Labor & Employment Law Daily California overtime law does not apply to oil platform employee working under qualifying CBA
Tuesday, January 29, 2019

California overtime law does not apply to oil platform employee working under qualifying CBA

By Ronald Miller, J.D.

An employee who worked on an offshore oil platform owed his right to overtime to the terms of the CBAs that governed his employment. Because of the qualifying CBAs, his state law overtime claim was preempted under LMRA Sec. 301 due to the need to interpret the agreement.

An employee’s claim for overtime pay was preempted under Section 301 of the LMRA because California’s overtime law does not apply to an employee working under a qualifying collective bargaining agreement, and in this instance the employee worked under such an agreement, ruled the Ninth Circuit. Because the employee’s right to overtime “existed solely as a result of the CBA,” his claim that the employer violated overtime requirements by not paying him for 12 off-duty hours was preempted under Section 301 (Curtis v. Irwin Industries, Inc., January 25, 2019, Ikuta, S.).

Offshore work. The employer conducts operations on oil platforms located off the coast of California. The employee was regularly scheduled to work seven 12-hour shifts in a seven-day period, with 12 hours on duty, followed by 12 hours off duty. As a union member, the employee was subject to two collective bargaining agreements between the employer and union. Both agreements included detailed provisions regarding wages, overtime, and hours, as well as a grievance procedure for disputes concerning the application and terms of the CBAs.

Without using the dispute resolution provisions of the CBAs, the employee filed this putative class action against the employer in state court. According to the employee, the employer denied him overtime pay, failed to give him meal and rest periods, and failed to pay him minimum wage for the 12 hours he was off duty. The complaint was based on the employee’s theory that his 12 off-duty hours counted as “hours worked” for purposes of California labor laws, because as a practical matter, he was unable to leave the oil platform during that time. Relying on the California Supreme Court ruling in Mendiola v. CPS Security Solutions, Inc., the employee argued that the employer violated various California wage and hour laws by failing to recognize his 12 hours of off duty time as “hours worked.”

Section 301 preemption. The employer removed the action to federal court, relying on Section 301 of the LMRA. In federal court, the employer filed a motion to dismiss on the ground that the employee’s claims were preempted by Section 301. In opposition, the employee argued that the CBAs did not apply at all because their scope did not extend to work conducted on the Outer Continental Shelf; California’s minimum wage and hour standards were not preempted by Section 301; his overtime and meal break claims were not precluded by Section 514 of the California Labor Code; and California law applied to the Outer Continental Shelf.

The district court granted the employer’s motion to dismiss based solely on the ground that there was a need to interpret the CBAs in order to resolve the parties’ dispute regarding their applicability, so that the employee’s state-law claims were preempted by Section 301. Additionally, the district court ordered the parties to proceed to arbitration under the terms of the CBAs. On reconsideration, the district court affirmed its dismissal, but retracted the order to arbitrate.

Two-step test. The central dispute on appeal was whether the employee’s claims were preempted by Section 301. To ensure that Section 301 preemption “extends only as far as necessary to protect the role of labor arbitration in resolving CBA disputes,” the Ninth Circuit employs a two-step test. First, the appeals court asks whether the asserted cause of action involves a “right [that] exists solely as a result of the CBA.” If so, “then the claim is preempted, and the analysis ends there.”

But if not, the court proceeds to the second step and asks “whether a plaintiff’s state-law right is substantially dependent on analysis of [the CBA],” which turns on whether the claim cannot be resolved by simply “look[ing] to” versus “interpreting” the CBA. At this second step of the analysis, “claims are only preempted to the extent there is an active dispute over ‘the meaning of contract terms.’” Accordingly, a state-law claim may avoid preemption if it does not raise questions about the scope, meaning, or application of the CBA.

“Hours worked” claim. The appeals court first applied this framework to the employee’s claims that the employer violated California labor law by failing to recognize his 12 off-duty hours as “hours worked,” in order to determine whether these claims were preempted by Section 301. As an initial matter, the employee claimed that the employer violated Section 510(a) of the California Labor Code, which provides a default rule for overtime. Here, the employee argued that the employer violated this section by failing to pay him the required overtime rates for the 12 hours he spent off-duty. Further, he argued that this section gave him a non-negotiable state right to such overtime pay, independent of any interpretation of the CBA.

However, the appeals court found that this argument failed in light of Section 510(a)(2). By its terms, the default definition of overtime and overtime rates in Section 510 does not apply to an employee who is subject to a qualifying CBA. If the employee’s CBAs meet the requirements of Section 514, the employee’s right to overtime “exists solely as a result of the CBA,” and therefore is preempted under Section 301.

State law interpretation. Here, the employee did not dispute that both CBAs expressly provide for “the wages, hours of work, and working conditions of the employees, and . . . premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage,” as required by Section 514. Rather, he argued that to qualify for the exemption form Section 510’s definition of overtime, a CBA must provide employees with overtime that is equivalent to Section 510’s definition of overtime.

This interpretation of Section 510 failed as a matter of statutory interpretation, and as construed by state courts. Because two California Court of Appeal decisions, Vranish v Exxon Mobil Corp and Flowers v. Los Angeles County Metro. Transp. Auth., provided a reasonable statutory interpretation that avoided rendering Sections 510(a)(2) and 514 superfluous, and was consistent with legislative history, the Ninth Circuit saw no reason that the California Supreme Court would reject it. Under the reasoning of Vranish and Flowers, the employee’s CBAs in this case met the requirements of Section 514, therefore, his claim for overtime pay was controlled by his CBAs. Accordingly, the employee’s claim failed at step one of the preemption analysis. Additionally, the appeals court remanded the employee’s remaining claims to the district court to address in the first instance.

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