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Did California Managers Sell Unused Vacation Time for Illegal Overtime Pay?

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Sacramento, CAAn overtime pay laws case in California that saw managers normally not qualifying for overtime pay receive extra compensation through a process historically reserved for natural disasters, has raised the ire of taxpayers across the cash-strapped state. According to the Sacramento Bee (8/16/12), about $271,000 was paid out inappropriately.

Overtime laws govern the process involving extra compensation for workers who toil over and above the standard workweek. Some employees, by way of a particular job description or a job that is classified as overtime exempt, do not qualify for extra pay. Management jobs usually fall in this camp.

However, during recent testimony before the Senate Budget and Fiscal Review Committee, it was revealed that some managers were allowed to use payroll codes reserved for natural disasters and other emergencies to claim overtime pay in exchange for unused vacation time.

There has been an allegation of collusion, which is illegal and certainly an affront to California overtime law.

It was reported in July that no fewer than 56 workers employed by the Department of Parks and Recreation in the state 'sold' unused vacation time back to the state for a combined sum in excess of $271,000. The money was paid as overtime pay, allegedly using the obscure payroll codes.

The overtime pay laws violation, it was reported, led in part to the departure last month of Ruth Coleman, longtime head of the state parks department. The Bee also reported that three executives with the parks department were disciplined earlier this month for having "manipulated the system," and providing "recklessly flawed advice," according to the report.

A fourth official was demoted for his role in the overtime pay scam. He subsequently resigned.

Efforts are now underway to determine if the overtime pay scheme went beyond mere violation of California overtime law, and may have involved criminal intent. It was reported the state Department of Justice is investigating, with an inquiry expected to be complete by October.

Issues such as unpaid overtime and workers compensation issues—which oft times results in workers compensation settlements—frequently involve immigrants and low-wage workers. However, some employers have been guilty in the past of miss-classifying employees as exempt from overtime, to avoid the added costs.

In this overtime pay case, it appears as if employees who rightfully should not have been paid overtime for any reason based upon their job classification, were allowed to collect at taxpayers expense. Officials with the state have suggested the alleged scheme may prompt residents of the state to defer donations to state parks.


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What they did is wrong and illegal. However, there is a way within the payroll system of the State of California that an exempt employee can be paid for extra hours.

It is called "arduous pay". It is paid on a hour-for-hour basis for exempt employees. For example, if a group of exempt employees were putting in 18-hour days for weeks at a time in order to meet a legal deadline, they could be paid for anything over 8 hours per day on a "straight-time" basis. Arduous pay is usually paid after it comes to Management's attention that a group of dedicated employees have gone above and beyond what is reasonably expected of them. It is extremely rare. I've seen it happen, once.

I am a retired California State employee whose career centered around the different areas of human resources.


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