Do California’s workplace laws apply to remote out-of-state workers?
There are limits, especially if alleged employer misconduct occurs mostly or entirely outside the state
Those who work in other states for employers doing business in California sometimes assert claims against their employers under California’s uniquely employee-friendly laws.
In Saberin v. Alation, Inc., the California court of appeal recently addressed a proliferating version of that tack: “The growth in remote work spurred by the pandemic is well-documented. We now confront one of the many issues created by that growth: When do California’s employment laws protect remote workers who are terminated by employers with their ‘principal offices’ in California?”
Background
Pejman Saberin had been working remotely from Utah as an engineer for California-based enterprise software company Alation since 2021. In October 2023, Saberin was arrested in Florida while returning from vacation. Saberin had his sister email Alation to ask for additional time off. The email to Alation said Saberin had been injured in an accident. Alation’s research uncovered the arrest.
Alation Vice Presidents Daniel Rose and Christos Mousouris decided to terminate Saberin’s employment soon after his release from detention “because of his unapproved absence and his dishonesty in communicating the reason for his absence.” Rose and Mousouris made the decision to terminate Saberin while the two men were in Illinois, though Mousouris normally worked from home in California. Senior human resources employee Liz Laber, who performed her work from California, provided input into the decision and communicated the decision to Saberin.
The criminal case against Saberin was dismissed in March 2024. Saberin’s proprietary and inventions agreement with Alation required binding arbitration of all disputes arising from his employment “pursuant to California law.” At arbitration, Saberin claimed his termination violated California law.
But did California law apply to Saberin’s claims? The parties stipulated they could identify no Utah, federal or applicable non-California law that barred an employer from terminating an employee based on the employee’s arrest.
The arbitrator and the trial judge rejected Saberin’s contention that California law applied to these facts. The court of appeal agreed.
California law
Government Code section 12952 of California’s Fair Employment & Housing Act prohibits a prospective employer with five or more employees from considering a job applicant’s arrest not followed by conviction. California Labor Code section 432.7 more broadly prohibits an employer from considering a worker’s arrest not followed by a conviction in determining any condition of employment, including termination. These laws establish a strong California prohibition on denying employment based on arrests.
Extraterritorial application of California law
The court of appeal rejected Saberin’s reliance on the designation of California law in his contractual arbitration provision because that provision incorporated all of California law – including California’s presumption against applying its laws extraterritorially, that is, outside California.
The court then evaluated whether Saberin could overcome the presumption against applying the protection of these statutes to a non-California worker. The court concluded that in enacting section 432.7, the state legislature intended to protect California workers from losing job opportunities based on arrests without proven guilt and to prevent employers from misusing arrest information. Consequently, section 432.7 may extend to non-California workers only if the employer’s conduct is sufficiently connected to California. The state legislature had similar motives for enacting section 12952 of the FEHA.
The court concluded that applying those laws to Saberin’s claims would accomplish neither of the legislature’s objectives.
“Saberin and his arrest have no connection to California. Saberin lived and worked remotely from Utah, not California. His ‘direct supervisor’ worked remotely from the state of Washington, not California. Finally, Saberin was arrested in Florida, not California.” The court expressly declined to resolve whether these statutes could apply to “California residents working remotely for employers that have no offices in California.”
The court agreed with Saberin that “the purportedly unlawful conduct here was Alation’s consideration of Saberin’s arrest in deciding to terminate him.” But the two Alationexecutives made that decision in Illinois. No evidence suggested Alation shuttled Mousouris out of California to avoid application of California laws. The court of appeal deferred to the arbitrator’s factual finding that California-based Laber’s input into the termination decision was not substantive. That input, plus Laber’s communication of the termination decision to Saberin, was insufficient to warrant the application of California law.
A worker with limited or no California connections generally will face special challenges asserting claims against their employer – even a California-based employer — based on California law where the asserted employer misconduct occurred mostly or entirely outside the state.
Click here to read the full article written by SCMV Shareholder Dan Eaton and published in The San Diego Union-Tribune.