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California wage-hour claims of worker on drilling platform affixed to outer Continental Shelf revived

By Kathleen Kapusta, J.D.

Addressing the novel question whether claims under state wage and hour laws may be brought by workers employed on drilling platforms fixed on the outer Continental Shelf, the Ninth Circuit held that the absence of federal law is not, as the district court concluded, a prerequisite to adopting state law as surrogate federal law under the Outer Continental Shelf Lands Act (OCSLA). Vacating the district court’s dismissal on the pleadings of a roustabout’s California wage and hour claims, the appeals court held that state wage and hour laws are adopted as surrogate federal law as long as they are “applicable and not inconsistent” with existing federal law and California’s minimum wage and overtime laws are not inconsistent with the FLSA (Newton v. Parker Drilling Management Services, Ltd., February 5, 2018, Christen, M.).

The roustabout and painter worked on drilling platforms that were located more than three miles offshore and were fixed to the seabed of the outer Continental Shelf (OCS). He worked 14-day shifts comprised of 12 hours on duty followed by 12 hours on “controlled standby.” He was paid for 12 hours work per day and could not leave the platform during his shifts. He alleged that his employer did not provide 30-minute meal periods for each five hours worked, as required by California law. In his putative class action filed in state court, he also claimed his employer did not pay him for the 12 hours he was on controlled standby each day. In all, he brought seven claims under California law.

Lower court holding. His employer removed the action to federal court and filed a motion for judgment on the pleadings, arguing that under the OCSLA, the FLSA is a comprehensive statutory scheme that leaves no room for state law to address wage and hour grievances arising on the OCS. Granting the motion, the district court found that “under [the] OCSLA, federal law governs and state law only applies to the extent it is necessary ‘to fill a significant void or gap’ in federal law.” Finding no significant voids or gaps in the FLSA, the district court held that the employee could not invoke California wage and hour laws as surrogate federal law.

Choice of law provision. On appeal, the Ninth Circuit observed that the employee’s grievances related to his employment on the OCS, and the parties agreed that the fate of his appeal rested on the OCSLA’s choice of law provision. Pursuant to that provision, the laws of the adjacent state are to apply to drilling platforms fixed to the seabed of the outer Continental Shelf as long as state law is “applicable and not inconsistent with… Federal laws.” Thus, the court explained, the parties dispute turned on the interpretation of the terms “applicable” and “not inconsistent.”

After surveying the Supreme Court’s OCSLA jurisprudence, the appeal court found there were three questions that must be asked in any case involving choice of law under Section 1333(a)(2)(A) of the OCSLA. First, the threshold question is whether the situs of the controversy is the OCS. If the situs is not the OCS, the OCSLA’s choice of law provision cannot apply. Second, if the situs is the OCS, the question is whether there is any federal law applicable to the dispute. If there is not, then state law generally applies. Third, said the court, if there is federal law applicable to the dispute, then “we ‘must consider the content of both potentially applicable federal and state law’ and ask whether any applicable state law is inconsistent with federal law.”

Statutory language. Finding no appellate case law examining whether, for purposes of the OCSLA, state wage and hour laws are inconsistent with the FLSA, the court turned to the language of the statute, which makes the laws of the adjacent state, “[t]o the extent that they are applicable and not inconsistent with this subchapter or with other Federal laws… the law of the United States.” The “ordinary, contemporary, common meaning,” of “applicable,” said the court, does not lend itself to the notion that state laws have to fill a gap in federal law to qualify as surrogate federal law. Further, reading the plain text of the OCSLA against the background of its inconclusive legislative history, the court was not convinced that state law applies as surrogate federal law on the OCS only if “necessary” in the sense that there is no existing federal law on the subject.

“As we see it,” said the court, “because there are California and federal statutory schemes that are ‘applicable,’ in the ordinary sense of that term, to the parties’ conflict, the determinative question” in the case “is not which law is ‘applicable,’ but whether California wage and hour laws are ‘inconsistent’ with existing federal law.” If they are not inconsistent, the court reasoned, then the OCSLA dictates that state wage and hour grievances should be redressable as federal claims on the OCS. After drawing on cases that have arisen in the context of two statutes involving the incorporation of state law into federal law, the court determined that inconsistency between state and federal law is assessed by looking at Congress’s objective in enacting the federal statutes at issue.

FLSA establishes a floor. Turning to the crux of the employee’s appeal—whether California’s minimum wage and overtime laws are inconsistent with the FLSA—the court found it critical that the FLSA “establish[es] a national floor under which wage protections cannot drop.” Further, its savings clause expressly provides that states are free to adopt more protective standards for minimum wages or maximum hours in a work week. Because the best evidence of Congress’s intent is the statutory text and the FLSA explicitly permits more protective state wage and hour laws, the court rejected the employer’s suggestion that California’s minimum wage and overtime laws were antagonistic to the remedial purposes of the FLSA simply because they establish different and more generous benchmarks than the floor set by the FLSA’s statutory and regulatory scheme.

Moreover, said the court, the application of California minimum wage and overtime laws as federal law on the OCS serves the purpose of the OCSLA. Citing to Supreme Court precedent, the court explained that application of California’s minimum wage and hours worked provisions does not vitiate the “special relationship between the men working on these [platforms] and the adjacent shore to which they commute to visit their families.” If anything, this policy consideration indicates that the overlapping state and federal statutory schemes regulating employment on the California shore should also govern, as federal law, on the OCS. Nor does application of California’s wage and hour laws frustrate an interest in national uniformity, because in enacting OCSLA, Congress “specifically rejected national uniformity as a paramount goal.” Thus, the court vacated the order dismissing these claims and remanded to the district court.

Other claims. The district court also dismissed the claims the employee brought pursuant to California’s meal period, final pay, and pay stub laws because it concluded that state law does not apply on the OCS unless there is a “significant void or gap” in federal law, and it found that there were no such voids or gaps. Because the Ninth Circuit held that the absence of federal law is not a prerequisite for applicable and not inconsistent state law to become surrogate federal law on the OCS, it vacated the order dismissing these claims as well, directing the district court on remand to determine whether California’s meal period, final pay, and pay stub laws are “not inconsistent” with existing federal law.