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PRESS RELEASE

Daily Pacific Builder

“UNIONS 2002” EDITION

Premium Pay For Overtime Hours…It's The Law!

By Cindy Sato and Michael Kurey
Building Industry Stabilization Program

August 26, 2002

Today, all construction workers in California must receive premium pay for overtime hours. But, what do we mean by overtime hours, and do contractors face the same rules on all construction projects? The answers to these questions can be found in a number of rules and regulations that apply to overtime. Basically, these rules and regulations establish different premium payment requirements for three categories of construction contracts: privately funded construction, publicly funded projects where contracts are issued by the state or local government and federal contracts.

Effective January 1, 2001, California’s Industrial Welfare Commission established Order No. 16-2001. This Order represents the Commission’s first attempt to provide minimum standards including premium pay for overtime specifically for the construction industry. The overtime requirements of this Order are similar to those provided in the Labor Code’s public works laws in that “one and one-half times” is applied to hours in excess of eight in a day and forty in a week. Although these formulas appear to be identical, a fundamental difference in the overtime requirements is in the focus of the rules. Order No. 16-2001 establishes minimum standards for construction in general, and therefore refers to the "employee’s regular rate of pay" when calculating overtime. Conversely, the Labor Code requires that an employee on a public works project receive "not less than 1½ times the basic rate of pay." The requirement of the basic rate of pay and fringe benefits is determined by the Division of Labor Statistics and Research. Generally, the basic rate of pay for public works is higher than an employee’s regular rate of pay in the private sector.

Another example of a difference between the two rules is found in the application of an alternative work schedule. If a contractor wishes to implement a four ten hour day schedule under specified procedures on a private construction project, no overtime pay is required. However, the same work schedule on a state public works project would require that workers receive overtime pay for the ninth and tenth hour worked each day.

Although the rules in the Fair Labor Standards Act (FLSA) and the Davis-Bacon Act lack an overtime requirement for hours in excess of eight in a day, both federal acts require a one and one-half payment for hours worked in excess of forty in a week. The premium payment in the FLSA for work over forty hours is based on a worker’s regular rate of pay, while the Davis-Bacon Act mandates a basic rate of pay (the basic rate of pay for construction classifications is usually included in the specifications of federal contracts). In the absence of a daily overtime requirement in the FLSA and the Davis-Bacon Act, an alternative work schedule of four ten hour days is feasible without the obligation to pay overtime.

The above comments represent a brief overview of complex issues that contractors face when evaluating overtime requirements. Contractors are strongly urged to read the full text of state and federal laws and regulations before determining the proper process for the payment of wages. A wealth of information and reference material is available on the Department of Industrial Relations web page, www.dir.ca.gov, and the U.S. Department of Labor web page, www.dol.gov.

The Building Industry Stabilization Program was established by the Construction Employers’ Association (CEA), and the Carpenter and Laborer Unions to assist, enhance and monitor compliance with state and federal prevailing wage laws pertaining to the building industry in Northern California.

CEA representatives of the Building Industry Stabilization Program:

• Larry Nibbi, BISP Co-Chairman and President of Nibbi Bros., Inc.
• Tim Marsh, President, Harris Construction Co., Inc.
• Russ Staines, President, W.A. Thomas Co., Inc.
• Michael Walton, Secretary, Construction Employers’ Association

Carpenter Representatives:

• Robert Alvarado, Executive Officer, Northern California Carpenters Regional Council
• Bill Feyling, Executive Director, Carpenters 46 Northern California Counties Conference Board

Laborer Representatives:

• Jose Moreno, BISP Chairman and Business Manager, Northern California District Council of Laborers
• James Homer, Business Manager, Laborers Local No. 270