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On June 2, 2016, the Ninth Circuit Court of Appeals issued its opinion in Flores v. City of San Gabriel, 9th Circuit Court of Appeals Nos. 14-56421 and 14-56514. The decision holds that amounts paid to employees in lieu of health benefits must be included in the regular rate for purposes of calculating overtime under the FLSA, and that because of the high percentage of cash in relationship to the overall plan cost to the City, the entire cost of the insurance must be counted toward the regular rate, regardless of whether it is actually paid in cash to the employee.

On June 16, the City filed a petition for panel rehearing and for rehearing en banc, and on June 27, our firm filed an amicus brief in support of the petition for rehearing, on behalf of the League of California Cities, California State Association of Counties, and the International Municipal Lawyers Association. On August 23, 2016, the panel voted to deny the petition for panel rehearing, and the petition for rehearing en banc was denied as well.

The City may file a petition for writ of certiorari to the U.S. Supreme Court. The Flores decision is not considered settled Ninth Circuit law until mandate issues, but generally Ninth Circuit decisions are considered final and binding on district courts in the Ninth Circuit during the pendency of a petition to the Supreme Court.

We will keep our clients informed as to the status of this development. If you have any questions in the meantime, please contact Art Hartinger ( or Kevin McLaughlin ( ), 510-995-5800.