©2024 Seyfarth Shaw LLP www.seyfarth.com 2024 Cal-Peculiarities | 267 (5) Does the Armenta/Gonzalez bar on averaging wages apply to a pay formula that generally awards credit for all hours on duty, but that, in certain situations resulting in higher pay, does not award credit for all hours on duty? In addressing these questions, the California Supreme Court shared some general observations: “[W]hen 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.”641 “[T]he 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.”642 The geographic scope of Labor Code section 204 (requiring timely wage payment) and Labor Code section 226 (requiring itemized wage statements) should be the same. The two statutes work “hand in hand” in that “Section 226 regulates the information an employer must provide in connection with wage payments, while Section 204 regulates when an employer must pay an employee for hours worked. … [W]hen an employee must be paid (the subject of § 204), and what information must accompany each such required payment (the subject of § 226) are necessarily linked.”643 For purposes of the geographical scope of section 226, no weight is assigned to the employee’s residence, where the employee receives wages, where the employee pays taxes, or the employer’s location (as opposed to the employee’s base of operations).644 The Supreme Court answered the five questions as follows: 1. When the Wage Order RLA exemption applies. The RLA exemption applies only to Wage Order 9 requirements, not to the broader requirements imposed by section 226. (See § 5.7.) 2. When section 226 applies to multi-state employees. Section 226 applies to all employees whose principal place of work is in California. The principal place of work for an employee is in California if the employee works mostly in California. And even if the employee does not work mostly in any single state, the principal place of work for an employee is in California if employee’s base of work operations is in California. 3. The limited geographical scope of sections 204 and 226. These sections do not apply to pay periods in which an employee works only episodically and for less than a day at a time in California. These sections do apply if the employee works primarily in this state during the pay period, or if the employee does not work primarily in any state but is operationally based in California. 4. How minimum wage is determined. State law limits on wage borrowing permit pay schemes that promise to pay for all hours worked at or above the minimum wage, even if particular components of those schemes fail to attribute to each compensable hour a specific amount equal to or greater than the minimum wage. (See § 7.2.) 5. The geographical scope of minimum wage law is not determined. The Supreme Court did not reach the question of whether California’s minimum wage laws apply to out-of-state employers or to employees who work in California only episodically and for less than a day at a time.645 A Ninth Circuit decision extended the California Supreme Court’s holding to California-based employees who worked for a California-based employer.646 That decision, Bernstein v. Virgin America, Inc., involved a Californiabased airline’s California-based flight attendants—who either lived in California or were based in California for business purposes.647 The California flight attendants spent 31.5% of their time working within California, and did
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