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Alvarado v. Dart Container Corp. of California

Filed 3/5/18 IN THE SUPREME COURT OF CALIFORNIA HECTOR ALVARADO, ) ) Plaintiff and Appellant, ) ) S232607 v. ) ) Ct.App. 4/2 E061645 DART CONTAINER CORPORATION ) OF CALIFORNIA, ) Riverside County ) Super. Ct. No. RIC1211707 Defendant and Respondent. ) ____________________________________) In this case, we decide how an employee’s overtime pay rate should be calculated when the employee has earned a flat sum bonus during a single pay period. Specifically, we consider whether the divisor for purposes of calculating the per-hour value of the bonus should be (1) the number of hours the employee actually worked during the pay period, including overtime hours; (2) the number of nonovertime hours the employee worked during the pay period; or (3) the number of nonovertime hours that exist in the pay period, regardless of the number of hours the employee actually worked. We conclude that the divisor should be the second of these options. We reverse the judgment of the Court of Appeal. FACTS AND PROCEDURAL BACKGROUND Defendant Dart Container Corporation of California is a manufacturer of food service products. Plaintiff Hector Alvarado was employed by defendant as a warehouse associate from September 2010 to January 2012. He is a member of a SEE CONCURRING OPINION putative class of employees who, during the period alleged in the complaint, were paid on an hourly basis and who, in addition to their normal hourly wages, received an “attendance bonus” if they were scheduled to work on a Saturday or Sunday, and did so, completing the full work shift. The amount of the bonus was a flat sum of $15 per day of weekend work, regardless of whether the employee worked in excess of the normal work shift on the day in question. The dispute in this case arises because the attendance bonus must be factored into an employee’s regular rate of pay so that the employee’s overtime pay rate (generally, 1.5 times the regular rate of pay) reflects all the forms of regular compensation that the employee earned. Defendant’s formula for calculating an employee’s overtime compensation is as follows. Step one: Defendant multiplies the number of overtime hours the employee worked in the relevant pay period by the employee’s straight time rate (i.e., his or her normal hourly wage rate), thus obtaining the employee’s base hourly pay for the overtime work. We use the word “base” to refer to the pay the employee is entitled to receive simply because he or she has worked additional hours for the employer, exclusive of any extra amount that must be paid because the work qualifies as overtime. Step two: Defendant adds (a) the total hourly pay for nonovertime work during the pay period; (b) any nonhourly compensation the employee earned during the pay period, including any attendance bonuses; and (c) the base hourly pay for overtime work (from step one, ante). The result is the total base pay for the pay period, including base compensation for overtime work. Defendant then divides the total base pay by …
Original document
Source: California Supreme Court