Airline Servicer Crashes in Overtime Case: Employers Cannot Define Workday to Avoid Payment of Overtime

Generally, employers in California are free to define their workdays and workweeks as they see fit, with at least one major caveat: they may not structure the workday or workweek in a way that systematically prevents employees from earning overtime pay.

A recent case, Jakosalem v. Air Serv Corp., highlights the risks inherent in this calculation.  In that case, commercial airline servicer Air Serv Corp. structured its workday to begin at midnight — a common policy that seemingly complies with state law. Unfortunately, workers on the “night shift,” which began before midnight and ended after midnight, were essentially ineligible for overtime pay because they never worked more than eight hours in the same “workday” (as defined in the company policy) despite sometimes working shifts longer than eight hours.

The California district court denied Air Serv’s motion for summary judgment, finding that the company failed to demonstrate that its policy was based on legitimate business reasons, as opposed to the desire to reduce overtime pay.  The company argued that its wage calculation practice conformed to industry standards, only affected a small number of workers, and was consistent with the federal Fair Labor Standards Act (FLSA).  The court rejected Air Serv’s arguments, holding that the number of affected workers was irrelevant to the question of whether the company was simply attempting to reduce costs.  The court also determined that California law — which has more stringent requirements with respect to workweeks and daily overtime than the FLSA —applied.  Under California law, Air Serv’s policy did not pass muster.

This case highlights the importance for companies with employees in California to understand the nuances of California law on this issue.  A.B. 60, or the “Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999,” defines a workday, workweek, and daily overtime pay in California.  A “workday” is “any consecutive 24-hour period commencing at the same time each calendar day.”  A “workweek” is “starting with the same calendar day each week[,] … a fixed and regularly recurring period of 168 hours, seven consecutive 24-hour periods.”  The law also clarifies that if an employer fails to designate the period of the workday and workweek, it will be assumed each workday starts at midnight and each workweek starts at midnight on Sunday.

As Air Serv teaches, however, employers cannot manipulate these concepts to avoid overtime obligations.  If employees are regularly scheduled to work a single shift over two separate workdays, the employer should consider either redefining the workday, or paying the employee as if the employee only worked a single workday.  An employer who chooses not to do so will have to provide a compelling justification for its policy, which is a tough — and expensive — standard to meet.

Carlson & Jayakumar will provide updates if this case is appealed and if there are any new cases that address this issue.  In the meantime, employers should comply with the court’s recent interpretation of the law.  If you have any questions regarding structuring your workday/workweek, overtime pay, or have any other legal inquiries, please contact the attorneys at Carlson & Jayakumar at (949) 222-2008.

By Christine de Bretteville & Jehan N. Jayakumar