8 Things Employees Must Know about California Overtime Law

Overtime, or OT, is something that both employees and employers should be familiar with. Employees and employers should also understand how overtime pay works. Employers who fail to pay overtime correctly can be liable for tens of thousands of dollars. Here, we will break down everything you need to know about working overtime in California and the required fair compensation.

By: Brad Nakase, Attorney

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According to California’s new overtime laws and specifically California Labor Code 510, non-exempt employees are required to be compensated by their employers in specific ways. If an employee is non-exempt, they will earn one and one-half times the normal pay rate over eight hours during a workday, over 40 hours per full week or work, or over six days during a row during a week of work. These three main conditions are essential to understanding how overtime works.

What about double-time? Double-time is also a key factor here. Employers in California need to pay their non-exempt employees double-time when the employees work over 12 hours during a single day or more than eight hours on a seventh straight day during a week of work.

When employers refuse to pay out the obligatory overtime pay that employees deserve and are owed, a few things can occur. First, workers can act against their employers with the Labor Commissioner by filing a complaint. Second, workers also have the ability to file a lawsuit.

Here, we will further explain new overtime law in California as follows:

1) The regular rate of pay

2) PTO vs. overtime

3) Being required to work additional hours

4) How overtime is authorized

5) How soon you may get overtime pay

6) How much overtime pay amounts in CA

7) When do compulsory overtime rules go into effect in California, and which workers do they impact?

8) Who is eligible to receive greater pay for working additional hours

1) How to calculate regular rate of pay in California?

The regular rate of pay depends on a few different factors. The main determining factor is whether a California-based employee works piece-rate or is paid hourly or on a salary. An employee’s regular pay rate cannot go below the minimum wage in California, with a few key exceptions. In order to calculate overtime pay, employers in the state use their employees’ regular pay rates. Let’s take a look at the different types of employees and how overtime pay works for each of them.

a) Hourly employees

For employees who work by the hour and are non-exempt, regular pay is simple: it is their hourly rate. If a person makes $20 per hour, then their regular pay rate is $20 per hour. If an employee earns $15 per hour, then their regular pay rate is—you guessed it—$15 per hour. Now, their overtime pay rate, if they are making $15 per hour, would be 1.5 X 15 and, therefore, $22.50. Double-time would be 15 X 2, so $30 per hour.

Some employees are paid different pay rates during the same week. This is where it can grow a little tricky. For an employee who has been paid two different rates, the regular pay rate is based on dividing their total earnings by the hours they worked. The total earnings include overtime.

It is important to realize the hourly rate the employee is paid and/or shift differentials figure into their regular pay. Also, some hourly employees get bonuses. Why would they receive this? Bonuses like this can provide incentives to keep working for an employer, or they are rewarded for time spent, skill, or production. If a bonus is paid, it is added to the individual’s hourly pay and divided by the number of hours worked that are not regarded as overtime. This equation will provide the hourly pay ratio.

Some payments to employees are not factored into the regular pay level. These payments can include:

    • holiday/weekend wages if the payment is at least one and one-half times the normal level for comparable work done during a normal workweek.
    • pay during periods when there is no work available, or during holidays, vacations, sick time, etc.).
    • gifts
    • bonuses
    • reimbursements for expenses

b) Overtime for Employees on Salary

Salaried employees who are non-exempt can easily calculate their normal pay level. This can be done by dividing the salary per week by the amount of up to 40 hours worked (non-overtime hours).

Therefore, if an individual receives $600 per week by working 40 hours, their pay level is $15 per hour.

To figure out what an employee is making per week, multiply the salary by the number of months, 12. Then divide by 52 (the number of weeks).

If you make a note of these different equations or simply remember them, you will always be able to figure out your routine pay ratio, whether you are an employer or an employee.

c) Piece-rate Workers

    • The pay rate is the group rate. The rate for the group is calculated by dividing the entire sum of pay by the group number. Each worker gets a specific group rate times the number of hours worked.
    • The normal pay rate can simply be the commission level or piece rate.
    • The pay rate can be computed by dividing workweek earnings by the number of hours worked.

