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Parker Drilling v. Newton and the Uncertainties of Wage-Hour Law

Summary:
As no less a public figure than Sen. Bernie Sanders (I-Vt.) has ironically been discovering lately, it’s not easy for an employer to comply with wage and hour law these days. For another illustration as to why that is, consider last month’s unanimous Supreme Court ruling reversing the Ninth Circuit in Parker Drilling v. Newton.  Although it was closely followed by business groups, Parker Drilling drew relatively little attention in the wider press. The practical question it raised might at first seem irrelevant to most ordinary workplace settings, namely: are oil workers on platforms off the California coast owed overtime pay for time they spend sleeping and otherwise off duty while on site?  Up till 2015, the answer to that question seemed clear: federal law sets labor standards for

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As no less a public figure than Sen. Bernie Sanders (I-Vt.) has ironically been discovering lately, it’s not easy for an employer to comply with wage and hour law these days. For another illustration as to why that is, consider last month’s unanimous Supreme Court ruling reversing the Ninth Circuit in Parker Drilling v. Newton

Although it was closely followed by business groups, Parker Drilling drew relatively little attention in the wider press. The practical question it raised might at first seem irrelevant to most ordinary workplace settings, namely: are oil workers on platforms off the California coast owed overtime pay for time they spend sleeping and otherwise off duty while on site? 

Up till 2015, the answer to that question seemed clear: federal law sets labor standards for offshore platform workers, and it says sleep and recreation periods don’t have to be paid. (Such arrangements have long been routine at the platforms, given that for many workers commuting to housing on land is not very practical.) In 2015, however, the California Supreme Court interpreted its state law in a different and more liberal way, classifying more on-site sleep and recreation arrangements as generating legally compensable time. Class action lawyers sprang into action, arguing that this new state rule should be applied to platform workers off the Pacific coast. While a district court dismissed the claim, the Ninth Circuit vacated and remanded, holding that the federal labor rules incorporated the new California rules by implication. 

Pause for a moment to note a curious thing about this controversy: at least for the sorts of high-skill jobs found on offshore oil platforms, predictable labor market adjustments could mean that a legal rule on whether to count sleep time might not make much difference in practice. As the Washington Legal Foundation noted in its merits brief before the high court, “Until California announced its rules four years ago in Mendiola v. CPS Security Solutions, Inc., employers and employees negotiated OCS [Outer Continental Shelf] wage agreements with the understanding that sleep and rest time spent on OCS structures was not compensable under applicable federal law.” Flip that presumption, and with base wage lowered appropriately (still higher than minimum wage) and overtime added back, the negotiation could wind up reaching much the same overall pay package.

What proved distinctively destructive, here as in many situations, was legal uncertainty.  As often happens when law changes by judicial say-so, the new California rule was said to apply retroactively: the platforms should have been paying for downtime all along. So the platform employers were handed an enormous past bill for compensation that, had they known ahead of time, they might have negotiated their way around.  

Now that won’t happen: after its own dive into the waters of statutory language and federal pre-emption theory, the Justices unanimously agreed that federal law does not incorporate California’s for this purpose, putting yet another distinctive Ninth Circuit frolic to an end. But the drilling episode typifies many other situations in which wage-hour law, especially as it comes under pressure to change and liberalize, generates uncertainty. Should exemptions be read narrowly so as to bring more white-collar and academic workers under overtime law? Is time spent donning and doffing work apparel compensable? What about the situations of tipped restaurant workersservice advisers at car dealerships, church volunteers, gig economy drivers, and workers who check e-mail after work hours

Even if you’re a class action lawyer, it’s hard to see all these uncertainties as optimal. 

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