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Overtime Pay, Premium Pay, and Calculating a Worker’s ‘Regular Rate of Compensation’ in California

A recent ruling from the California Supreme Court began by stating that, under this state’s law, “employers must provide employees with overtime pay when employees work more than a certain amount of time.” That much we all probably already knew, lawyers and non-lawyers alike. Additionally, the method for calculating overtime pay is well-settled, as well. What hasn’t been as clear, though, is how employers must go about calculating “premium pay.” If you think your employer has shorted you when it comes to overtime compensation or premium pay, get advice from a knowledgeable San Mateo wage-and-hour lawyer, who can help take the necessary action to protect your rights.

Many factors can influence the calculation of a worker’s pay in California. For example, the state has various laws, regulations, and standards that govern meal breaks, rest breaks, and recovery periods. California’s statutes also state that, if an “employer fails to provide an employee a [compliant] meal or rest or recovery period… the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each workday that the meal or rest or recovery period is not provided.” That payment for missed meal or rest breaks is what’s called “premium pay.

Sometimes, seemingly straightforward terms actually aren’t (which is another great reason why having skillful legal representation is a must.) For example, an employee’s “regular rate of compensation” seems pretty clear-cut, doesn’t it? It wasn’t, as a recent premium pay lawsuit demonstrated.

The case involved a bartender and the Hollywood hotel where she worked. The bartender’s total compensation included both base hourly wages and “quarterly nondiscretionary incentive payments.” The dispute centered around whether the bartender’s quarterly incentive income should be included or excluded when calculating her “regular rate of pay” for purposes of determining how much premium pay she was owed.

‘Regular Rate’ Includes All Nondiscretionary Payments

Overtime pay involves similar calculations. The statute covering overtime pay (Labor Code Section 510) says that, in determining a worker’s overtime pay, an employer is required to pay that worker one and one-half times the worker’s “regular rate of pay.” In the overtime realm, a “regular rate of pay” assessment must include both hourly wages and also “other nondiscretionary payments for work performed by the employee.”

This new ruling from the Supreme Court clarifies that premium pay operates largely the same way. When an employer must calculate “regular rate of pay” for purposes of premium pay, the regular rate must include both hourly wages and all other nondiscretionary payments the worker receives based on work performed.

What this means is that, if your employer was paying you premium pay for your missed breaks and basing that pay only on your base hourly wage, your employer may have been in violation of the law and illegally underpaying you.

Contact a San Mateo Wage-and-Hour Attorney

Whether it’s premium pay, overtime pay, minimum wage, or some other wage-and-hour issue, if you have questions, we’re here to help. The knowledgeable San Mateo wage-and-hour attorneys at Galine, Frye, Fitting & Frangos, LLP have many years handling cases like these, so we have the direct experience and the know-how to help you get everything the law says you’re owed. To set up a free consultation, contact us at 650-345-8484 or through our website.

Wage and Hour Law

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