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Calculating Travel Pay in California

Hourly employees must be paid for all “hours worked.” Where an employee is required to travel for work, near or far, the employer must compensate the worker for that time. Exceptions are normal commute time or road trip downtime. Thus, an hourly worker who watches a movie through a flight for business is still earning pay for his or her hours on the plane except the time spent taking a meal, as traveling employees are still entitled to meal and rest breaks.

Businesses may establish a lower hourly rate of pay for unproductive but compensable travel time. Thus, an employer could pay an hourly employee minimum wage (currently $11.00/hour in California for businesses with 26 or more employees) for the transit time and that worker’s higher, normal rate (say, $20.00/hour) for time spent working at the destination that day. If that worker flew for five hours ($11.00/hour x 5 hours = $55.00) and then attended a conference for another three ($20.00/hr x 3 hours = $60.00), his total pay that day would be $115.00.

Unless there is a clear written agreement setting a special, reduced “travel rate,” the compensation is at the employee’s normal hourly rate, which may be no less than minimum wage. See, California Minimum Wage Rates for 2018 (December, 2017). The state’s daily and weekly overtime laws also apply to work-related travel days. Thus, a worker that spent a ten hour day flying to New York and then preparing for a meeting in the hotel room has earned eight straight time hours and two overtime hours.

California is one of the few states that require overtime premium pay either weekly (“time-and-a-half” after 40 in a week) or daily (“time-and-a-half” after eight hours in a day, “double time” after 12 daily hours). See, The Basics of Overtime (May, 2018).

Things get more complex when a California employee works either daily or weekly overtime while earning separate hourly rates during a pay period. Employers must calculate those 1.5x and 2x premium rates based upon the “regular rate of pay.” To calculate the “regular [hourly] rate” to be used for paying overtime, the employer must add up all non-overtime compensation for a week and divide it by the total number of hours worked.

Thus, if the above worker flying to New York also returned to California that same week, working a total of 50 hours, with ten of those hours at the $11.00/hour travel rate ($11.00/hr x 10 hrs. = $110.00) and the other 40 hours at the $20.00 rate ($20.00/hour x 40 hrs. = $800), his total earned compensation would of course be $910.00 for those 50 hours. The regular rate would be $18.20/hr ($910.00 ÷ 50 hrs = $18.20), making the 1.5x premium rate for each of the ten overtime hours $27.30.

If the worker had any very long work days that week exceeding 12 hours, the employee would earn 1.5x the regular rate for the each of the 9th – 12th hours worked in that day and then 2x the regular rate for each daily hour worked over 12. So, if the employee worked five days of 8, 10, 12, 14, and 8 hours respectively, the additional pay for overtime on both a daily or weekly calculation would be for 10 hours at an additional .5 premium rate per hour (or 10 x $13.65 overtime premium) and 2 hours at an additional 2x premium rate per hour (i.e., 2x $27.30 overtime premium). The employer would therefore pay $910 + $136.50 + $54.60 for that week.

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin

May 18, 2018