Overtime: California Style Presented on Tuesday, May 24, 2016

Transcription

1 Overtime: California Style Presented on Tuesday, May 24,

2 2015 The Payroll Advisor 2

3 Housekeeping 3 Credit Questions Today s topic Speaker 2015 The Payroll Advisor

4 To earn RCH credit you must 4 Stay on the webinar, online for the full 60 minutes Be watching using your unique URL Certificates delivered by , to registered , by June 24 th

5 Our Focus For Today 5 Laws of Overtime in California Workweeks and workdays Regular Rate of pay Multiple rates of pay Pieceworkers and commission payments Overtime under the wage orders Make up time Compensatory time off

6 About the Speaker 6 Vicki M. Lambert, CPP, is President and Academic Director of The Payroll Advisor, a firm specializing in payroll education and training. The company s website offers a subscription payroll news service which keeps payroll professionals up-to-date on the latest rules and regulations. As an adjunct faculty member at Brandman University, Ms. Lambert is the creator of and instructor for the Practical Payroll Online payroll training program, which is approved by the APA for recertification credits.

7 Definition of Overtime 7 Federal Overtime pay under the Fair Labor Standards Act is computed at 1 1/2 times the regular rate of pay for all hours worked in excess of the 40 hours in a workweek. Do not pyramid hours. California Has both daily and weekly overtime. Has both daily and weekly double time. Overtime is paid at one and one half times the regular rate of pay. Double time is paid at two times the regular rate of pay.

8 Daily Overtime 8 8 hours constitutes a day s work Excess of 8 hours up to 12 hours in a workday is overtime Excess of 12 hours in a workday is double time

9 Weekly Overtime 9 40 hours is workweek maximum before overtime Plus, first eight hours worked on the seventh day of work in any one workweek is paid at time and one half Any work in excess of eight hours on any seventh day of workweek is double time Exceptions for certain industries such as health care

10 Example: California Overtime 10 Employee A has the following timecard for the workweek: Mon Tues Wed Thurs Fri Sat Sun Total Hours Under the FLSA he would be paid 40 hours straight time and 2 hours of overtime

11 But Under California Law 11 The employee would be due the following Hours Breakdown Mon Tues Wed Thurs Fri Sat Sun Total Hours Straight Overtime Total Employee A is due 39 straight hours and 3 hours of overtime. So if the employee makes $10 per hour

12 Determine by the Math 12 Federal Law California Law $10 x 40 = $ $10 x 39 = $ $10. x 1.5 = $15 x 2 = $30 $10. x 1.5 = $15 x 3 = $45.00 Total of: $400 + $30 = $ Total of: $390 + $45.00 = $ California is higher so the higher standard is paid

13 Workweeks 13 Workweek 168 consecutive hours; 7-24 hour periods OT paid as previously discussed Alternative Workweek 10 hour days 4 day week instead Secret ballot 2/3rds of employees approve 1 1/2 times regular rate of pay for hours worked over hours established and over 40 in workweek Double time for over 12 hours worked in a day Excess of 8 hours beyond regularly scheduled work days is double time as well

14 Work Day 14 A workday is any consecutive 24-hour period beginning at the same hour on each calendar day. The 24-hour period may begin at any hour of the day, but must be consistent and unchanged May change if the change is meant to be permanent Not all employees must have the same workday

15 15 Hours Worked To comply with the FLSA, hours worked need to include not only hours actually performing job duties but also any other hours suffered or permitted to work by the employer for the employer's benefit. California follows this same definition of hours worked

16 Holidays, Saturdays and Sundays 16 Hours worked on holidays, Saturdays, and Sundays are treated like hours worked on any other day of the week. Additionally, there is nothing in the law that mandates an employer pay an employee a special premium for work performed on a holiday, Saturday, or Sunday, other than the overtime premium required for work performed in excess of eight hours in a workday or 40 hours in a workweek.

17 For Example 17 Employee B worked the following schedule for the workweek under the California Law M T W TH F SA SU Total Hours Hours Breakdown ST OT

18 For Example 18 Now let s say Employee B worked the same hours but Monday was a holiday as designed by the employer M T W TH F S A SU Total Hours Hours Breakdown ST HOL OT Under the DLSE the 8 hours on Monday are not considered hours worked

19 For Example 19 M T W TH F SA SU Total Hours Hours Breakdown ST HOL OT The same would apply if Monday were sick leave, vacation time or PTO. However company policy may differ.

20 Regular Rate of Pay 20 The definition is the same under FLSA and California It is a calculated rate and not just the file rate The employer must consider many different payments in accurately calculating the correct rate of pay for overtime hours.

