| Source: SHRM 05/26/26 A California appellate court revived a proposed class action alleging that an ambulance company miscalculated overtime by excluding certain bonuses from employees’ regular rate of pay. The case arises under California wage-and-hour law governing overtime and the calculation of the “regular rate of pay,” including whether bonuses are nondiscretionary and must be included in that rate. It also implicates class certification standards, particularly whether the plaintiff’s claims are “typical” of the proposed class. The plaintiff, a former emergency medical technician, alleged that the employer systematically excluded nondiscretionary bonuses from overtime calculations. The bonuses were paid to employees under a standardized structure tied to performance and company metrics. The plaintiff claimed this practice resulted in underpayment of overtime wages across the workforce. The employer opposed class certification. It argued that the bonuses were discretionary or akin to gifts, and therefore properly excluded from the regular rate of pay. It also contended that individualized defenses applied to the plaintiff, making his claims atypical of other employees. The trial court agreed with the employer and denied class certification. It found that the employer’s defenses — particularly regarding the nature of the bonus payments — were unique to the plaintiff and defeated the typicality requirement. On appeal, the court rejected that reasoning. It held that the employer’s defenses were not unique to the plaintiff because the same bonus structure applied to other employees. The characterization of the bonus as discretionary or a gift would rise or fall on common proof applicable to the entire class. The appellate court emphasized that typicality does not require identical facts among class members. Instead, it asks whether the plaintiff’s claims are reasonably coextensive with those of the class. Here, the plaintiff and other employees were subject to the same compensation policies and alleged the same legal violation: exclusion of bonuses from overtime calculations. Red Flag Tips California law broadly defines the regular rate of pay to include nondiscretionary compensation. Bonuses tied to productivity, attendance, or company performance typically qualify. Calling a payment “discretionary” will not control if the underlying facts show otherwise. The ruling also reinforces that uniform pay practices create class-wide exposure. When compensation policies apply consistently across employees, courts are more likely to find common questions suitable for class treatment. Employers should expect that defenses to those policies will be evaluated on a class-wide basis as well. Organizations that focus on execution — reinforcing habits, maintaining strong documentation, and adapting to evolving indoor standards — will be best positioned to meet regulatory expectations and safeguard their workforce. Key Takeaway: Employers should audit bonus structures that may affect the “regular rate of pay.” Labels like “discretionary” or “gift” will not shield payments that function as earned compensation. If a bonus is broadly distributed under consistent criteria, assume it must be included in overtime calculations and applied consistently across employees. Note: This topic will be covered in the live Wage & Hour Bootcamp scheduled for September 15th in Orange County. Additional information to come! For additional information, please call our office at (714) 799-1115 |
CA Court Revives Overtime Class Action Over Bonus Pay
08/11/2026
By: HR NETwork Inc
