California overtime laws

California Overtime Laws: Is Your Employer Paying Your Overtime Correctly?

Is Your Employer Paying Your Overtime Correctly According to California Overtime Laws?

An employer may violate overtime law by either:

(1) Not calculating a flat sum bonus into overtime pay or

(2) Not properly calculating the amount of overtime pay owed

In March 2018, the California Supreme Court issued its holding in Alvarado v. Dart Container Corporation of California, explaining how a flat sum bonus is treated in calculating overtime pay.  Overtime law requiring employers to pay premium pay for overtime work reflects a state policy favoring an eight-hour workday and a six-day 40-hour workweek. Overtime law also requires an employer to properly calculate overtime pay by including certain types of pay or benefits in the regular rate. The idea is that overtime must be paid not based on the straight time hourly rate (base hourly rate) but what the law calls the “regular rate.” 

An employee’s “regular rate of pay” for purposes of overtime calculation, as explained above, is not the same as the employee’s straight time rate (i.e., his or her normal hourly wage rate).  The regular rate of pay, which can change from pay period to pay period, includes upward adjustments to the straight time rate, reflecting, among other things, shift differentials, non-discretionary bonuses and the per-hour value of any non-hourly compensation the employee has earned.

In the Dart case, the Supreme Court held that a flat sum bonus was properly treated for purposes of calculating overtime by dividing the amount of the bonus by only the total number of non-overtime hours actually worked during the relevant time period, as opposed to dividing the bonus by all hours worked.  Stated differently, the court explained that a flat sum bonus which the employee earned for working weekends was properly treated, when calculating employee’s “regular rate of pay” for overtime purposes, by dividing the amount of the bonus by the total number of non-overtime hours actually worked during the relevant pay period, and by using 1.5, not 0.5, as the multiplier for determining overtime pay rate.  Since the divisor is a lower number, and the multiplying factor is higher, the amount of underpaid overtime is higher under this recent holding.

If you believe that your employer may have not accurately paid your overtime or if you have overtime pay due that your employer has not paid, you may contact Blady Workforce Law Group, APC at (323) 933-1352 for a complimentary consultation.