Do California Employment Laws Apply to Out-of-State Workers?

For many California employers, a remote workforce, with out-of-state employees, is the new normal. Managing employment law requirements across multiple jurisdictions can be challenging, to say the least. California employers with out-of-state workers should take note of a recent decision from a California appeals court, Saberin v Alation, Inc., where the court considered whether California’s laws protecting employees from adverse employment decisions based on arrest records protected an out-of-state worker.

The Facts

In the Saberin case, a company headquartered in California hired a software engineer in Utah to work remotely from Utah for a supervisor in Washington. A couple of years later, the employee, Mr. Saberin, went on vacation to Florida but did not return to work when scheduled. His sister emailed the company to say he had been injured in an accident and needed more time off, but an employee in Utah investigating the leave request obtained an arrest record showing that Mr. Saberin was actually in police custody following his arrest in Florida.

The criminal charges were eventually dismissed, but the company decided to terminate Mr. Saberin’s employment due to his dishonesty and unapproved absence.

Mr. Saberin brought a wrongful termination lawsuit, including claims for violation of California Labor Code section 432.7 and Government Code 12952, both of which prohibit employers from using a record of an arrest that did not result in a conviction (as well as other types of convictions) in certain employment decisions.

The company argued that Mr. Saberin did not have rights under these laws because they do not apply outside of California (“extraterritorially”) and the arbitrator agreed. Mr. Saberin then pursued the argument in court.

The Court’s Analysis

The Court explained that California’s laws are presumed to apply within the state’s borders. Whether a California law applies extraterritorially (out of state) requires an analysis of the specific law at issue to determine the Legislature’s intent about extraterritorial application.

The Court concluded that the two laws at issue here could extend protections to out-of-state workers based on employer conduct with “sufficient connection to California.” In this case, the only employer conduct potentially connected to California was the “input” from the California HR business partner in the termination decision. The Court deferred to the arbitrator’s finding that this input was “not substantive,” and upheld the arbitrator’s decision.

The Takeaway For California Employers  

While this case ended in favor of the employer, it still provides a cautionary reminder that an out-of-state worker can fall under California’s protections. The Court in this case did not end its inquiry at where the employee lived or worked, where his supervisor was located, or where the arrest occurred. Instead, the analysis reached the location of the employer’s conduct, i.e., where the termination decision was made.

In light of the Saberin case, California employers evaluating employee arrest records of out-of-state employees should proceed with caution and not assume that California’s laws will not apply.

Have questions? Our HR Advisors are here to help! Contact us by phone, email, or Live Chat.