WASHINGTON—In a decision with implications for class action lawsuits, the U.S. Supreme Court ruled Tuesday that a company’s principal place of business is where its officers “direct, control and coordinate” its activities—not where it has its largest volume of business.

The court’s unanimous decision in Hertz Corp. vs. Melinda Friend et al. will make it easier for class action parties that are citizens of different states to move the action to federal court from state court, legal experts say. The Class Action Fairness Act, which was backed by businesses that held they could get a fairer hearing in federal rather than state court if they were not resident of a state, allows such a move under most circumstances.

The case involves a group of Hertz Corp. employees based in California. They sued Park Ridge, N.J.-based Hertz in California state court, alleging violations of state employment law. Hertz held that because it is based in New Jersey, the matter should be heard in a federal court.

A district court held that the case should be heard in state court because Hertz’s business activity “substantially predominates in one state”—California. Hertz appealed to the 9th U.S. Circuit Court of Appeals, which affirmed the lower court’s decision.

However, the U.S. Supreme Court ruled Tuesday that a company’s “nerve center,” where company officers “direct, control and coordinate” the company’s activities, should be the principal place of business. Typically, that would be the company’s headquarters, the high court said. But if a court finds that a company’s alleged “nerve center” is nothing more than a mailbox or an empty office, the courts should determine the location its actual principal place of business.

The Supreme Court remanded the case to a lower court.

Reacting to the ruling, C.R. Wright, a partner at Fisher & Phillips L.L.P. in Atlanta, said, the issue is “very important to businesses. Hertz was in the position in fairly large class action case and, under the 9th Circuit’s precedent, Hertz would have been left to litigate in California state court instead of being able to remove the case to federal court,” said Mr. Wright, who represents employers but was not involved in the case.

“It is a big win for business,” Mr. Wright said. “It allows companies to follow the rules and more clearly establish where their principal place of business is” located.