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When Does Overtime Clock Start Ticking? Think 40/8

May 21, 2000

Q: One of our employees took two days' vacation Monday and Tuesday, then worked eight hours each of the remaining days of the week and eight hours on Saturday.

He was paid straight time for Saturday and complained that he should have been paid time-and-a-half. The company took the position that vacation days were not considered part of a 40-hour workweek.

The employee stated that had he known he would not get paid time-and-a-half for Saturday, he would not have reported for work. The company said if he had refused to work on Saturday he would have been subject to disciplinary measures.

Who is correct on these two issues?

--C.S., Orange

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A: The company is correct. Overtime only need be paid if "hours worked" exceed 40 in one week, or eight in one day. Taking paid vacation time is not the equivalent of "hours worked."

In addition, an employee may be disciplined or terminated for refusing to work a reasonable amount of overtime when requested to do so. Saturday work is ordinarily not considered unreasonable.

--James J. McDonald Jr.

Attorney, Fisher & Phillips

Labor law instructor, UC Irvine

Signing Bonus' Return May Be Negotiable

Q: I have been offered a great job at a new company. The only problem is that I've been with my current employer for only seven months, and received a large signing bonus when I first joined. I've already spent the money.

I have a letter from my current employer stating that I would be required to pay back the bonus if I left the firm within two years. The letter did not mention any terms for paying it back.

If I accept this new offer, I want to pay back the bonus, but will have trouble coming up with the funds right away.

What is the best way to approach them about this? Can my current employer ruin my credit history if I don't pay right away? Can the company sue me?

--W.S. Santa Monica

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A: It is very common, as well as legal, for an employer to give a signing bonus that must be repaid if the employee quits within a certain time period.

Your employer could certainly argue that you did not live up to the conditions of the deal and must repay the money because you did not work for the minimum period of time. Even though the exact time of repayment was not mentioned, it was implied that it would be within a "reasonable" time period after the date that you prematurely quit.

It is possible that your employer could negatively affect your credit rating, especially if it files a lawsuit to recover the money that it advanced to you. Credit reporting services often monitor court filings.

However, you may have convincing arguments for repaying the bonus later, paying back only part of the bonus, or not paying it at all.

Evaluate your options before you voluntarily submit to whatever the company demands.

For example, if the employer's letter requiring you to repay the bonus was given to you after you received the bonus and had left your previous job, it might not be enforceable.

And because the time period for paying back the bonus was not specified, you have a good chance of persuading the company to agree to reasonable repayment terms if you insist that you really don't have the money.

You also could argue that you should have to repay only part of the bonus because you did work for seven of the 24 months required to keep the entire bonus, noting that many companies only require repayments on a pro rata basis.

Consider the reasons for your decision to leave for another job. If the employer failed to give you the support, benefits or opportunities that it initially promised, you could claim that the company breached its contract.

If the company is guilty of discrimination, unfair retaliation or engaging in unfair or illegal business practices, your premature departure also would be justified.

Accordingly, you might want to think less of defending yourself and instead consider if there is a justifiable reason to eliminate the entire obligation.

--Don D. Sessions

Employee rights attorney

Mission Viejo

Firms Not Required to Provide Retirement Plan

Q: I work for a law firm with no pension plan, 401(k), simplified employee pension individual retirement account (SEP IRA) or any similar benefit.

I have been told that there is a government regulation requiring partnerships whose principals have set up IRAs to offer such plans to their employees. Are you aware of such a regulation and can you provide details?

--E.B., Tarzana

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A: There is no requirement that a business establish a tax-qualified retirement plan of any sort for its employees. However, if an employer does establish such a retirement plan for its owners, all of the employees of the business must be taken into account in determining if the plan satisfies the requirements to be tax-qualified. These rules generally preclude a plan from only covering the owners of a business.

But IRAs typically are investment vehicles established by individuals, not by employers. As such, they are not subject to these nondiscrimination requirements.

Thus, if each partner decided to establish an individual IRA, the partnership is not required to contribute to IRAs for any of its employees.

--Kirk F. Maldonado

Employee benefits attorney

Riordan & McKinzie

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If you have a question about an on-the-job situation, please mail it to Shop Talk, Los Angeles Times, P.O. Box 2008, Costa Mesa, CA 92626; dictate it to (714) 966-7873, or e-mail it to shoptalk@latimes.com. Include your initials and hometown. The Shop Talk column is designed to answer questions of general interest. It should not be construed as legal advice.

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