Finally some good news to report! The court of appeal appears to be backing away from reasoning it first announced in Seymore v. Metson Marine. Who knows, perhaps they got wind of our Lunch and Learn!
As you may recall, Seymore created significant confusion regarding the employer’s ability to designate a “workweek” definition for payroll purposes. In that case, an employer was required to pay a seventh day premium, even though no premium was owed based on the employer’s defined workweek. In a somewhat surprising shift, the court of appeal vacated its initial ruling and issued a new opinion. While this new opinion ultimately arrives at the same conclusions, it does so based on very different reasoning.
Under the latest iteration of Seymore:
1) Employers can use a “workweek” definition that differs from the actual schedule if there is a “bona fide business reason” to justify the difference (such as accommodation of employees, a collective bargaining agreement, federal regulation, etc.).
2) The “bona fide business reason” for having a different payroll “workweek” cannot be primarily to avoid overtime obligations.
3) 9/80 schedules are most likely still permitted (even though the 9/80 schedule is in all likelihood implemented primarily to avoid overtime). Though the 9/80 arrangement arguably goes against the court’s reasoning, the court acknowledges a long-standing practice of allowing 9/80 schedules.
4) DLSE guidance will be afforded considerable weight, even though it does not have the force of law. (This was a big shift from the earlier decision which said the DLSE should be given “no deference.”)
Yet, though the court seems to have cleaned up some of its mess, it is worth mentioning that it did not revise its reasoning with respect to “workday” definitions. That is, the Seymore decision still seems to indicate that overtime for “hours over eight in a day” requires overtime based on the shift worked, rather than based on the defined workday. In other words, overtime might be triggered, for example, where an employee works a graveyard shift in excess of 8 hours, even if that shift is allocated to two distinct workdays. As we have noted, this approach is a significant departure from the stance that has historically been taken by the Labor Commissioner. In addition, this rationale flies in the face of logic to the extent that it renders the “workday” definition meaningless since there can be no cut-off. For now, we will have to wait to see if either the California Supreme Court grants review or whether the court of appeal does another about-face.
In the meanwhile, please feel free to contact us if you have any questions related to this case and we will continue to update you on new developments related to this decision.