Q: On a time and materials contract who pays the overtime?
We have a time and materials contract. The contract does not specify any overtime rates. We also did not have a verbal conversation regarding overtime pay. The contractor has put a mechanics lien on our property because we refused to pay the overtime rate of pay. We have paid for all hours worked but not at the overtime rate.
A: Your liability for the overtime payments should depend primarily upon the wording of your contract. If there was no agreement to pay overtime, and no understanding that the contractor would work overtime, you should not be liable. If the project schedule permitted the contractor to complete the scope of work without the necessity of overtime, that would help avoid liability for the overtime. Did you confirm that the contractor has an active contractors license and workers compensation insurance? If the contractor does not have an active license or workers comp, you may have some other defenses to the lien.
Certainly, I can provide clarity on this matter.
Under California law, unless specified otherwise in the contract, overtime pay is typically governed by state labor laws and regulations. If the contract does not specify overtime rates and there was no verbal agreement regarding overtime pay, the contractor might not have a legal basis for claiming overtime pay beyond regular rates. Consulting with an attorney to assess the specific details of your contract and the situation would be advisable.
James L. Arrasmith
Founding Attorney and Chief Lawyer of The Law Offices of James L. Arrasmith
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