A unionized employer sued in a California wage class action has a defense most employers don’t: the collective bargaining agreement. If the agreement meets Labor Code section 514, the state’s daily overtime rules in section 510 “do not apply,” and the right to overtime comes from the contract. A claim built on a right that exists only because of the contract is preempted by section 301 of the Labor Management Relations Act. That can mean removal to federal court, dismissal, or a trip to the grievance process.
What is section 301 preemption?
It’s the rule that disputes over a union contract are decided under federal law, usually through the contract’s grievance and arbitration process.
29 U.S.C. § 185(a), section 301 of the LMRA, gives federal courts jurisdiction over “Suits for violation of contracts between an employer and a labor organization.” In Curtis v. Irwin Industries, Inc. (9th Cir. 2019) 913 F.3d 1146, the Ninth Circuit explained that section 301 has such “extraordinary pre-emptive power” that it “converts an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.” The practical result: a complaint pleaded only under the Labor Code can still be removed if the claims are preempted.
There’s an important limit. The Curtis court repeated the Supreme Court’s warning that “§ 301 cannot be read broadly to pre-empt nonnegotiable rights conferred on individual employees as a matter of state law.” The court added that claims over minimum wages, work hours, leave, worker safety, and discrimination “will not necessarily be preempted, even when the plaintiff is covered by a CBA.” Preemption is a targeted defense, not a blanket one.
How do courts decide whether a wage claim is preempted?
With a two-step test.
The Ninth Circuit in Curtis described it this way. First, the court asks whether the claim involves a “right [that] exists solely as a result of the CBA.” If so, “then the claim is preempted, and [the] analysis ends there.” If not, the court asks “whether a plaintiff’s state law right is substantially dependent on analysis of [the CBA],” which depends on whether the claim can be resolved by “look[ing] to” the agreement or requires “interpreting” it.
The second step is narrow. The same opinion says “claims are only preempted to the extent there is an active dispute over ‘the meaning of contract terms.’” Reading a wage rate off the contract’s schedule isn’t interpretation. Fighting about what “overtime” or “shift” means in the contract is.
When does Labor Code 514 take overtime out of state law?
When the agreement covers the basics and pays enough above minimum wage.
Section 514 says “Sections 510 and 511 do not apply to an employee covered by a valid collective bargaining agreement 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.”
Curtis applied that text to an offshore oil-platform employee who claimed overtime for the 12 off-duty hours in each shift cycle. The court held that when a qualifying agreement exists, the employee’s “right to overtime ‘exists solely as a result of the CBA,’” so the overtime claim “is preempted under § 301” and “fails at step one of the preemption analysis.” The court also rejected the argument that the contract’s overtime definition must match section 510’s. It reasoned that requiring every employer to meet all of section 510(a)’s requirements “would render the collective bargaining exception in sections 510(a)(2) and 514 superfluous.”
The 30 percent figure is the condition that trips employers up. The state minimum wage changes every January, and a contract rate that cleared the bar when the agreement was signed may not clear it two years later. If the lowest rate in the wage schedule drops below 30 percent over the current minimum, the exemption is at risk for those classifications.
Does a union contract also cover meal period claims?
Sometimes, for specific occupations.
Labor Code section 512(e) says the meal period rules in subdivisions (a) and (b) “do not apply” to employees listed in subdivision (f) if the employee “is covered by a valid collective bargaining agreement” that “expressly provides for the wages, hours of work, and working conditions of employees, and expressly provides for meal periods for those employees, final and binding arbitration of disputes concerning application of its meal period provisions, premium wage rates for all overtime hours worked, and a regular hourly rate of pay of not less than 30 percent more than the state minimum wage rate.” Subdivision (f) lists four groups: construction occupations, commercial drivers, registered security officers employed by private patrol operators, and employees of electrical, gas, and water corporations and local publicly owned electric utilities.
