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A Collective Bargaining Agreement That Provides For Premium Rates For Overtime Hours Worked Is Not Subject To The Same Overtime Pay Obligations Defined By California Labor Code Section 510

January 27 2014

By: Labor and Employment

In George Vranish, Jr. et al. v. Exxon Mobil Corporation, 2014 DJDAR 761, January 23, 2014, the Court upheld the terms of a collective bargaining agreement (“CBA”) which set forth overtime pay for Exxon Mobil’s employees. Pursuant to the CBA, Plaintiffs were paid at the overtime premium rate of 1.5 times their regular rate of pay for hours worked over 40 hours in a workweek or over 12 hours in a workday but were not paid overtime for hours worked between the eighth and twelfth hour in a workday. Thus, Plaintiffs argued that they were not paid premium compensation for all “overtime hours worked” as required under Labor Code section 510. That section provides that any work in excess of eight hours in one workday is compensated at 1.5 times the regular rate of pay for an employee and any work in excess of 12 hours in one day is compensated at 2 times the regular rate of pay for an employee.

However, Labor Code section 514 provides that Labor Code section 510 does not apply to an employee covered by a valid CBA if the agreement expressly provides for the “wages, hours of work, and working conditions of the employees, and if the agreement provides premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage.”

Here, the Court engaged in a statutory construction analysis with a view of promoting rather than defeating the general purpose of the statute, so as to avoid an interpretation that would lead to absurd consequences. The Court held that the CBA at issue satisfied all the requirements of Labor Code section 514, including the fourth requirement that it provide “premium wage rates for all overtime hours worked.” According to the Court, Labor Code section 514 did not require Exxon to “look to the definition of ‘overtime’ as that word is defined in section 510(a).” Alternatively, the Court found that, because Plaintiffs worked an alternative workweek schedule adopted as part of the CBA, the CBA, rather than Labor Code section 510, defined what work constituted overtime hours for purposes of Labor Code section 514.