Alvarado v. Dart Container Corp. of CaliforniaAnnotate this Case
In calculating an employee’s overtime pay rate when the employee has earned a flat sum bonus during a single pay period, the divisor for purposes of calculating the per-hour value of the bonus should be the number of nonovertime hours the employee worked during the pay period, rather than the number of hours the employee actually worked during the pay period, including overtime hours, or the number of nonovertime hours that exist in the pay period, regardless of the number of hours the employee actually worked.
Plaintiff filed a complaint against Defendant, his former employer, alleging that Defendant had not properly computed his overtime pay under California law. Defendant moved for summary judgment, arguing that the trial court should look for “persuasive guidance” to a federal regulation explaining how to factor a flat sum bonus into an employee’s regular rate of pay and that its formula for calculating overtime compensation was complaint with the relevant federal regulation. The trial court granted summary judgment for Defendant. The Court of Appeal affirmed. The Supreme Court reversed, thus favoring the formula that allocates an employee’s bonus to the nonovertime hours worked, rather than to all hours worked.