California Overtime Pay Laws

Work Overtime California

For any time worked over eight hours in a day, the employee is entitled to time and a half. For any hours worked over 12 hours in a day, the employee is entitled to double time. For over 40 hours worked in a week, the rate is time and a half. For working seven days in a workweek, the employee is entitled to double time for all hours worked that seventh day. Sometimes, employers force employees to punch out but require employees to do work after their eight-hour shift. This is called “off-the-clock” overtime. Employees who are denied overtime pay in any manner are entitled to their overtime wages plus penalties and interest pursuant to the California Labor Code.

California Exempt and Non-Exempt

Employees in California are divided into two categories: exempt and non-exempt (from the protections of the Labor Code). The determination of whether an employee is exempt or non-exempt is established by what job the employee does, how he or she is paid, how much discretion the employee has in doing his or her job, and whether the employee has control over the policy or procedural decisions of the company, among other factors. Many (but not all) salaried employees are considered exempt, and most (but not all) hourly employees are non-exempt.  Some employers will intentionally misclassify an employee or group of employees as “exempt” in order to avoid paying overtime.

 

 

California Overtime Pay Laws FAQ

 

  1. What is the “regular rate of pay,” and how is it determined?

Overtime is based on the regular rate of pay, which is the compensation you normally earn for the work you perform. The regular rate of pay includes a number of different kinds of remuneration, such as hourly earnings, salary, piecework earnings, and commissions. In no case may the regular rate of pay be less than the applicable minimum wage.

 

Ordinarily, the hours to be used in computing the regular rate of pay may not exceed the legal maximum regular hours which, in most cases, is 8 hours per workday, 40 hours per workweek. This maximum may also be affected by the number of days one works in a workweek. It is important to determine what maximum is legal in each case. The alternate method of scheduling and computing overtime under most Industrial Welfare Commission Wage Orders, based on an alternative workweek schedule of four 10-hour days or three 12-hour days does not affect the regular rate of pay, which in this case also would be computed on the basis of 40 hours per workweek.

 

The agreed upon regular hours must be used if they are less than the legal maximum regular hours. For example, if you work 32 to 38 hours each week, there is an agreed average workweek of 35 hours, and thirty-five hours is the figure used to determine the regular rate of pay. However, in circumstances where the workweek is less than 40 hours, the law does not require payment of the overtime premium unless the employee works more than eight hours in a workday or more than 40 hours in a workweek. In other words, assuming you are employed under a policy that provides for a 35-hour workweek, the law does not require the employer to pay the overtime premium until after eight hours in a workday or 40 hours in a workweek. If you work more than 35 but fewer than 40 hours in a workweek, you will be entitled to be paid for the extra hours at your regular rate of pay unless you work over eight hours in a workday or 40 hours in a workweek.

 

The following are examples of how to calculate the regular rate of pay:

 

If you are paid on an hourly basis, that amount, including among other things, shift differentials and the per hour value of any non-hourly compensation the employee has earned, is the regular rate of pay.

 

If you are paid a salary, the regular rate is determined as follows:

Multiply the monthly remuneration by 12 (months) to get the annual salary.

Divide the annual salary by 52 (weeks) to get the weekly salary.

Divide the weekly salary by the number of legal maximum regular hours (40) to get the regular hourly rate.

 

If you are paid by the piece or commission, either of the following methods may be used to determine the regular rate of pay for purposes of computing overtime:

The piece or commission rate is used as the regular rate and you are paid one and one-half this rate for production during the first four overtime hours in a workday, and double time for all hours worked beyond 12 in a workday; or

 

Divide your total earnings for the workweek, including earnings during overtime hours, by the total hours worked during the workweek, including the overtime hours. For each overtime hour worked you are entitled to an additional one-half the regular rate for hours requiring time and one-half, and to the full rate for hours requiring double time.

 

A group rate for piece workers is an acceptable method for computing the regular rate of pay. In using this method, the total number of pieces produced by the group is divided by the number of people in the group, with each person being paid accordingly. The regular rate for each worker is determined by dividing the pay received by the number of hours worked. The regular rate cannot be less than the minimum wage.

 

If you are paid two or more rates by the same employer during the workweek, the regular rate is the “weighted average” which is determined by dividing your total earnings for the workweek, including earnings during overtime hours, by the total hours worked during the workweek, including the overtime hours. For example, if you work 32 hours at $11.00 an hour and 10 hours during the same workweek at $9.00 an hour, your weighted average (and thus the regular rate for that workweek) is $10.52. This is calculated by adding your $442 straight-time pay for the workweek [(32 hours x $11.00/hour) + (10 hours x $9.00/hour) = $442] and dividing it by the 42 hours you worked.

 

  1. If an employee works unauthorized overtime is the employer obligated to pay for it?

Yes, California law requires that employers pay overtime, whether authorized or not, at the rate of one and one-half times the employee’s regular rate of pay for all hours worked in excess of eight up to and including 12 hours in any workday, and for the first eight hours of work on the seventh consecutive day of work in a workweek, and double the employee’s regular rate of pay for all hours worked in excess of 12 in any workday and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.

