Employees who receive bonuses, shift differentials or premiums—such as people who work graveyard shifts, earn non-discretionary bonuses for attendance, production or performance, or earn commissions—must have those earnings calculated into their overtime. Failure to do so means the employee could be receiving less pay for overtime work than he or she is entitled to.
"This is an error employers regularly make," Haines says. "If you're earning those types of compensation and you work overtime, there's a good chance your employer is miscalculating your overtime and underpaying you."
Forms of pay that affect overtime calculations include shift differentials, non-discretionary bonuses—including production bonuses, attendance bonuses, longevity bonuses and safety bonuses—commissions or SPIFFS and piece-rate pay. Part of the issue with overtime pay is that when these bonuses are offered they make the calculations more complex and they often mean that the amount paid for overtime can vary even from week to week, depending on what wage augments were paid in a given week.
"Even though the amount underpaid might seem small in a work week, in California you can go back four years to recover underpaid overtime," Haines says. "Under the Fair Labor Standards Act (FLSA) there's a three-year statute of limitations, so you accrue all that overtime for three years or four years. Under the FLSA, you can get twice the actual damages and under California law there are many types of statutory penalties that often are equal to or might exceed the overtime underpayment. So you could be entitled to significant statutory penalties and/or liquidated damages."
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"The math can be very complex and it's very difficult for the lay person to detect a regular rate violation," Haines says. "The companies often don't provide employees with the information they need to determine if they have been paid fairly. If an employee works overtime and ever earns any of these wage augments, then they should contact us and we can determine if their overtime rate has been correctly calculated."