1976 Statement of
Findings, supra, p. 12.)
33
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
out of Nevada, and only incidentally works in California,
Nevada law governing wage statements should apply
regardless of whether the employee chooses to live across the
border in California, receive pay here, and pay taxes here. On
the other hand, if an employee principally works in California
out of headquarters here, with some incidental work in
Nevada, section 226 should apply, notwithstanding that the
employee may elect to live in Nevada. We decline Ward’s
invitation to make employees’ residence a focus of the test for
determining whether an employer must furnish wage
statements that comply with California law.
Finally, Ward proposes section 226 should apply,
whether or not an employee works principally in California, so
long as the “conduct which gives rise to liability . . . occurs in
California.” (Diamond Multimedia Systems, Inc. v. Superior
Court, supra, 19 Cal.4th at p. 1059.) Ward asserts that the
conduct supporting liability under section 226 is the issuance
of a noncompliant wage statement, and that for the plaintiff
classes this occurred in California.
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 section 226 and similar wage
and hour protections. Is liability based on preparation of a
noncompliant statement, in State X, where an employer may
house its payroll department? Is it in State Y, where the
34
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
statement is received? Or is it in State Z, where corporate
headquarters are located and the decision as to the statement’s
contents is made? For claims that arise from allegedly
inadequate wage payments, does the conduct supplying
liability occur where decisions are made, where payments are
issued, or where payments are received, e.g., wherever an
employee may have a bank account for direct deposit purposes?
Looking to the location where the conduct supporting liability
occurred does not provide a workable test in this context.
Instead, to determine whether section 226 applies, courts
should consider in the first instance whether the employee
works the majority of the time in California, or in another
state. For employees, like those here, who do not work
principally in any one state, a court should consider
secondarily whether the employee has a definite base of
operations in California, in addition to performing at least
some work in the state for the employer. Thus, if a pilot or
flight attendant has a designated home-base airport, section
226 would apply if that airport is in California, and not if it is
elsewhere. The remaining factors mentioned in the Ninth
Circuit’s question—employer location, employee residence,
receipt of pay, and payment of taxes—are not pertinent.
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
35
WARD v. UNITED AIRLINES, INC.
Opinion of the Court by Kruger, J.
California. This test is satisfied 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.
KRUGER, J.
We Concur:
CANTIL-SAKAUYE, C. J.
CHIN, J.
CORRIGAN, J.
LIU, J.
CUÉLLAR, J.
GROBAN, J.
36
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion Ward v. United Airlines, Inc.
__________________________________________________________________________________
Unpublished Opinion
Original Appeal
Original Proceeding XXX on request pursuant to rule 8.548, Cal. Rules of Court
Review Granted
Rehearing Granted
__________________________________________________________________________________
Opinion No. S248702
Date Filed: June 29, 2020
__________________________________________________________________________________
Court:
County:
Judge:
__________________________________________________________________________________
Counsel:
Jackson Hanson, Jeffrey C. Jackson, Kirk D. Hanson; Esner, Chang & Boyer, Stuart B. Esner and Joseph S.
Persoff for Plaintiffs and Appellants.
Mastagni Holstedt, David E. Mastagni and Isaac S. Stevens for Dan Goldthorpe, James Donovan, Chris
Bennett, James Isherwood and David Vincent as Amici Curiae on behalf of Plaintiffs and Appellants.
O’Melveny & Myers, Robert Siegel, Adam P. KohSweeney and Susannah K. Howard for Defendant and
Respondent.
Jones Day, Douglas W. Hall, Shay Dvoretzky and Vivek Suri for Airlines for America as Amicus Curiae
on behalf of Defendant and Respondent.
Counsel who argued in Supreme Court (not intended for publication with opinion):
Stuart B. Esner
Esner, Chang & Boyer
234 East Colorado Blvd., Suite 975
Pasadena, CA 91101
(626) 535-9860
Kirk D. Hanson
Jackson Hanson, LLP
2790 Truxton Rd., Suite 140
San Diego, CA 92106
(619) 523-9001
Adam P. KohSweeney
O’Melveny & Myers LLP
2 Embarcadero Center, 28th Floor
San Francisco, CA 94111-3823
(415) 984-8700