 

An employer can discipline an employee if he or she violates the employer’s policy of working overtime without the required authorization. However, California’s wage and hour laws require that the employee be compensated for any hours he or she is “suffered or permitted to work, whether or not required to do so.” California case law holds that “suffer or permit” means work the employer knew or should have known about. Thus, an employee cannot deliberately prevent the employer from obtaining knowledge of the unauthorized overtime worked, and come back later to claim recovery but at the same time, an employer has the duty to keep accurate time records and must pay for work that the employer allows to be performed and to which the employer benefits.

 

  1. Is a bonus included in the regular rate of pay for purposes of calculating overtime?

Yes, if it is a nondiscretionary bonus. A nondiscretionary bonus is included in determining the regular rate of pay for computing overtime when the bonus is compensation for hours worked, production or proficiency, or as an incentive to remain employed by the same employer. Incentive bonuses include flat sum bonuses. To properly compute overtime on a flat sum bonus, the bonus must be divided by the maximum legal regular hours worked in the bonus-earning period, not by the total hours worked in the bonus-earning period. This calculation will produce the regular rate of pay on the flat sum bonus earnings. Overtime on a flat sum bonus must then be paid at 1.5 times or 2 times this regular rate calculation for any overtime hour worked in the bonus-earning period. Overtime on production bonuses, bonuses designed as an incentive for increased production for each hour worked are computed differently from flat sum bonuses. To compute overtime on a production bonus, the production bonus is divided by the total hours worked in the bonus earning period. This calculation will produce the regular rate of pay on the production bonus. Overtime on the production bonus is then paid at .5 times or 1 times the regular rate for all overtime hours worked in the bonus-earning period. Overtime on either type of bonus may be due on either a daily or weekly basis and must be paid in the pay period following the end of the bonus-earning period.

 

Discretionary bonuses or sums paid as gifts at a holiday or other special occasion, such as a reward for good service, which are not measured by or dependent upon hours worked, production or efficiency, are not subject to be paid at overtime rates and thus are not included for purposes of determining the regular rate of pay.

 

  1. Are any amounts excluded from the regular rate of pay?

Yes, there are certain types of payments that are excluded from the regular rate of pay. Examples of some of the more common exclusions are sums paid as gifts for special occasions, expense reimbursements, payments made for occasional periods when no work is performed due to vacation, holiday, illness, failure of the employer to provide sufficient work, premium pay for Saturday, Sunday, or holiday work (where such premium rate is not less than one and one-half times the rate established in good faith for like work performed in non-overtime hours on other days), and discretionary bonuses.

 

  1. Are salaried employees entitled to overtime?

It depends. A salaried employee must be paid overtime unless they meet the test for exempt status as defined by federal and state laws, or unless they are specifically exempted from overtime by the provisions of the California Labor Code or one of the Industrial Welfare Commission Wage Orders regulating wages, hours and working conditions.

 

  1. Can an employer require an employee to work overtime?

Yes, in general, an employer may dictate the employee’s work schedule and hours. Additionally, under most circumstances, the employer may discipline an employee, up to and including termination, if the employee refuses to work scheduled overtime. However, an employer cannot discipline an employee for refusing to work on the 7th day in a workweek and is subject to a penalty for causing or inducing an employee to forego a day of rest. An employee who is fully apprised of the entitlement to rest may independently choose not to take a day of rest.

 

  1. Last week I worked Monday, Tuesday, Wednesday, Thursday, and Saturday, eight hours each day. I was out ill all day Friday. For the workweek, I was paid 48 hours at my regular hourly rate. Am I entitled to eight hours of overtime pay?

No, you are not entitled to any overtime pay. Overtime is calculated based on hours actually worked, and you worked only 40 hours during the workweek. Another example of where you get paid your regular wages but the time is not counted towards overtime is if you get paid for a holiday but do not work that day. In such a case, the time upon which the holiday pay is based does not count as hours worked for purposes of determining overtime because no work was performed.

 

  1. When must I be paid for the overtime hours I work?

Overtime wages must be paid no later than the payday for the next regular payroll period after which the overtime wages were earned. (Labor Code Section 204) Only the payment of overtime wages may be delayed to the payday of the next following payroll period as the straight-time wages must still be paid within the time set forth in the applicable Labor Code section in the pay period in which they were earned; or, in the case of employees who are paid on a weekly, biweekly, or semimonthly basis, not more than seven calendar days following the close of the payroll period.

 

  1. Can an employee waive his or her right to overtime compensation?

No, California law requires that an employee be paid all overtime compensation notwithstanding any agreement to work for a lesser wage. Consequently, such an agreement or “waiver” will not prevent an employee from recovering the difference between the employee’s wages and the overtime compensation he or she is entitled to receive. (Labor Code Section 1194)

 

  1. What can I do if my employer doesn’t pay me my overtime wages?

You can file a lawsuit in court against your employer to recover the lost wages. Additionally, if you no longer work for this employer, you can make a claim for the waiting time penalty pursuant to Labor Code Section 203.

 

  1. What can I do if my employer retaliates against me because I told him/her I was going to file a wage claim for unpaid overtime?

If your employer discriminates or retaliates against you in any manner whatsoever, for example, he discharges you because you file a wage claim or threaten to file a wage claim with the Labor Commissioner, you can file a lawsuit in court against your employer.

 

The rules may seem confusing, but we can help you understand your rights.  Call us now.

 

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