CA: Calculating Overtime Pay Rates

The California Supreme Court has resolved that employers “must calculate an employee’s overtime pay rate when the employee earns a bonus during a single pay period”.

The recent court decision highlights the importance of correctly calculating an employee’s overtime pay, particularly as it relates to bonuses and non-overtime hours worked.

Stoel Rives LLP also adds the following:

In addition to clarifying how flat sum bonuses should be factored into an employee’s regular rate of pay, the Supreme Court also confirmed the value of the Department of Labor Standards Enforcement’s so-called “underground interpretive regulations.” These are regulations that did not comply with the California Administrative Procedures Act.

Employers should review the ruling as there are significant legal consequences for errors in calculations.

For more on the Court’s decision, please click here.