In Alvarado v. Dart Container Corporation of California, the Supreme Court today settles how to calculate an employee’s overtime pay rate when the employee has earned a flat sum bonus during a single pay period. State law guarantees employees 1.5 or 2 times their “regular rate of pay.”
When the bonus is added to an employee’s salary to determine the “regular rate,” the question, the court says, is “whether the bonus is treated as if it were earned throughout the entire pay period (including any overtime hours), or whether the bonus is treated as if it were earned throughout only the nonovertime hours of the pay period.” The court’s opinion by Justice Ming Chin holds it is the latter, and also that it’s the nonovertime hours the employee actually works — not the number of nonovertime hours that exist in the pay period — that count. This, the court says, furthers the state policies that “favor[ ] an eight-hour workday and a six-day 40-hour workweek, and discourag[e] employers from imposing work in excess of those limits” and that are in “favor of worker protection.”
Justice Chin’s opinion is for himself and Justices Carol Corrigan, Goodwin Liu, Mariano-Florentino Cuéllar, and pro tem Justice Steven Perren. Chief Justice Tani Cantil-Sakauye writes a brief concurring opinion, signed by Justices Corrigan, Liu, and Leondra Kruger. The Chief Justice is critical of the Division of Labor Standards Enforcement for not adopting as a regulation the rule the court states today. Instead, the rule was included only in a DLSE policy manual that the court finds to be void because it was not promulgated according to the Administrative Procedure Act. “Regrettably,” the concurrence laments, “more was not done to help employers meet their statutory responsibilities, or to ensure that employees receive the overtime pay they are due.”
A concurring opinion signed by a majority of the justices is rare but not unprecedented.
The court reverses the Fourth District, Division Two, Court of Appeal.