21 Does Not Include: 21 Gifts Payments of a gift nature such as for holidays or other special occasions Amount may not be measured by performance or hours worked Nonworking Hours Such as sick, vacation, holiday, or PTO Failure to provide sufficient work Expenses Reasonable costs for travel Reimbursements for maintaining uniforms Discretionary Bonuses Recognition of services but not tied to performance Given at or near end of period Sole discretion of employer

22 Does Not Include: 22 Profit Sharing Payments Must be bona fide profit sharing or trust or thrift savings plan Must also meet additional requirements Health or Life Insurance Made to bona fide plan for providing old age, retirement, life, accident, or health insurance Premium Pay Extra compensation paid at a premium rate for certain hours worked because such hours are in excess of 8 in a day or in excess of 40 in a week May be creditable towards OT compensation (29 CFR ) Premium Pay Extra compensation for premium work on Saturdays, Sundays, days of rest or holidays. May not be less than 1 ½ time rate established in good faith May be creditable towards OT compensation

23 Regular Rate of Pay 23 Computation of the hourly regular rate of pay is calculated as follows:

24 24 Doing the Math Following the Steps 1. Total pay for workweek exclusions = regular rate of pay 2. Regular Pay/hours worked = regular rate of pay 3. Regular rate of pay x.5 x hours of overtime = premium pay for overtime 4. Total pay for workweek + premium pay for overtime = total weekly compensation

25 Now an Example with Numbers 25 Example Information: Employee is paid an hourly rate of $10.00 Works 44 hours in the workweek

26 The Proper or FLSA/DLSE Method x $10.00 = $ $ = $10.00 $10.00 x.5 = $ x $5.00 = $20.00 $ $20.00 = $ So what is the difference between the proper method and the commonly understood method of calculating overtime?

27 Commonly Used or Alternative Method x $10.00 = $ x $15.00 = $60.00 $ $60.00 = $ This uses the time and a half method that most computers use and is acceptable if the employee does not have any additional wages that trigger the required method No difference. DLSE would accept both

28 Example With Bonus 28 Same info except employee receives $10 bonus. 44 x $10.00 = $ $10.00 = $ $ / 44 = $10.23 $10.23 x.5 = $5.12 $5.12 x 4 = $20.48 $ $20.48 = $470.48

29 Notice the Difference 29 Without the added bonus under the DLSE method, both had $ as the gross But when the bonus is added it goes to $ under the DLSE method but only $ under the alternate method $.48 difference than just adding in the $10. Result Penalties, fines and interest for using the wrong method

30 30 But What if More than One Work Week Is Involved? When a nondiscretionary bonus covers a period of time longer than a workweek, it must be apportioned back over the workweeks of the period during which it was earned. If it is not possible or practicable to allocate the bonus on the basis of when the bonus was actually earned, some other reasonable or equitable method must be adopted (for example, allocation of an equal amount for each workweek covered by the bonus). The employee must then receive additional overtime pay for each workweek in which overtime was worked during the period.

31 Multiple Rates of Pay 31 When an employee in a single workweek works at two or more different types of work for which different straight time rates have been established, the regular rate of pay for that week is the weighted average of all the rates.

32 32 Example At Secrest Corp this week Paul worked to cover for other employees on vacation. His time card reads as follows: Day Per Hour Rate Number of Hours Worked Monday $ Tuesday $ Wednesday $ Thursday $ Friday $ Total Hours 43

33 Step 1 Calculate the Earnings for Each Day 33 Day Calculation Amount Monday 8 x $10.00 = $80.00 Tuesday 8 x $11.00 = $88.00 Wednesday 8 x $10.00 = $80.00 Thursday 9 x $10.75 = $96.75 Friday 10 x $10.50 = $ Total $449.75

34 34 Then Step 2: Divide the total earnings by the total hours worked to determine the regular rate of pay $ divided by 43 = $10.46 (regular rate of pay) Step 3: Determine the premium pay for overtime by multiplying the regular rate of pay by.5 (or divide by 2) then multiplying that amount by the number of overtime hours $10.46 x.5 x 3 = $15.69

35 Finally Step 4 35 Determine the total weekly compensation by adding the total earnings (step 1) and the premium pay (step 3) $ $15.69 = $ total weekly compensation

36 Weekly Salary Basis 36 If the employee is paid on a weekly salary basis, the regular hourly rate is reached by dividing the salary by the number of hours which the salary is intended to compensate. If the salary covers a period longer than a workweek, such as biweekly, monthly, etc., it must be converted to a weekly equivalent.

37 Fixed Work Weeks 37 Where employees are paid a salary for a fixed workweek, (salary intended to cover only a specified number of hours per week, i.e. 37 1/2 or 40) total earnings are divided by the number of "fixed" hours rather than the number of hours worked. Example: Joe is hired at a salary of $500 per week. It is understood that this salary is compensation for a regular workweek of 35 hours or $14.29 per hour. When overtime is worked Joe is entitled to receive $14.29 for each of the first 40 hours and $21.44 (time and one half) for each hour thereafter.

