Are California Employers Required to Include Employee Bonuses When Calculating Overtime Pay?
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A former paramedic says his ambulance company employer paid him and more than 100 fellow emergency workers less overtime than California law required — by leaving their bonuses out of the calculation entirely. The California Court of Appeal agreed the case deserved a closer look, reversing the trial court's decision to block it from proceeding as a class action.
Case: Martinez v. Sierra Lifestar, Inc.
Court: California Court of Appeal, Fifth Appellate District
Case No.: F089576
Get to Know the Plaintiff: Martinez v. Sierra Lifestar
Adam Martinez worked as an emergency medical technician for Sierra Lifestar, Inc., doing business as Lifestar Ambulance, a private ambulance company providing 911 emergency services in Tulare County, California. Martinez and approximately 135 current and former employees were paid hourly on a biweekly schedule and received various bonuses throughout their employment. In May 2020, Martinez received a $100 EMS Week bonus — awarded during National Emergency Medical Services Week — as recognition for the demanding work he and his colleagues perform. His lawsuit alleges that this bonus, along with other nondiscretionary bonuses paid by Lifestar, should have been included in the calculation of overtime pay but was not, resulting in a systematic underpayment of overtime and other premium wages across the workforce.
Get to Know the Defendant: Martinez v. Sierra Lifestar
Sierra Lifestar, Inc., operating as Lifestar Ambulance, provides 911 emergency ambulance services in and around the City of Tulare in California's Central Valley. The company employs paramedics, emergency medical technicians, clerical staff, and an IT technician, all paid on an hourly basis on a biweekly pay schedule. According to the complaint, Lifestar paid employees approximately ten categories of bonuses during the class period but did not factor those bonuses into the regular rate of pay it used to calculate overtime, double time, and meal and rest period premiums.
What Are the Allegations in the Complaint?
Martinez filed a class action in Tulare County Superior Court seeking to represent himself and approximately 135 current and former Lifestar employees. Court filings show the following:
Lifestar excluded nondiscretionary bonuses from the "regular rate of pay" used to calculate overtime, double time, and meal and rest period premium pay, resulting in employees receiving lower premium pay than California law requires
The company paid approximately ten types of bonuses, and the complaint alleges all of them were nondiscretionary and should have been included in overtime calculations
Because of this exclusion, employees received time-and-a-half calculated only on their base hourly rate — rather than on the slightly higher regular rate that would include the bonus — and lost wages accordingly
The employer's argument that the EMS Week bonus was a "gift" or a discretionary payment was rejected by the Court of Appeal as a reason to deny class treatment, because the same bonus policy applied to all employees in the class
What Was the Main Question in the Case?
The central legal question before the Court of Appeal was not whether Lifestar violated the law — that question remains for future proceedings — but whether the case could proceed as a class action. The trial court denied class certification on the ground that Martinez only received one of the ten bonus types and that each type presented unique circumstances, making his claims atypical of the class. The Court of Appeal reversed, holding the trial court applied the wrong legal standard. The question of whether any given bonus is nondiscretionary, and therefore must be included in the regular rate of pay, is a classwide issue that applies equally to all employees — not a reason to block class treatment at the threshold stage. The case was remanded to Tulare County Superior Court for a fresh evaluation of class certification under the correct framework.
Why Does the Case Matter to California Employees?
While this case was filed in Tulare County, California workers across the state experience similar situations. Miscalculation of the regular rate of pay is one of the most common sources of wage and hour complaints in California.
California law requires that nondiscretionary bonuses — those tied to performance goals, attendance, production, or other objective criteria — be included in the regular rate of pay used to calculate overtime, double time, and meal and rest period premiums
An employer cannot retroactively label a recurring, policy-based bonus a "gift" to escape the obligation of including it in overtime calculations
The Court of Appeal's ruling closes a tactic some employers have used to defeat class certification: arguing that minor differences between employees' bonus types make a single plaintiff's claims atypical of the class as a whole
This case is especially relevant to hourly workers in healthcare, transportation, emergency services, and any other field where bonuses supplement an hourly wage
A Brief Overview of the Case
May 2020: Adam Martinez receives a $100 EMS Week bonus from Lifestar Ambulance, netting approximately $100 after withholdings
Complaint filed: Martinez files a class action in Tulare County Superior Court (Case No. VCU299663) alleging that nondiscretionary bonuses were excluded from overtime and other premium pay calculations
March 25, 2025: The trial court denies class certification, finding that Martinez's claims are not typical of the proposed class because he only received one type of bonus
April 21, 2026: The California Court of Appeal, Fifth Appellate District, reverses the denial of class certification, holding the trial court applied an incorrect legal standard; the case is remanded for further proceedings
FAQs: Martinez v. Sierra Lifestar
Q: What is the "regular rate of pay" and why does it matter for overtime in California?
A: The regular rate of pay is the hourly figure California employers must use to calculate overtime, double time, and meal and rest period premiums. It is not simply an employee's base hourly wage — it must also include nondiscretionary bonuses, certain incentive payments, and other forms of additional compensation earned during the workweek.
Q: What makes a bonus "nondiscretionary" under California law?
A: A bonus is generally nondiscretionary if it is tied to objective criteria — such as a performance goal, a production target, or a recognized occasion like National EMS Week — and employees have a reasonable expectation of receiving it. A truly discretionary bonus is one the employer decides to pay spontaneously, in an amount determined entirely at its own discretion, without any prior promise or established policy.
Q: Can an employer call a bonus a "gift" to avoid including it in overtime calculations?
A: Not automatically. California courts look at the substance of the payment, not just the label. A recurring bonus paid under a consistent company policy to employees who meet defined criteria is likely nondiscretionary regardless of what the employer calls it.
Q: What is class certification and why did it matter so much in this case?
A: Class certification is the court's decision to allow a lawsuit to proceed on behalf of a group of similarly situated employees rather than just the individual who filed. In wage and hour cases, certification is critical — without it, each of the 135 employees would have to file separately to recover their share of the underpaid wages.
Q: If I receive a bonus at work, should my employer include it in my overtime calculation?
A: If your bonus is tied to performance goals, production numbers, or other objective criteria, it is likely nondiscretionary and should be included in your regular rate of pay for overtime purposes. If your overtime paychecks do not appear to reflect your bonuses, you may have a wage claim worth evaluating with an employment attorney.
Q: What happens next in Martinez v. Sierra Lifestar?
A: The case was sent back to Tulare County Superior Court for a fresh analysis of class certification using the correct legal standard. Whether Lifestar ultimately violated California wage law has not been decided; that determination will come later in the litigation if the class is certified and the case proceeds to trial.
Have You Been Shortchanged on Overtime Pay?
Cases like Martinez v. Sierra Lifestar are a reminder that wage miscalculations — even small ones — can add up to significant losses for California workers over time. If you believe your employer has not been calculating your overtime correctly, including by failing to account for bonuses or incentive pay, contact Blumenthal Nordrehaug Bhowmik DeBlouw LLP. Knowledgeable employment law attorneys are ready to assist you in law firm offices located in Riverside, San Francisco, Sacramento, San Diego, Los Angeles, and Chicago.
