California's Wage Laws Do Not Apply to Offshore Oil Rigs

“Ah! sir, live—live in the bosom of the waters! There only is independence! There I recognize no masters! There I am free!” 

-- Jules Verne,  Twenty Thousand Leagues Under the Sea

The issue of preemption and federal supremacy appears constantly in the case law of the Fair Labor Standards Act (“FLSA”). The statute imposes requirements for minimum wages and overtime but also allows more protective state laws. As a result, courts have often incorporated protective state laws when interpreting the FLSA. However, this trend does not always cover areas of exclusive federal jurisdiction. The Federal Enclave doctrine, which we have discussed here https://www.awrcounsel.com/blog/2018/12/12/federal-enclave-doctrine-sometimes-state-wage-and-hour-claims-are-barred, changes the conversation. The case in Parker Drilling Management Services, LTD. v. Newton, No. 18-389 2019 WL 2412907 (June 10, 2019) is a continuation of this family of litigation authority that evolves from previous cases involving FLSA preemption and federal enclave law. This Supreme Court decision was delivered by Justice Thomas on behalf of an unanimous court.

In Parker, the plaintiff worked on an offshore oil rig in the Pacific Ocean off the coast of California. He worked 12-hour shifts, with 12 hours of off time in which he was unable to leave the platform. Under the FLSA he was not required to be compensated for that time; however, under California law, employees were often required to be compensated for time in which they are unable to leave their work site while remaining on standby. See 29 C.F.R. § 785.23; Cal. Lab. Code Ann. §510(a) (West 2011) and  an infamous recent California Supreme Court case known as Mendiola v. CPS Security Solution, 60 Cal. 4th 833, 842, 340 P. 3d 355, 361 (2015).

The issue joined in this case is whether the California law supplements the FLSA on the offshore oil rig or if the FLSA is sufficient to govern the Outer Continental Shelf. Of course, the issue is more complicate than that and the Supreme Court looks to the canon of statutory interpretation to determine if California law should supplement or not apply.

The applicable federal laws are the FLSA, the Outer Continental Shelf Lands Act (“OCSLA”) and the Submerged Lands Act (“SLA”). The SLA was created after confusion regarding the authority over lands off of the coast of the United States; the House ceded authority over submerged lands a certain distance from the shore. The OCSLA was created shortly afterwards and granted the federal government power over lands not reserved to the states by the SLA. The oil rig is subject to the OCSLA and not the SLA.

The sub-issue discussed in the case is what standard should be used when determining which state laws should supplement the OCSLA. The plaintiff hoped to incorporate a more permissive standard suggesting that state law should by incorporated as federal law where they are not in direct conflict with federal law. Parker, No 18-389 at *4. Therefore, the state law would only be pre-empted under the normal pre-emption standards. The defendant on the other hand, argued that it should only supplement the law where there is a gap that needs to be filled and that state law can be inconsistent with federal law even if there is no direct conflict. Id.  The court sided with the defendant. In doing so they looked at the context of the OFCLA and SLA, tried to give every part of the OCSLA effect, and read the language of the act.

The context behind the federal laws is amplified by the discussions of federal enclaves. The OCLSA gives federal jurisdiction over the Outer Continental Shelf to the same degree it would to a federal enclave. 43 U.S.C. § 1333(a)(1). It is important to mention that federal enclaves allow concurrent jurisdiction with states when the states reserve some jurisdiction over the enclave or when there are laws in effect at the time the enclave was created. However, where there is no state law in effect or when the state never had jurisdiction over the land, the state laws can only supplement federal law where there the federal law is insufficient to govern life in the enclave. Parker, No 18-389  at*6. In accordance with the federal enclave doctrine and the language of the OCLSA, the only state laws eligible for adoption are those that are applicable and not inconsistent with the federal laws. Id. The court interpreted that to mean that state law will not be adopted unless there is a gap in the regulatory scheme that should supplement the existing federal law.

To support this, the Supreme Court wrote that to interpret the OCLSA differently would make parts of it unnecessary. Id. at 5. The Outer Continental Shelf would be treated the same as those ceded to the states as a part of the SLA for the purposes of the FLSA. Any limiting language as to the applicability of state laws in the OCLSA would be rendered useless which violates a cardinal principle of interpretation. Loughrin v. United States, 573 U. S. 351, 358 (2014). Furthermore, the history of federal enclave law includes examples of state laws creeping in because the federal laws were incapable of governing life in the enclave. Lewis v. United States, 523 U. S. 155, 160 (1998) (where state criminal laws were necessary to life on the enclave).

Finally, the Supreme Court looked at its previous decisions with regard to state laws supplementing the OCLSA. In a series of decisions, the Supreme Court applied state wrongful death and tort laws to oil rigs governed by the OCLSA where there was no federal law on point. They applied state law because the federal laws were not sufficient to govern the issue. The court distinguishes that situation, and this one, because the FLSA governs wage and hour laws.

After adopting this standard that state law can only apply where there are substantial gaps in the federal scheme, the court looked at the claims. One claim related to the requirement to pay employees who are on standby based on a California law, yet federal law addresses this issue and does not require payment for those employees. 29 C.F.R § 785.23. Since there is no gap in federal law, the state law will not be adopted. Another claim relates to minimum wage and relies on California’s generous $12.00 an hour minimum wage. Since the FLSA requires employees to pay not less than $7.25 an hour, there is clearly a federal law that addresses the issue. Therefore, the state law will not be adopted.

This opinion deals with a somewhat unique issue of employees who work far enough from shore that even the Submerged Lands Act’s jurisdiction doesn’t reach them. However, it shows the type of analysis that the court could apply when dealing with federal and state preemption where the state never had jurisdiction over the area, such as other federal enclaves. This holding applies to all facets of the law rather than exclusively employment/wage and hour law and it expands the ever-changing body of law on federal jurisdiction.