Articles Posted in Overtime

The Supreme Court has held that time spent waiting for work is compensable if the waiting time is spent “primarily for the benefit of the employer and his business.” Armour & Co. v. Wantock (1944). Whether the time spent predominantly for the employer’s benefit depends on the specific circumstances of each situation. Although there is no hard and fast rule, the cases dealing with the question of compensation and overtime for on-call duty consider two major factors: (1) the degree to which the employee is free to engage in personal activities; and (2) the agreement between the parties.

While the second factor – the existence or non existence of the agreement to waive on-call duty compensation – is usually easy to determine, the first factor includes sub-elements that determine whether the employee is free to engage in personal activities while on call: (a)whether there was an on-premises living requirement; (b) whether there were restrictions on employee’s travel during on-call duty; (c) whether the frequency of calls was so high that it prevented employee from engaging in typical off-duty activities of a person; (d) whether a fixed time limit for response was unduly restrictive; (e) whether the employee could easily trade on-call responsibilities; (f) whether employee actually engaged in personal activities during call-in time.

The above list is not exhaustive but merely illustrative.

Under Federal Law

Federal law exempts certain employees from both minimum wage and overtime pay requirements. These exemptions include:

* Workers employed in a bona fide executive, administrative or professional capacity;

The executive exemption that relieves employers from the obligation to pay overtime compensation applies to any employee:

* Whose duties and responsibilities involve the management of the enterprise in which he is employed or of a customarily recognized department of subdivision of that enterprise;

* Who customarily and regularly directs the work of two or more other employees in that enterprise;

Under California Labor Code section 510(a), all employees who work in excess of 40 hours in one workday or in excess of 8 hours per day must receive overtime pay. This provision, however, doesn’t apply to any employee “whose earnings exceed one and a half time of the minimum wage if more than half of that employee’s compensation represents commissions.” (California Code of Regulations, title 8, section 11040, subdivision 3(D)).

It is important to understand which compensation exactly is considered commissions for the purposes of the issue in question. A commission is a compensation paid for services rendered in the sale of property and services, and based proportionately upon the amount of the value of the services rendered. Under the Supreme Court definition, the compensation is commissions if (1) the employee receiving compensation is involved in selling a product or a service; (2) the amount of compensation in question is a percent of the price of the product or service.” (Ramirez v. Yosemite Water Co. (1999)).

Thus, if, for instance, the employer’s “bonus” or “incentive” pay does not depend on the volume of products/services sold by an employee, the overtime protections laws probably apply to that employee.

Under California law (California labor code section 501), an employer can authorize alternative workweeks of workdays exceeding eight hours without overtime pay if specified criteria are met. Such flexible scheduling requires full disclosure to affected employees and the affirmative vote of at least two-thirds of the employees in the affected workplace voting in a secret ballot election before performance of the week.

Any type of alternative schedule that is authorized by Cal. labor code section 501 may be repealed by the affected employees. An employer shall not reduce an employee’s regular rate of hourly pay as a result of the adoption repeal or nullification of an alternative week schedule.

However, the employer must pay overtime at one-and-a-half times the regular rate after 10 hours per day in a 40 hour workweek, and a double the regular rate after 12 hour per days and for any work in excess of eight hours on those days worked beyond the regularly scheduled alternative workweek days.