The Labor and Employment Law Blog : Labor & Employment Lawyer & Attorney : Weintraub Genshlea Chediak Tobin & Tobin Law Firm : Sacramento California : Labor & Employment Law Blog

The DLSE issued its model notice in late December 2011 which can be obtained at: www.dir.ca.gov/dlse/LC_2810.5_Notice.pdf. Because AB 469 specifically provided that the DLSE could include additional information in the notice, the model notice calls for more information than that itemized in Labor Code section 2810.5(a). It is not mandatory that employers use the DLSE model form. However, if they prepare their own form, it must include all of the information contained in the model form.

This notice is not required if an employee is: (a) directly employed by the state or any political subdivision thereof; (b) is exempt from the payment of overtime wages by statute or wage order; or (c) covered by a collective bargaining agreement that expressly provides for wages, hours of work and working conditions, and provides for premium wage rates for all overtime worked.

One requirement contained in the DLSE’s model notice that is not itemized in the statute, is a requirement that the employer note whether employment is under an oral or written employment agreement. Most non-exempt at-will employees are not subject to a formal written employment agreement; instead they merely fill out an application and are offered – and accept – an oral offer of employment. However, if there is any writing (e.g. offer letter) that reflects the terms of employment, then the employer will need to reflect the existence of such writing on this notice.

Also, it appears that the DLSE is taking the position that in addition to new hires, employers must provide the notice to current employees. Also, as expressly provided in section 2810.5(b), if any of the information contained in the notice changes during employment, the employer is required to communicate that change to the employee within seven calendar days of such change.

Finally, while the statute does not specify what, if any, penalties can be imposed for failure to comply with the notice requirement, it is likely that the Private Attorney General Act (“PAGA”) penalties will be relied upon by employees and/or the DLSE when pursuing a non-compliance claim. Under certain circumstances, PAGA penalties can be imposed against an employer for failing to comply with various Labor Code sections. The amount of PAGA penalties can range anywhere from $100 per employee per pay period for the initial violation to $200 per pay period per employee for subsequent violations.

If you have questions about the new notice requirement, feel free to contact any of the employment lawyers at Weintraub Genshlea Chediak Tobin & Tobin Tobin & Tobin who are always available to answer questions and assist employers in all of their employment law needs. Happy New Year.
 

To qualify for the maximum base bonus, the employee must have been paid for at least 1,000 hours in the six-month period preceding April 1 and October 1. Bonuses are prorated for those paid less than 1,000 hours; the formula for the base bonus is thus: hours paid up to 1,000 ÷ 1,000 x maximum bonus amount.

b. Overtime on the Bonus.

The Court said the general rule is that “where a bonus payment is considered a part of the regular rate at which an employee is employed, it must be included in computing his regular hourly rate of pay and overtime compensation. No difficulty arises in computing overtime compensation if the bonus covers only one weekly pay period. The amount of the bonus is merely added to the other earnings of the employee (except statutory exclusions) and the total divided by total hours worked. Under many bonus plans, however, calculations of the bonus may necessarily be deferred over a period of time longer than workweek. In such a case the employer may disregard the bonus in computing the regular hourly rate until such time as the amount of the bonus can be ascertained. Until that is done he may pay compensation for overtime at one and one-half times the hourly rate paid [to] the employee, exclusive of the bonus. When the amount of the bonus can be ascertained, it must be apportioned back over the workweeks of the period during which it may be said to have been earned. The employee must then receive an additional amount of compensation for each workweek that he worked overtime during the period equal to one-half of the hourly rate of pay allocable to the bonus for that week multiplied by the number of statutory overtime hours worked during the week.” (29 C.F.R. §778.209(a) (2008))

The Costco decision involves a lengthy discussion and mathematical analysis of Costco’s bonus plan. The main message from the case is that the method for calculating the amount of “bonus overtime” depends on whether the bonus is characterized as a “flat sum” bonus or a “production” bonus. The two formulas for calculating the overtime due under each type of bonus is summarized below.

Pursuant to the DLSE, if the bonus is a flat sum (such as $300 for continuing to the end of the season, or $5.00 for each day worked) the regular bonus is determined by dividing the bonus by the maximum legal regular hours worked during the period to which the bonus applies.* Section 49.2.4.3 of the DLSE Manual provides a sample “flat sum” bonus calculation for a $300.00 bonus “for remaining to the end of the season paid to a pieceworker who worked 640 regular hours, 116 time and one-half overtime hours and 12 double time hours:  

Pursuant to the DLSE, if a bonus is based on a percentage of production or some formula other than a flat amount, the regular bonus rate is found by dividing the bonus by the total hours worked during the period to which the bonus applies. The total hours for this purpose will be all hours, including overtime hours. Section 49.2.4.1 of the DLSE Manual provides the following example:

 *It is important to note that the Costco court agreed with Costco that the “flat sum” bonus overtime calculation in section 49.2.4.2 of the DLSE Enforcement Manual may be unenforceable as a void regulation.