Advanced-Tech Security Services, Inc. v. Superior Court
filed June 3, 2008,
Second District, Div. Five

May Premium Pay be Credited against Overtime?

Ester Roman is a security guard for petitioner Advanced-Tech Security Services, Inc. (Advanced-Tech). She was provided with Advanced-Tech’s Employees Handbook when she was employed. The handbook sets forth the policies for overtime wages and the amount of wages the company would pay to its security guards who worked on designated holidays. It provides that all hours an employee worked in excess of 40 hours/week would be compensated at the rate of one and one-half times the employee’s regular rate of pay.

Advanced-Tech’s handbook listed 6 holidays, amongst which are Labor Day and Memorial Day.

Ms Roman worked for 12 hours on Labor Day during the week of 4 September 2006. She worked for a total of 60 hours during that week. She also worked on Memorial Day during the week of 28 May 2007 where she rendered 8 hours of overtime.

Advanced-Tech paid Ms Roman time and one-half for her holiday work, while her holiday pay was credited against her overtime pay to the extent she worked in excess of a 40-hour in a workweek.

Ms Roman filed a complaint against the petitioner for failure to pay overtime compensation. She contended that while she is entitled to time and one-half for her holiday work, she is also entitled to additional overtime payments for work she rendered in excess of 40 hours in the same week.

For its part, Advanced-Tech argued that the manner in which Ms Roman was paid was consistent with Section 510 (a) of the Labor Code as premium holiday pay may be credited against overtime.

The pertinent legal provision mandates that an employee shall be compensated at the rate of no less than one and one-half times the regular rate of pay for an employee for (1) more than 8 hours of work in one workday and (2) more than 40 hours of work in any one workweek.

Advanced-Tech moved for a summary adjudication on the ground that Ms Roman would never be able to prove that she was not paid right.

The respondent court denied the petitioner’s motion on the ground that its authorities “did not address the issue of the propriety of its practice of crediting a contractual holiday premium payment toward overtime pay for work in excess of 40 hours in the same week.”

The Court ruled that the petitioner is entitled to summary adjudication.

The Court held that there was no legislative intent to deem premium holiday pay, voluntarily offered by the employer, as regular pay. Relevant federal legislation and case are decidedly to the contrary.

Amongst others, the Court cited the case of Walling v. Youngerman-Reynolds Hardwood Co. (1945) (325 U.S. 419, 424) which holds that “regular rate” refers to the hourly rate actually paid the employee for the normal, non-overtime workweek for which he is employed. Premium holiday pay, said the Court, is not considered as a regular rate of pay an employee receives for a normal workday, following the doctrine of the above-cited case.

The Court ordered the respondent court to grant the petitioner’s motion for adjudication.