Pub. 2 2013 Issue 2

Fall 2013 17 No Manipulation To Avoid Overtime In California, the regular rate is designed to further a two-fold public policy underlying overtime: 1) to spread employment by encouraging employers to avoid overtimework and thereby employ additional workers on a regular basis; and 2) where the employer prefers overtime work, to compensate the employee for the burden of working longer hours. Any methodology that seeks to undermine the regular rate to avoid payment of an overtime premiummay be invalidated by the courts or the California Labor Commissioner as a subterfuge. For example, an employer cannot first calculate weekly pay at the base piece or incentive rate, then avoid overtime by reducing those base rates so that the employee always receives the same level of compensation without an overtime premium based on the original rates. Conclusion Employers should do frequent regular rate tune-ups by consultingwith their legal counsel and conducting internal audits on a regular basis. The calculation of the regular rate can be extremely complex when combining different pay schemes and incentive rates, but getting the number right can make thousands of dollars difference in the calculation of overtime. This can make all the difference in the end, both in calculating damages when claims are made, or in getting it right when calculating overtime during payroll. For more information contact the author at JSkousen@laborlawyers.com or 949.851.2424. Isn’t It tIme you had a fully - loaded certIfIed publIc accountIng fIrm? We have been steering San Diego businesses in the right direction since 1946. • Accounting Support & Financial Analysis • Corporate & Individual Tax Planning • Estate Planning & Business Continuation • Management Consultation • Audit & Review Services • Assistance in Tax Audits • Retirement & Pension Plans • Finance & Business Planning For a free evaluation of your current accounting program, please contact Philip Smith at (619) 231-1977