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North Carolina Wage and Hour Act Does Not Apply to Employees Living and Working in Other States

    Client Alerts
  • June 20, 2008

The North Carolina Wage and Hour Act, N.C.G.S. § 95-25.1, provides double damages and attorneys fees to employees who have not been paid wages by their employer.  A recent decision from the North Carolina Court of Appeals limits the application of the Act to a North Carolina company’s employees who live or work in the state.  In Sawyer v. Market Am., Inc., the plaintiff was a contractor who lived and worked in Oregon for a North Carolina company.  He filed suit under the Wage and Hour Act, alleging that he had been improperly classified as a contractor, and was therefore owed unpaid wages along with the liquidated damages remedy.

In his appeal, the plaintiff relied upon a portion of the independent contractor services agreement that adopted North Carolina as the governing law.  The Court of Appeals disagreed, relying upon similar decisions in other states to conclude that the Act does not have extraterritorial application even when the parties agree to apply North Carolina law to their relationship.  The law was clearly adopted to provide certain protections to North Carolina residents and employees.  The North Carolina Department of Labor and state courts have no authority to apply these legal standards to residents of other states who do not work in North Carolina.