38 Biweekly Payroll Example Fixed Work Week 38 Sylvia is hired at a weekly salary of $500 a week. The salary is based on a fixed workweek of 40 hours. She worked 50 hours her first week and 45 hours her second week of a biweekly payroll

39 The Math 39 Week One $ = $12.50 $12.50 x 10 = $ $12.50 x.5 x 10 = $62.50 $500 + $ $ = $ Week Two $ = $12.50 $12.50 x 5 = $62.50 $12.50 x.5 x 5 = $31.25 $500 + $ $31.25 = $ The total is: $ $ = $

40 Fluctuating Work Weeks 40 The FLSA permits an employees be paid a salary for a fluctuating workweek (salary intended to compensate for an entire workweek, regardless of the number of hours actually worked) California does not permit fluctuating workweeks

41 Pieceworkers 41 Permitted by DLSE to compensate employee on piece-rate basis Can pay a specified sum for each completed task or procedure rather than hourly rate Must still be paid overtime based on regular rate of pay Determine regular rate of pay as follows:

42 Pieceworkers 42 Divide the pieceworker s total earnings by hours worked in the workweek Total earnings include all hourly guarantees, bonuses, and any sums for waiting time Example: An employee paid on a piecework basis works 45 hours in a week and earns $505. The regular rate of pay for that week is $505 divided by 45, or $11.22 an hour. In addition to the straighttime pay, the employee is also entitled to $5.61 (half the regular rate) for each hour over 40 - an additional $28.05 for the 5 overtime hours - for a total of $

43 Commissioned Employees 43 DLSE permits employer to compensate employees on a commission basis Calculate the regular rate of pay by dividing the total commissions for the workweek by the number of hours worked in the workweek Employee entitled to one-half of the regular rate for each overtime hour worked

44 Commissioned Employee Example 44 Employee is paid commissions of $100 on each sale and made 10 sales = $500 Employee worked 50 ( 40 straight time and 10 overtime) hours that week Divide $500 by 50 = $10 per hour $10 x.5 = $5 x 10 hours = $50 for overtime premium Total paid $550.00

45 Tipped Employees 45 Tip credit against minimum wage is permitted under the FLSA but not permitted in California A mandatory service charge represents an amount added to the bill of a hotel or restaurant patron in accordance with the establishment s policy The portion that is distributed to the employee by the employer is not considered a tip or gratuity

46 Tipped Employees 46 Such amounts are treated as straight-time wages These amounts must be added to the other wages when computing an employee s regular rate of pay for overtime purposes

47 Makeup Work Time 47 Employee requests make up work time in writing Time lost is a result of personal obligation of the employee Work the same workweek in which the time was lost Up to 11 hours in one day or 40 hours in one week

48 Comp Time 48 Permitted under Labor Code Section Permitted to nonexempt employees under wage orders 2, 4, 6, 7, 9, 11, 12, and 15 Employee must request in writing Must regularly work a 40 hour week Provided at no less than one and one-half times applicable premium rate and begins with the 9 th hour worked in a workday

49 Comp Time 49 Must be requested prior to work being performed and under written agreement such as bargaining unit or MOU Can not exceed 240 hours once limit is reached overtime must be paid Compensation is paid at the employee s regular rate of pay at time of payment not when earned Must be paid out at current rate if terminated

50 Comp Time 50 Must be able to use the time when requested within reason Employee may request to be paid overtime instead of C.T.O at any time Must maintain accurate records at all time Not permitted under federal law as overtime must be paid after 40 hours

51 Overtime Catch Up 51 An employer shall be in compliance with Labor Code Section 226(a) relating to total hours worked by the employee if the overtime hours are recorded as a correction on the itemized statement for the next regular pay period and include the dates of the pay period for which the correction is being made. Labor Code Section 204(b)(2)

52 Daily Overtime Liability Weekly Overtime Liability Wage Order 8-Hour Premium 10-Hour Premium 12-Hour Premium 14-Hour Premium 4-Day Week Permitted 40-Hour Premium Sixth Day Premium Seventh Day Premium 1 Yes Yes Yes Yes Yes 2 Yes Yes Yes Yes Yes 3 Yes Yes Yes Yes Yes 4 Yes Yes Yes Yes Yes 5 Yes Yes Yes Yes Yes 6 Yes Yes Yes Yes Yes 7 Yes Yes Yes Yes Yes 8 Yes Yes Yes Yes Yes 9 Yes Yes Yes Yes Yes 10 Yes Yes Yes Yes Yes 11 Yes Yes Yes Yes Yes 12 Yes Yes Yes Yes Yes Yes Yes 13 Yes Yes Yes Yes Yes 14 Yes Yes 15 Yes Yes Yes Yes 16 Yes Yes Yes Yes Yes 17 Yes Yes Yes Yes Yes 52

53 Are There Any Questions? 53

54 How Can Ascentis Help Me? 54 Process payroll Real time flexible processing 100% accuracy Reduce processing time by up to 30% Employee portal Paycheck data Paystubs Tax forms Paycheck simulation tools

55 To earn RCH credit you must 55 Stay on the webinar, online for the full 60 minutes Be watching using your unique URL Certificates delivered by , to registered , by June 24 th

56 On-Demand Webinars 56 Watch from anywhere, at anytime, at no cost to you!

57 Download Slides? Watch again? 57

58 Sharing the Education 58

59 Contact Us