Skyline Homes, Inc. v. Department of Industrial Relations

In Skyline Homes, Inc. v. Department of Industrial Relations (1985) 165 Cal. App. 3d 239, salaried salespeople who worked a fluctuating workweek filed a claim with the Department of Industrial Relations, Division of Labor Standards Enforcement (the DLSE), alleging that their employer improperly computed their overtime pay. ( Skyline Homes, Inc. v. Department of Industrial Relations, supra, 165 Cal. App. 3d at p. 244.) The relevant regulation was substantially similar to the one at issue here, providing that any employee who worked longer than eight hours daily or 40 hours weekly would be compensated at one and one-half times the employee's regular rate. The salespeople were guaranteed a fixed minimum weekly salary, but were paid overtime compensation for all work performed over 40 hours in any given workweek. Their employer computed overtime pay in the same manner as the federal standard applied here by Employer: by dividing the employee's weekly salary by the number of hours actually worked in a given week. Under this method, as in the PPR, the more hours the employee worked, the lower the regular rate became. ( Id. at p. 245.) In Skyline, the employer maintained that its method for deterring overtime pay was valid as sanctioned under federal law. The Skyline court considered the conflict between federal and state law and concluded that federal law did not preempt state law because the Fair Labor Standards Act (FLSA; 29 U.S.C. 201-219) specifically states that 3 "No provision of this chapter or of any order thereunder shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this chapter or a maximum workweek lower than the maximum workweek established under this chapter." (29 U.S.C. 218(a).) 4 Federal regulations also provide that where state or local laws provide greater protection to the employee, they shall be interpreted to override the provisions of the FLSA. ( Skyline Homes, Inc. v. Department of Industrial Relations, supra, 165 Cal. App. 3d at pp. 250-251, citing 29 C.F.R. 778.5.) The Skyline court concluded that 5 since the number of hours required to be worked before the overtime rate is applied is less under state law than under federal law, the State of California provides for a lower maximum workweek, and thus comes within the express savings clause of the FLSA. ( Skyline, supra, 165 Cal. App. 3d at p. 252.)