Warning to Employers: Following the Terms Of A Collective Bargaining Agreement Is No Defense To Employee Claims For Overtime, Meal and Rest Periods

Many employers believe that union and non-union labor law are two entirely different universes. In some respects this is understandable. After all, there is an extensive decades-old body of federal labor law regulating the relationship between management and organized labor. The purpose of this regime is to ensure that the terms and conditions of employment will be determined by a freely negotiated bargain struck between equal bargaining powers.   So once this bargain is finally struck and reduced to a written collective bargaining agreement (“CBA”), shouldn’t it be the final word in determining the wages that must be paid to union employees?

The answer is no. 

While a union and employer are permitted to bargaining over most workplace issues, federal labor law does not permit unions to bargain away “non-negotiable minimum labor standards” established by state law. For example, a union could not agree to allow its members to work for less than the California minimum wage. Nor, with one exception, may a CBA waive the right to collect all overtime pay authorized by the California Labor Code.

This exception is contained at Labor Code section 514, which provides:

[California overtime requirements] do not apply to an employee covered by a valid collective bargaining agreement if the agreement expressly provides for the wages, hours of work, and working conditions of the employees, and if the agreement provides premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage.

Many employers are generally aware of this exemption but mistakenly believe that it exempts all employees covered by a CBA from state overtime requirement. The exemption is actually very narrow.   For example, employees are exempted from state overtime only if their CBA provides a premium wage rate for “all overtime hours worked.” In California all hours worked in excess of eight per day are considered “overtime.” Thus, a CBA which only provides premium pay for hours in excess of 40 per week would not qualify for the exemption. Likewise, any employee whose regular straight time rate under the CBA is less than $9.75 would not qualify for the exemption and would be entitled to state law overtime payments.

In the 2005 case of Valles v. Ivy Hill Corp, the Ninth Circuit also held that federal labor law does not permit a CBA to waive California’s meal and rest break requirements. Thus, all employees must receive meal and rest breaks – and receive one hour of compensation for each missed meal or rest period – regardless of whether they are in a union or are covered by a CBA.    

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