Prizes count toward overtime pay only if regular and tied to job performance

STATE OF CALIFORNIA GEORGE DEUKMEJIAN, Governor

DEPARTMENT OF INDUSTRIAL RELATIONS

DIVISION OF LABOR STANDARDS ENFORCEMENT
525 GOLDEN GATE AVENUE
SAN FRANCISCO, CALIFORNIA 94102

   (415) 557-3827                                    ADDRESS REPLY TO:
                                                       P.O. BOX 603
                                                       San Francisco, CA 94101

                                                     IN REPLY REFER TO:

February 17, 1987

Ms. Karen K. Haubrich
Ballard, Rosenberg & Golper
1900 Avenue of the Stars
Suite 2300
Los Angeles, CA 90067
Dear Ms. Haubrich:

This is in reply to your letter of January 11, 1987, regarding the value of prizes awarded to employees as possibly affecting the calculation of overtime pay.

The prizes described in your letter, "a nominal amount of lottery tickets" and raffles, would not constitute bonuses for the purposes of establishing the regular rate of wages in order to compute overtime, unless they are given on a regular basis and are directly related to job performance.

The value of the prizes would be treated as wages under the general definition in the Labor Code (Section 200), and subject to a claim if, for example, an employee won a prize, but did not receive it in accordance with the company's policy or agreement.

As federal law and regulations may include the value of prizes in the computation of overtime, you may wish to contact the U.S. Department of Labor, Wage Hour Division for additional information.

I hope this is responsive to your question; if not, please let me know.

Very truly yours,

Lloyd W. Aubry, Jr.
State Labor Commissioner

LWA:sw

1987.02.17