The California Supreme Court has issued a ruling that changes the way overtime is calculated for employees who earn certain flat sum bonuses. Under California law, employers must pay overtime to non-exempt employees at a rate of no less than one and one half times the employee’s “regular rate of pay” for all hours worked in excess of 40 per workweek and in excess of 8 hours but fewer than 12 hours per workday. The “regular rate of pay” is determined by adding together the employee’s total “remuneration” as defined by law (e.g., regular pay plus non-discretionary bonuses) for the workweek in which the employee worked overtime.
The question before the Court in the case of Alvarado v. Dart Container was whether the “regular rate of pay” should be calculated by using an employee’s total hours worked (including overtime hours) or only an employee’s regular hours during a workweek when an employee earns a particular kind of flat sum bonus (e.g. daily attendance bonus).
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