California Supreme Court Puts Federal Bonus OT Formula in Doubt

Seyfarth Synopsis: The Court of Appeal decision that held that employers may use the federal formula for calculating overtime on a flat sum bonus is no longer citable precedent as the California Supreme Court has granted review of the decision.

On January 22, 2016, we reported on Alvarado v. Dart Container Corp. of California, (click here to read), in which the California Court of Appeal held that an employer can use the federal formula for calculating overtime on a flat sum bonus, even though the California Division of Labor Standards Enforcement Manual states otherwise. On May 11, 2016, the California Supreme Court granted review in the case. Since the California Supreme Court has granted review, Alvarado is no longer citable as precedent. We will report on the result of this case once the California Supreme Court has issued its decision.