If You Think You are being Paid Correctly You May want to Take Another Look
If you are a non-exempt employee who receives a salary, this means that you are still entitled to overtime pay. In the past, employers have used different formulas to calculate what rate your overtime will be paid out at. The most common error is to include your overtime in your flat salary every month.
For example: Originally California Supreme Court first reviewed Arechiga v. Dolores Press and found in favor of Dolores Press allowing that an employer has the option of including overtime in the salary so long as the following is specified:
• The number of days the employee will work every week
• How many hours the employee will be working every day
• The exact amount of the guaranteed salary
• Hourly rate used to calculate the salary
• And that the salary included both overtime and regular hours
Recently though, this decision was overturned in appellate court citing California labor code section 515(d), which requires that the hourly rate of a salary-paid, non-exempt employee was the salary divided by 40.
To further solidify 515(d), Governor Brown signed Assembly Bill 2103 into law on September 30, 2012 which is now referred to as Section 515(d)(2) and further clarifies 515(d)(1) as it states that:
“Payment of a fixed salary to a nonexempt employee shall be deemed to provide compensation only for the employee’s regular, non-overtime hours, notwithstanding any private agreement to the employer.”
For the typical non-exempt employee, section 515(d)(2) will mean that any salary will not extend beyond providing compensation for five, eight-hour days per week. The amendments to the Labor Code will take effect January 1, 2013.
In conclusion, if your overtime is included in your flat salary this is a red flag. Also, if your hourly rate is not based on all your wages divided by forty hours, this too could be a problem and you should contact an California labor law attorney to review your situation.
Labor law is complex; if you have any questions regarding your employment it is recommended that you contact a California labor law attorney who can help you understand your rights and in many cases will review your situation without charge.
Photo Credit: Shutterstock/Dean Drobot