Curtis didn’t decide the meal period question. The court remanded those claims and noted the parties hadn’t addressed whether the worker was “an employee specified in” section 512(f). That’s the lesson for employers: the meal period exemption depends on the occupation and on every listed term being in the contract, including binding arbitration of meal period disputes.
| Claim | Statute | When the CBA can control | Typical defense |
|---|---|---|---|
| Daily and weekly overtime | Lab. Code §§ 510, 514 | Agreement covers wages, hours, and working conditions, pays premium overtime, and base rates are at least 30% over state minimum wage | Step-one preemption under Curtis, then removal or grievance |
| Meal periods | Lab. Code § 512(e)-(f) | Listed occupations only, with meal periods and binding arbitration of meal disputes in the agreement | Statutory exemption, plus preemption if the claim requires interpreting the meal terms |
| Minimum wage | Lab. Code §§ 1194, 1197 | Rarely; courts treat it as a state-law protection | Merits defenses, with step-two preemption only if contract terms are actively disputed |
| Wage statements and waiting time | Lab. Code §§ 226, 203 | Usually rise or fall with the underlying claim | Defeat the predicate claim |
Should a unionized employer remove the case?
Often, but the removal has to be built on a real preemption argument.
A notice of removal based on section 301 needs the agreement, proof that it covers the plaintiff and the class period, and a showing that the 514 or 512(e) conditions are met. Employers with several bargaining units should check each agreement separately. A class that mixes union and non-union workers, or workers under different agreements, complicates both removal and class certification, and that complication can itself be a defense.
Removal isn’t the only route. The grievance and arbitration clause may give the employer a path to compel the dispute into the contract’s process, and the union’s role there changes the dynamics of the case. Where the plaintiff concedes the contract applies, the fight narrows to whether the statutory conditions are met.
The strongest position comes from records assembled early: every agreement in effect during the class period, the wage schedules with dates, and a comparison of each classification’s lowest rate to the state minimum wage in each year. Employers that keep this file current tend to win the preemption fight before discovery starts.
What to do when union employees file a wage lawsuit
- Preserve every collective bargaining agreement, side letter, and wage schedule in effect during the claim period, along with payroll and timekeeping data, under a litigation hold.
- Calendar the response and removal deadlines, check the agreement’s grievance and arbitration terms, and notify the EPLI carrier as the policy requires.
- Identify the labor relations staff and supervisors who administered the agreement, and stop any action against the named employees that could look like retaliation.
- Pull the documents the preemption defense rests on: the agreement’s wage and hour terms, its overtime and meal period provisions, and a rate-by-year comparison to the state minimum wage.
- Talk to a lawyer before responding to the complaint, contacting the union or the employees’ lawyer, or discussing settlement.
Union-workforce wage cases are one part of defending employment lawsuits in California, and the contract file is usually where the defense starts.
FAQ
Does a union contract mean employees can’t sue for California overtime?
Not automatically. Labor Code section 514 takes daily and weekly overtime out of section 510 only when the agreement expressly provides for wages, hours, and working conditions, pays premium overtime rates, and sets regular rates at least 30 percent above the state minimum wage. If any condition fails, section 510 still applies, and the claim may stay in state court.
Can a minimum wage claim be preempted by a union contract?
Rarely. The Ninth Circuit has said that setting minimum wages stays within the states’ traditional police power, so a minimum wage claim isn’t preempted just because the employee works under a union contract. A minimum wage claim could be preempted only if resolving it requires interpreting disputed contract terms, not just looking up a rate. Most minimum wage claims by union employees are decided under state law.
What happens to a preempted claim after removal?
The federal court may dismiss it or direct the parties to the contract’s grievance and arbitration process, depending on the claim and the agreement. Related state claims that aren’t preempted may stay in federal court under supplemental jurisdiction or be remanded. How each claim is pleaded usually decides where it ends up.
Does the 30 percent test use the minimum wage when the contract was signed?
The statute asks whether the agreement provides a regular hourly rate of not less than 30 percent more than the state minimum wage, and the minimum wage changes each year. Employers should check each classification’s lowest rate against the minimum wage in effect for every year of the claim period, not just the year the agreement was signed.
If your union workforce has filed a wage class action
If your company’s union-represented employees have sued over overtime or meal periods, the collective bargaining agreement and the wage schedules usually decide where the case is heard and what survives. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including overtime class actions by union employees. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.
Sources
29 U.S.C. § 185; Labor Code sections 512 and 514; Curtis v. Irwin Industries, Inc. (9th Cir. 2019) 913 F.3d 1146.
This post is general information about California and federal employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.