The California Supreme Court recently decided the question of how an employee’s overtime pay rate should be calculated when the employee has earned a flat sum bonus during a single pay period.1 In Alvarado v. Dart Container Corp. of California, there was no dispute that the bonus needed to be factored into the employee’s regular rate of pay. The question addressed by the court was whether the divisor for purposes of calculating the per-hour value of the bonus should be (1) the number of hours the employee actually worked during the pay period, including overtime hours; (2) the number of non-overtime hours the employee worked during the pay period; or (3) the number of non-overtime hours that exist in the pay period, regardless of the number of hours the employee actually worked.
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