Employers Cannot Choose “Workday” and “Workweek” Definitions That Deny Employees Overtime

The California Labor Code allows employers to choose the beginning and end times of the “workday” and “workweek” as long as the “workday” covers a consecutive 24-hour period commencing at the same time each calendar day, and the “workweek” covers any seven consecutive days starting with the same calendar day each week.  This is important because once defined, the employer’s “workday” and “workweek” become the benchmarks by which overtime pay is determined.

Non-exempt employees in California are entitled to overtime pay for work in excess of eight hours in one “workday,” work in excess of 40 hours in one “workweek,” and work on the seventh consecutive day of a “workweek.” This is usually a pretty straightforward matter since most employees who work overtime do so during their employer’s usual business hours, which usually fall within the employer’s defined “workday.” Many employers select a workday that starts at 12:01 a.m. and ends at midnight, which doesn’t pose any issues for employees who work standard business hours. But this becomes a bit more tricky when an employee works a shift that starts on one workday and the shift ends on a different work day, such as employees who work overnight shifts.

For example, at one of my first jobs working at a bookstore, every few months we would work overnight while the store was closed, pulling old books that didn’t sell off the shelves to send back to the publishers. I am assuming (but don’t remember) that the bookstore had a standard workday of 12:01 a.m. to midnight, which would usually make overtime pay easy to figure out since the bookstore had normal business hours. But this workday definition would have resulted in shorting us on overtime if we worked more than eight hours during those overnight shifts.  For example, if we started our shift at 10:00 p.m. and worked until the following morning at 8:00 a.m. (with a 30-minute meal break required by law), we would have worked 9.5 hours, meaning we should have been paid 1.5 hours of overtime.  But based on the 12:01 a.m. to midnight workday, the store would have paid us for 2 hours of straight time on one workday, and 7.5 hours of straight time on the next workday, with no overtime pay. The courts that have addressed this issue have held that splitting a shift between two workdays resulting in the employee losing their overtime runs afoul of the law.

While an employer is free to select its own workday/week parameters, the cases state that an employer may designate a workday/week that differs from the work schedule of its employees only if there is a bona fide business reason for doing so, which does not include the primary objective of avoiding the obligation to pay overtime. The cases have not done a good job of clarifying what a bona fide business reason would be, but they have done a good job of establishing what it is not.

For example, in Seymore v. Metson Marine, Inc. (2011) 194 Cal.App.4th 361, the employer’s workweek definition had the effect of denying overtime to its employees who worked aboard a ship.  The employer attempted to justify its workweek designation by arguing that it had other employees, such as office employees, who worked a more conventional schedule. The court rejected this reason, stating it was not a good reason for using the same workweek definition for its employees who worked on the ship resulting in them losing overtime pay.

In Jakosalem v. Air Serv Corp., Case No. 13-cv-05944-SI (N.D. Cal. 2014) the district court held that “[v]ague references to concerns regarding the administrability of maintaining more than one workday” did not constitute a bona fide business reason for applying a workday definition that denied employees overtime pay. And in Henry v. Home Depot USA, Inc., Case No. 14-cv-04858-JST (N.D. Cal. 2016), the court held that the fact that 90% of employees worked during the applicable “workday” and that the workday was chosen based on customer demands did not meet the employer’s burden to justify not paying overtime to night shift employees.

I recently explained all of this to a client when advising that the company would need to select a new workday definition that did not result in denying night shift employees their overtime pay. The client was adamant that their workday definition was not chosen to deliberately short any employees their overtime pay. But as I explained to my client, the issue isn’t whether the employer chose the workday in order to deliberately short employees on their overtime. What matters is that if the employer’s workday/week definition results in denying employees their overtime pay, the employer must have a legitimate business reason for applying that workday/week to those employees. Based on the current case law on this subject, employers will have a hard time convincing a court that such a bona fide business reason exists.

Employer Action Items

Review your pay practices to make sure that your workday and workweek definitions are not resulting in employees being shorted their overtime, particularly if you have employees who work an overnight shift. Update your workday and workweek definitions so that no employee is being denied overtime. You are allowed to have different workdays and workweeks apply to different groups of employees, for example, one workday/week for office employees, and another for employees who work overnight in the warehouse. If you do change your workday/week definitions, make sure to update your written policies to reflect these changes, including in your employee handbook.

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