Q: What is the requirement regarding overtime pay for my company when there is a paid holiday on Monday and employees are required to work 8 hours per day Tuesday through Friday, plus Saturday? Is Monday counted as a day worked for the purpose of calculating the 40 hours and thus Saturday hours should be paid at the overtime rate?
A: No. In this example, Saturday is not an overtime day. Premium pay is based on hours worked. Your employees did not work on Monday but simply observed a holiday by having the day off with pay.
Hours Worked Under the basic definition set out in the Industrial Welfare Commission order, "hours worked" means the time during which and an employee is subject to the control of any employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so. Where it is determined that the employee's time is subject to the control of the employer, the time constitutes "hours worked." An employee off on holiday with or without pay is not working and the time does not count toward premium pay. This also holds true for an employee not working, but receiving vacation pay, paid time off or paid sick leave.
Overtime Pay Section 3 of the Wage Orders contains the overtime provisions. In brief, what is required is one-and-a-half times the regular rate of pay for "hours worked" in excess of 8 hours per day. There are other requirements, such as time-and-a-half over 40, double-time over 12 hours in a day and the seventh-day rule. The "hours worked" definition and the overtime requirements in the Wage Orders confirm that holiday pay is not "hours worked." Thus, the overtime calculation does not include the holiday hours.
Reprinted with permission from the California Chamber of Commerce, www.calchamber.com.