Bryan Little, Farm Employers Labor Service

Feb. 14, 2019

The implementation of AB 1066 (Gonzalez) and issuance of updated Industrial Welfare Commission Wage Order No. 14-2001 by the Department of Industrial Relations (see Labor Commissioner’s Office Posts Ag O/T FAQ, FELS website, Jan. 24, 2019) has created continuing confusion for agricultural employers.

The capping as of Jan. 1 of straight-time pay at 9.5 hours per workday and 55 hours per workweek for agricultural employees of employers employing 26 or more employees has created a new uncertainty for farm employers: how to calculate overtime pay for employees who have worked both daily and weekly overtime hours in one workweek.

Many ag employers commonly and mistakenly believed the prior version of Order 14 required a nonexempt farm employee to be paid an overtime premium after working 60 hours in a workweek. In fact, it permitted farm employees to work up to 10 hours per workday at their regular rate of pay and required on the seventh consecutive day of work in a workweek time-and-a-half (“overtime”) pay for the first eight hours worked and double-time pay for hours worked beyond eight.

While as a practical matter an ag employee could work only up to 60 hours over six days in a workweek (i.e., six 10-hour days) at his regular rate of pay, Order 14 never specified a limit on the number of hours an employee could work in a workweek before being owed an overtime premium.

The January 2019 update of Order 14 describes the transition from the 10-hour day for farm employees as mandated by AB 1066. As of Jan. 1, 2019, an employer with 26 or more employees (“large employer”) must pay overtime to an ag employee for hours worked beyond 9.5 in a workday. It also specifies (as does AB 1066) a separate obligation for an employer to pay overtime to an ag employee for hours worked after 55 in a workweek.

Of course, in coming years ag employees of “small” employers—those with 25 or fewer employees—will also be covered by the ever-lower straight-time limits. Daily and weekly overtime thresholds will steadily decline until overtime will be required after 8 hours worked in a workday and 40 hours worked in a workweek (Jan. 1, 2022 for large employers, and Jan. 1, 2025 for small employers, respectively). In addition, starting on those date, an ag employee will be entitled to double-time pay for hours worked after 12 in a workday.

These two obligations—to pay daily and weekly overtime—are separate and apart from one another. It’s possible to incur an overtime obligation to an employee on one or more workdays in a workweek without incurring a weekly overtime obligation. For example, an ag employee of a large employer who worked five 10-hour days in a workweek is entitled to 2.5 hours of daily overtime (five days times .5 hour per day) but no weekly overtime for the 50 hours (five days times 10 hours per day) worked in the workweek.

And vice versa, an employee could be entitled to weekly overtime but not daily overtime in a workweek. For example, an ag employee of a large employer who worked six 9.5-hour days in a workweek gets no daily overtime (because he never exceeded the daily limit) but must be paid two hours of weekly overtime (six days times 9.5 hours per day is 57 hours, two beyond the 55-hour limit).

But what happens when an ag employee of a large employer worked both daily overtime and weekly overtime in a workweek? How does the employer calculate the overtime pay?

Ag employers struggling to understand how to comply with the new weekly overtime requirement have asked if daily overtime hours must be compensated by a separate overtime premium even though they are counted toward weekly overtime hours. For example: An ag employee of a large employer worked six 10-hour days (60 hours) in a workweek. Does the employee get three hours of daily overtime (six days times .5 overtime hour per day) plus weekly overtime for the five hours worked beyond the 55-hour weekly limit—a total of eight overtime hours?

Fortunately for employers, the answer is “no.” California does not require the so-called pyramiding (duplicating) of overtime hours. The key court decision on this was in Monzon v. Schaefer Ambulance Service, Inc. (1990) 224 Cal.App.3d 16. In Monzon, the appellate court held:

[T]he proper method to use in calculating overtime is one in which the employer must identify at week’s end all hours worked by an employee during that workweek and pay overtime based upon the excess of total hours over the greater of either: (1) eight hours in a workday, including double time, or (2) forty hours in a workweek.

A few years later, the labor commissioner’s office—the Division of Labor Standards Enforcement—affirmed that this also reflected its view:

[O]nce an hour is counted as an overtime hour under some form of overtime, it cannot be counted as an hour worked for the purpose of another form of overtime. When an employee works ten hours in one day, the two daily overtime hours cannot also be counted as hours worked for the purpose of weekly overtime.

In short, the employer should calculate—and the employee should be paid for—the greater of either daily overtime pay or weekly overtime pay, but not both.

So in the example above, where the employee worked six 10-hour days (60 hours) in a workweek, the employee must be paid for five hours of weekly overtime, as it exceeds the total of three hours of daily overtime.

And if that employee also worked on the seventh consecutive day of the workweek, he must additionally be paid overtime for the first eight hours worked and double-time for hours worked after those 8 hours on that day.

Of course, FELS is ready to help subscribers determine the correct application of the new weekly overtime requirements; please contact us at 800-753-9073 or email us at info@fels.net.