On June 30, 2011, the California Supreme Court unanimously held in Sullivan v. Oracle (S170577) that: (1) California's overtime laws do in fact apply to nonresident employees who work in California, even temporarily; (2) that failure to pay overtime wages to nonresidents employed in California can form a basis of an a Business and Professions Code Section 17200 claim commonly referred to as an UCL claim (unlawful..business act or practice) thus extending the statute of limitations for such claims from 3 to 4 years; but that (3) overtime claims under the Fair Labor Standards Act for overtime work performed by nonresidents in another state who are also paid in another state cannot form the basis of a California UCL claim.

In Sullivan, the plaintiffs were residents of the states of Colorado and Arizona who worked for Oracle (a California based company) primarily in their home states but were occasionally assigned to perform temporary work in the state of California. The Plaintiffs who were classified by Oracle as exempt from overtime, sued Oracle claiming they were entitled to overtime pay for the work they performed in California. Oracle claimed it was not required to pay California overtime because the laws of Colorado and Arizona followed the employees during the temporary work periods in California.

In Sullivan, the California Supreme Court reaffirmed its decision in Tidewater Marine Western, Inc. v. Bradshaw, 14 Cal.4th 557 (1996), stating:

"California law might not apply to nonresident employees of out-of-state businesses who ‘enter California temporarily during the course of the workday’ (ibid., italics added). In contrast, plaintiffs here claim overtime only for entire days and weeks worked in California, in accordance with the statutory definition of overtime. (See Lab. Code, § 510.) Nothing in Tidewater suggests a nonresident employee, especially a nonresident employee of a California employer such as Oracle, can enter the state for entire days or weeks without the protection of California law."

According to the Court, "California's overtime laws apply by their terms to all employment in the state, without reference to the employee's place of residence." Consequently, employers who intend to have out-of-state residents perform temporary work in the State of California (even for a day) should set up a system to track the daily and weekly overtime hours of employees temporarily stationed in California. Such employers should also be mindful that what constitutes a nonexempt employee in their home state may not qualify as an exempt from overtime employee in California.