Originally published by Jackie E. Hickman and Thomas J. McGoey II.
On June 10, the United States Supreme Court issued an opinion holding that California’s wage-and-hour laws do not apply to workers on oil and gas platforms located in open water on the Outer Continental Shelf. In Parker Drilling Management Services, Ltd. v. Newton, offshore rig workers filed a class action asserting that their employer violated California’s minimum wage and overtime laws by failing to pay them for stand-by time while they were on the drilling platform. Both parties agreed that the platforms were governed by the Outer Continental Shelf Lands Act (“OCSLA”), but they disagreed regarding whether the California’s wage-and-hour laws were incorporated into OCSLA and therefore applicable to workers on the platform.
OCSLA provides that federal law governs the Outer Continental Shelf, but also states that an adjacent state’s laws are deemed to be incorporated into federal law “to the extent they are applicable and not inconsistent with other federal law.” In this case, the employer argued that because the federal Fair Labor Standards Act (FLSA) addressed minimum wage and overtime, California’s state laws on those issues were necessarily inconsistent with federal law and could not apply. In opposition, the employees argued that the FLSA and California laws were not incompatible under any ordinary preemption analysis, and therefore California law, which is more generous to employees than the FLSA, should apply.
The district court relied on Fifth Circuit precedent and dismissed the employees’ claims, holding that the FLSA was a comprehensive wage-and-hour scheme such that there is no gap in federal law that would make California state law applicable under OCSLA. The Ninth Circuit reversed, holding that California’s laws were applicable to the issue and not inconsistent or incompatible with the FLSA, so they must also apply.
A unanimous Supreme Court reversed the Ninth Circuit, explaining that the statutory scheme of OCSLA and previous Supreme Court precedent make clear that OCSLA is to be interpreted under the “federal enclave model,” meaning that federal law is exclusive and state law only applies where there “is a gap in federal law’s coverage.” Accordingly, the Court held that under OCSLA, “where federal law addresses the relevant issue, state law is not adopted as surrogate law on the [Outer Continental Shelf].” In other words, for purposes of determining whether a state law would apply under OCSLA, “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.” Here, because the FLSA establishes rules regarding payment for stand-by time and a minimum wage, there is no gap or void in federal law for the California wage-and-hour laws to fill with respect to those issues.
In addition to providing some measure of certainty to employers, the Court’s straightforward analysis of OCSLA will have applicability to all manner of legal issues arising on the Outer Continental Shelf. Companies operating in offshore areas should pay particular attention to this precedent and how it may affect an analysis of the application of other state laws to offshore platforms.
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