News Notes: New Case Focuses On Union Contract Exception To Overtime Pay Rates

California overtime pay rules don’t apply to unionized employees if the union contract sets premium overtime rates as well as a regular hourly rate that’s at least 30% over the minimum wage. Examining an older version of this exemption, a California Court of Appeal explained that it permits an employer and union to negotiate how to calculate overtime pay, so long as a premium, which can be any amount above the regular rate, is paid for overtime hours.1 The case involved Southern California Gas Company meter readers who were paid a flat daily rate. Overtime pay was figured by dividing the flat rate by the total hours actually worked and multiplying that figure by 1.5. Employees complained that the more they worked the lower their regular and overtime rates became. The appeals court sent the case back to determine whether the union contract exemption didn’t apply on some occasions because the overtime formula resulted in a premium below the exemption threshold.