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California wage laws don’t apply—FLSA does—to employee working on drilling platform affixed to Outer Continental Shelf

By Ronald Miller, J.D.

Under the Outer Continental Shelf Lands Act (OCSLA), state law is adopted as surrogate federal law only if federal law does not address the relevant issue. The FLSA already addresses wage-hour issues, so California law is not adopted.

To the extent that an employee’s Outer Continental Shelf-based (OCS) claims relied on the adoption of California’s minimum wage, the FLSA already provides for a minimum wage, so the state minimum law was not adopted as federal law and does not apply to the OCS, ruled a unanimous Supreme Court, reversing the Ninth Circuit. Moreover, to the extent that the employee’s OCS-based claims relied on California law requiring payment for all standby time, those claims also failed. Under the standard adopted by the High Court, if a federal law addresses the issue at hand, then state law is not adopted as federal law on the OCS (Parker Drilling Management Services, Ltd. v. Newton, June 10, 2019, Thomas, C.).

“Controlled standby.” The employee worked on drilling platforms off the California coast. He worked 14-day shifts comprised of 12 hours on duty followed by 12 hours on “controlled standby,” during which he could not leave the platform. He was paid for 12 hours of work per day, but not for his time on standby. Additionally, the employee alleged that the employer did not provide 30-minute meal periods for each five hours worked, as required by California law. The employee filed a putative class action in state court, alleging that California’s minimum-wage and overtime laws required the employer to compensate him for his standby time.

Federal wage-and-hour scheme. After the employer removed the action to federal district court, the parties agreed that the platforms were subject to the Outer Continental Shelf Lands Act (OCSLA). The district court applied the standard long-used by the Fifth Circuit, as set forth in Continental Oil Co. v. London Steamship Owners’ Mut. Ins. Assn. That ruling provided that under the OCSLA, “state law only applies to the extent it is necessary ‘to fill a significant void or gap’ in federal law.” The court determined that the FLSA constitutes a comprehensive federal wage-and-hour scheme which left no significant gap in federal law for state law to fill. Finding that all of the employee’s claims relied on state law, the district court granted the employer’s motion for judgment on the pleadings.

The Ninth Circuit vacated and remanded. The appeals court held that state law was “applicable” under the OCSLA whenever it “pertain[s] to the subject matter at hand.” It found that California wage-and-hour laws satisfied this standard and turned to the question “whether California wage and hour laws are ‘inconsistent with’ existing federal law.” According to the Ninth Circuit, state laws are “inconsistent” with federal law under the OCSLA only “if they are mutually incompatible, incongruous, [or] inharmonious.” Applying that standard, the Ninth Circuit determined that no inconsistency existed between the FLSA and California wage-and-hour laws because the FLSA saving clause “explicitly permits more protective state wage and hour laws.”

OCSLA. The OCSLA declares that “the subsoil and seabed of the OCS appertain to the United States and are subject to its jurisdiction, control, and power of disposition.” Of relevance here, the OCSLA provides that all law on the OCS is federal law, administered by federal officials; denies states any interest in or jurisdiction over the OCS, and deems the adjacent state’s laws to be federal law only “[t]o the extent that they are applicable and not inconsistent with” other federal law.

The question posed by this case is how to interpret the OCSLA’s command that state laws be adopted as federal law on the OCS “[t]o the extent that they are applicable and not inconsistent” with other federal law, 43 U.S.C. § 1333(a)(2)(A). The employee argued that state law is “applicable” on the OCS whenever it pertains to the subject matter at issue. On the other hand, the employer argued that state law is not “applicable to the OCS in the absence of a gap in federal law that needs to be filled.

Although the Supreme Court found this to be a close question of statutory interpretation, it was persuaded by the employer’s approach because “‘the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.’”

Exclusive federal jurisdiction. The Supreme Court’s pre-OCSLA decisions made clear that the federal government controlled the OCS in every respect, and the OCSLA reaffirmed the central role of federal law on the OCS. The statute applies federal law to the OCS “to the same extent as if the [OCS] were an area of exclusive federal jurisdiction within a State.” Accordingly, the only law on the OCS is federal law, and state laws are adopted as federal law only “[t]o the extent that they are applicable and not inconsistent with” federal law.

Taking these provisions together, the High Court was convinced that state laws can be “applicable to and not inconsistent” with federal law only if federal law does not address the relevant issue. Thus, the question is whether federal law has already addressed the relevant issue; if so, state law addressing the same issue would necessarily be inconsistent with existing federal law and cannot be adopted as surrogate federal law.

Apart from § 1333(a)(2)’s place in the overall statutory scheme, several considerations supported the Supreme Court’s interpretation, which accords with the standard applied by the Fifth Circuit. First, if the employee were correct that the choice-of-law question on the OCS is the same as it would be in an adjacent state, much of the OCSLA would be unnecessary. Second, the Court’s interpretation is consistent with the federal-enclave model and the historical development of the statute. And third, the Court’s interpretation is in accord with its precedents construing the OCSLA.

Under the standard adopted by the Court, state law is not adopted as federal law on the OCS because a federal law (in this instance, the FLSA) addresses the issue at hand: whether the employee should be compensated for his time on standby. Consequently, the Supreme Court vacated and remanded the decision of the Ninth Circuit.