Vranish v. Exxon Mobil Case Analysis

“Overtime,” as Defined by the California Labor Code, Does Not Apply To Workers Covered by a Collective Bargaining Agreement

A recent California Court of Appeal decision put employees considering collective bargaining agreements on notice that such agreements may exclude them from receiving overtime pay. In Vranish v. Exxon Mobil Corp., 223 Cal. App. 4th 103 (2014), the California Court of Appeal ruled that employees who are covered by a valid collective bargaining agreement (“CBA”) may not receive additional overtime compensation under Sections 510 and 511 of the California Labor Code, because section 514 of the Labor Code excludes employees covered under collective bargaining agreements from the Code sections governing overtime. The Court ultimately found that Sections 510 and 511 of the Code did not protect the Plaintiff employees, because the Plaintiffs were covered by a valid collective bargaining agreement that expressly covered wages, hours, and provided for premium wage rates for overtime work.

Factual Basis of the Case

The Plaintiffs were two Exxon Mobil employees, employed at an Exxon onshore facility in the state of California. The Exxon Employees Federation – Western Division, also known as, Federation of Santa Ynez Unit Exxon Employees (“the Federation”), is the exclusive bargaining representative for Exxon employees at the Plaintiffs’ location. There was a longstanding CBA in effect between the Federation and Exxon, which covered the Plaintiffs. As agreed to under the CBA, the Plaintiffs each worked shifts that exceeded eight hours. The terms of the CBA required Plaintiffs to work seven 12-hour shifts in a row and then have seven days off. The CBA not only concerned the Plaintiff's’ hours, but it also had provisions pertaining to the days of the week that the Plaintiffs could work. Both the Plaintiffs and Defendants agreed that the Defendants had compensated the Plaintiffs for all overtime worked in accordance with the CBA. In particular, the Plaintiffs earned an overtime rate of one and one-half times their regular rate of pay for any hours worked in excess of 40 hours in a workweek or 12 hours in a workday.

The Plaintiffs brought their initial complaint as a class action, and then filed an amended complaint about four months later. Finally the Plaintiffs filed the operative second amended complaint. The Plaintiffs alleged that the Defendants had failed to pay overtime wages in violation of California Labor Code section 510, California unfair practices law, and violation of the Labor Code Private Attorneys General Act of 2004. In response, the Defendants filed a motion for summary judgment, which the trial court granted. The trial court found that the Plaintiffs’ claim failed as a matter of law for several reasons. The chief reason is that Labor Code Section 514 excludes employees covered by a valid collective bargaining agreement from the requirements of sections 510 and 511. The trial court also found that, even if Section 510 did apply, the Defendants would have met its requirements. After the Court entered judgment in favor of the Defendants, the Plaintiff appealed.

The Appeal

California Labor Code Section 510 provides that a day’s work consists of eight hours of labor. But Section 514 states that Section 510 does not apply to “an employee covered by a valid [CBA] if the agreement expressly provides for the wages, hours of work, and working conditions of the employees, and if the agreement provides premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage." Since the Plaintiffs did not dispute that they were covered by a valid CBA, the main issue on appeal is whether the phrase “all overtime hours worked” means “overtime” as defined in Section 510 or “overtime” as defined in the CBA. The Court found that the Exxon properly applied the CBA’s definition of overtime.

In deciding the Appeal, the Court not only applied the plain language of Section 514, but it also considered the legislative history and found that the legislature clearly intended to exclude union-represented employees from sections 510-511. The Plaintiffs nonetheless had argued that even if the Defendants’ workweek was lawful under the California Labor Standards Act, it violated the Fair Labor Standards Act. (“FLSA”). But the court did not agree. The Court found that, the Defendant’s workweek was legal under the FLSA provisions requiring overtime pay, because the CBA compensated the plaintiffs for work in excess of 40 hours.

Impact of Vranish

This case has implications for employees and unions considering collective bargaining agreements. Employees and unions should now know that a collective bargaining agreement excludes them from the overtime protections of the California Labor Act. If you have wage or hour dispute, contact the employment attorneys at Nassiri Law Group, practicing in Orange County, Riverside, and Los Angeles. Call 714-937-2020.