Dive Brief:

• San Jose firefighters who were paid more than required by the federal Fair Labor Standards Act (FLSA) failed to prove their allegations that they were underpaid for nearly six months (Wallace v. City of San Jose, No. 18-16083 (9th Cir. Jan. 15, 2020)).
• Public agencies employing firefighters are allowed to adopt a 28-day work period for purposes of calculating overtime under the FLSA, which San Jose opted to do. The firefighters were paid a base amount for 224 hours per work period, regardless of whether they actually worked this full amount of time, and were also paid "contractual overtime" at a time-and-a-half rate for each additional hour worked. The firefighters were also entitled to FLSA overtime pay for each hour worked over 212.
• The 9th U.S. Circuit Court of Appeals concluded that the firefighters were paid more than was legally required, so San Jose had no liability under the FLSA. Accordingly, the 9th U.S. Circuit Court of Appeals upheld a federal district court's summary judgment ruling in favor of the city.

Dive Insight:

While the FLSA provides special rules, as in this case, for certain jobs, the general rule is that non-exempt employees must receive overtime pay, at a time-and-a-half rate, for hours worked beyond 40 in a given workweek.  

When calculating overtime, it's important to remember that an employee's regular rate of pay doesn't consist only of an employee's hourly wages — it generally includes all compensation, with just a few exceptions.

Delta recently agreed to pay $3.5 million to settle class action allegations that it incorrectly calculated overtime pay under California law for certain nonexempt employees. The airline was accused of failing to include, in the regular rate of pay, things like shift differential payments, profit-sharing payments and "Shared Rewards" bonuses.

The U.S. Department of Labor issued its final rule updating the regular rate at the end of 2019, which took effect on Jan. 12. Under the new rules, employers would be able to exclude certain items when calculating the regular rate of pay, including the cost of wellness programs, unused leave and reimbursed expenses, among other things.

Employers should regularly review their timekeeping practices to ensure compliance with state and federal overtime rules. Additionally, front-line managers should be trained on compliant wage and hour practices to ensure common questions and issues are handled properly at the outset.