In an order issued August 23, 2016, the Ninth Circuit Court of Appeals issued an order denying the City of San Gabriel's request to reconsider en banc its decision in Flores v. City of San Gabriel. Although the City has publicly stated its intention to seek review in the United States Supreme Court, this order will likely result in Flores remaining the controlling authority in the Ninth Circuit. Supreme Court review is rarely granted and the Court is currently split 4-4.
Assuming the Supreme Court does not grant review, in the Ninth Circuit the FLSA requires employers to include cash payments made in lieu of health benefits into the overtime, i.e. regular rate, of pay. Additionally, the Court held that contributions provided to employees for the purchase of health care that were not paid out as cash must be included in the regular rate under certain circumstances. A benefits plan can only pay out an incidental amount as cash and retain the ability to exclude the payments into an employee's benefit plan from being included the overtime rate of pay. In Flores, the court required non-cash benefit plan contributions that amounted to between 53% and 58% of the total amount the City paid on behalf of its employees pursuant to its Flexible Benefits Plan, to be included in the overtime rate.
