Holiday Premium Pay Not Part of Regular Rate of Pay
Like many employers, Advanced-Tech Security Services has a policy of paying “premium pay” (1.5 times the regular hourly rate of pay) when its security guards have to work on particular holidays. While premium holiday pay is not required, it is an added benefit to employees and an attempt to compensate the employee for having to work the holiday. When Ester Roman worked 12 hours on Labor Day, she was paid 1.5 times her regular hourly rate for all 12 hours. Ms. Roman believed she should have received time and one-half for the first 8 hours (based on the holiday pay plan), and 1.5 times the holiday pay rate for hours worked in excess of 8 hours that day. The Second Appellate District disagreed.
The employer was able to show that Ms. Roman receive 1.5 times her regular hourly rate for all overtime hours worked that week and the court held that the “regular rate of pay” does not include premium holiday pay. This case is interesting because determining an employee’s regular rate of pay can oftentimes be very confusing. For example, bonuses and commission are supposed to be included in the employee’s regular rate of pay. Unfortunately, Labor Code Section 510 (which requires overtime compensation “at the rate of no less than one and one-half times the regular rate of pay for an employee”) does not define “regular rate of pay.”
Finding no direction in California law, the Appellate Court loked at the FLSA which provides that the
“regular rate” of pay includes all “remuneration for employment,” subject to several exceptions, including “extra compensation provided by a premium rate paid for work by the employee on Saturdays, Sundays, holidays, or regular days of rest, or on the sixth or seventh day of the workweek, where such premium rate is not less than one and one-half times the rate established in good faith for like work performed in nonovertime hours on other days.” (29 U.S.C. §§ 207(e)(1), 207(e)(6))
Employers should keep in mind that the exceptions noted above only apply when the employee receives at least 1.5 times the employee’s regular hourly rate for the premium pay situations.
Employers are free to offer premium pay to employees that have to work weekends or holidays without worrying that they will have to pay increased overtime. Those interested in reading the case can find it at http://www.courtinfo.ca.gov/opinions/documents/B205186.PDF.The Law Office of Phillip J. Griego 95 South Market Street, Suite 520 San Jose, CA 95113 Tel. 408-293-6341 Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
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