The calculation of overtime requires that employers include any “extra” pay such as commissions or bonuses. When employers fail to do so, they are in violation of the Fair Labor Standards Act (FLSA). This is the issue that Quest Diagnostics faces in the class action overtime suit they are currently up against.
Lead plaintiff in the class action (Avila v. Quest Diagnostics Clinical Laboratories Inc. et al.) claims that the Company did not provide proper pay to hundreds of hourly employees. They failed to include automatic incentive payments when they completed overtime rate calculations. The named plaintiff was a referral assistant and testing assistant in the West Hills, California location. She claimed her typical work week was over 40 hours. She also alleges that when she was paid overtime, her non-discretionary bonuses (called “Recognition Quest” and “Goal Sharing Bonus” at Quest Diagnostics) were not included when they calculated her regular rate of pay. This is in violation of state employment law as well as federal law (Fair Labor Standards Act or FLSA). She states that her employer miscalculated overtime in this way as a matter of policy. She also claims that over 500 workers can be included in the class that are or were affected by policies and practices addressed by the suit. The lawsuit alleges violations of both FLSA and California Labor Law. It also alleges violations through failure to provide timely wage payment when employment is discontinued and additional violations of California Unfair Competition Law.
Employers should remember that sums employees derive from employment (whether “promised” to them or stated in employment policy, i.e. commissions, earned bonuses, etc.) have to be included when completing calculations of the regular rate (or base rate of pay) in relation to overtime pay. When this is not handled correctly, employers can expect to eventually face a FLSA collective action like the one Quest Diagnostics is currently handling.
If you have questions regarding overtime pay calculations or class action status, please get in touch with the southern California employment attorneys at Blumenthal, Nordrehaug & Bhowmik.