1713 - Overtime Compensation (Cash in Lieu of Benefits)
- Employee Relations Officers
- Labor Relations Officers
- Personnel Officers
- Personnel Transactions Supervisors
- Provides direction on factoring the cash that state employees receive in lieu of benefits under the FlexElect Cash Option and Consolidated Benefits (CoBen) Cash Option programs or excess cash received under the CoBen Benefit Allowance program into the overtime rate of pay.
Effective July 1, 2018, the cash amount paid in lieu of health and/or dental benefits and the excess cash received under the CoBen allowance program must be included in an employee’s regular rate of pay for overtime purposes.
The Fair Labor Standards Act (FLSA) requires that all pay earned during the regular scheduled work period be included as part of the regular hourly rate for purposes of calculating overtime. For most classifications overtime is authorized time worked in excess of the employee’s regularly scheduled workweek. For represented employees, the Memoranda of Understanding determine whether the overtime hours worked should be compensated at a straight or premium rate of pay. For excluded employees, refer to California Code of Regulations, title 2, sections 599.700 to 599.711.
Departments should take action to include, in the overtime rate of pay, the cash that state employees receive under the state’s FlexElect Cash and CoBen Cash programs. Additionally, departments should include in the overtime rate of pay the excess cash employees receive under the CoBen allowance program. As illustrated in the chart below, if a Bargaining Unit 7 employee receives a $626.00 CoBen allowance and the benefit premiums total $499.02; there is an excess cash allowance of $126.98. The $126.98 excess cash allowance must be included in the employee’s regular rate of pay for overtime purposes.
Excess Cash Paid to Employee
Health (Health Net Salud y Mas)
Dental (Delta Care USA)
Payroll processing instructions are provided by the State Controller’s Office (SCO); refer to the Payroll Procedures Manual (PPM) and Payroll letter sections on the SCO State Human Resources Department webpage.
Permanent Intermittent (PI)
PI employees who elected benefits and as a result receive an excess cash allowance each month, should have their excess cash allowance factored into their overtime rate of pay as outlined in the example above.
PI employees who elected cash in lieu of benefits during the open enrollment period are not eligible for the additional Flex Cash/CoBen Cash overtime compensation until completion of the required eligibility criteria. Once an employee’s eligibility has been verified, the department should process retroactive overtime adjustments for the affected pay periods. For information on the FlexElect Program for PI employees, refer to the Benefits Administration Manual (BAM), section 700. For information on the CoBen Program for PI employees, refer to the BAM, section 1600.
LEAP employees become eligible for the cash in lieu of benefits when their LEAP appointment is made permanent and the time base is half-time or more. Once an employee’s eligibility has been verified, the department should process retroactive overtime adjustments for the affected pay periods.
This policy applies to employees eligible to receive overtime compensation.
Departments should ensure that any retroactive enrollments, changes, or cancellations to an employee’s CoBen Cash or Flex Cash election form are factored into the overtime calculation on a timely basis to avoid employee accounts receivables and to ensure timely issuance of overtime pay.
- Bargaining Contracts - MOUs
- California Code of Regulations, title 2, sections 599.700 to 599.711
- United States Code, title 29, section 207(e)
- BAM section 1600: CoBen (enrollment forms, processing instructions)
- BAM section 700 : FlexElect Program (enrollment forms, processing instructions)
- Payroll Procedures Manual : State Controller's Office PPM
- State Human Resources Departments: SCO State Human Resources Departments
Personnel Services Branch
Personnel Program Consultant, Personnel Services Branch
Chief, Personnel Management Division