Appellate court also held that payments made on behalf of employees to third party health care providers for benefits through the City's Flexible Benefits Plan could not be excluded from the overtime rate of pay. The City's Flexible Benefits Plan was held not to be a “bona fide plan” under 29 U.S.C. § 207(e)(4) because over 40% of the City's total contributions were paid directly to employees rather than received as benefits. Additionally, the court ruled that the City’s violation of the Act was willful because it took no affirmative steps to ensure that its initial designation of its benefits payments complied with the Act and failed to establish that it acted in good faith.
Now that all appeals have been exhausted, California agencies that modified their overtime policies to comply with the Flores decision will have stability and certainty relative to their inclusion of waiver payments in overtime compensation.