2) Comp Time Pay vs. Overtime

While some employees worry that employers can force them to take comp time pay as opposed to overtime pay, this should not happen. In California, workers are not required to take comp time (also known as paid time off or PTO) instead of being paid overtime.

However, employees in California are able to ask employers for comp time instead of overtime if they would like. However, there are some qualifications for this. An employee can request this, if:

  • A written agreement between the employer and the employee already existed regarding comp time
  • The worker asked the employer for comp time in lieu of overtime in writing
  • The employee works full time for the company (40 or 40+ hours)
  • The worker does not yet have over 240 hours of comp. Time.

Additionally, the compensating time must be the same as the overtime rate. For example, if the overtime rate is time and one-half, then the employer must give the worker an hour and one-half of PTO for each overtime hour worked.

3) Being Required to Work Additional Hours

Under California’s overtime laws, employers can usually require workers to put in mandatory overtime hours, otherwise known as forced overtime. Also, California employers can discipline their workers—even lay them off—if employees refuse to comply with these rules. One exception is employees who refuse to work on the seventh straight day of one single workweek. If this happens, employers are unable to discipline those workers for that specific reason.

Many times, people wonder: what is the purpose of having overtime pay laws? The intention is to encourage employers to hire enough workers so that they will not have to pay overtime. With more people employed, no employees will have to work extra hours, and employees do not have to pay more per hour than they should. Overall, this would create happier employees and workplaces in general; however, sometimes, hiring more and more people is simply not financially possible.

4) How Overtime is Authorized

If you are wondering who is able to be compensated with overtime rates and why and how it is authorized, you are not alone. In California, workers who are non-exempt are able to be remunerated overtime for unauthorized overtime. Unauthorized overtime means that even though the employer did not tell workers to work extra hours, they did anyway. An important distinction here is that it is necessary that the employer was aware that the worker was putting in overtime hours. Legally, this is known as the employee is “suffered or permitted to work, whether or not required.”

If employees work overtime without first obtaining permission, their employer is able to discipline them. Workers, then, cannot hide their overtime hours from their bosses on purpose. And, though it may be a popular expression, bosses are never able to ask their workers to work for a few hours “off the clock.”

5) How Soon You May Get Overtime Pay

Employers have seven days after payroll closes to compensate workers for their overtime hours. This pertains to workers who are paid twice a week, twice a month, or weekly. In other cases, employers must pay overtime wages by the second normal payday following the overtime work. This gives employers plenty of extra time to collect the money needed for overtime pay.

6) How much is overtime pay in California?

Usually, in California, the overtime pay rate is time and one-half. This means that overtime is calculated by multiplying the normal rate of pay times one and one-half.

Employers, however, must pay to double time (twice the worker’s regular hourly rate) when employees work over eight hours on a seventh straight day or more than 12 hours in one single day.

Now, hours worked not only include time spent working but also when employees/workers spend time:

  • commuting
  • completing job preparation if the prep is integral and indispensable to the job
  • on-call, unless the employee is free to participate in personal activities and has sufficient time to go to work when called on
  • on rest breaks (usually ten minutes per every four hours worked
  • on meal breaks only if the employee is asked to, or allowed to, work during the break

a) Important Distinctions

Here are a few important and simple facts to remember about working overtime in California:

    • Working over eight hours during a workday will provide the worker with overtime pay at times one and one-half.
    • Working over 12 hours in one workday provides the worker with double-time overtime pay.
    • Working 40 hours during a workweek does not trigger overtime pay unless one of those workdays included working past eight hours. If it does, overtime should be paid.
    • After a worker has put in 40 hours during one single workweek, any additional hours count as overtime.

7) When Do Required Overtime Rules Go into Effect in California, and Which Workers Do They Impact?

Under California state law, employees who are non-exempt can get compulsory overtime payments if they:

  • work over eight hours during one day
  • work over six straight days in one workweek
  • work over a forty-hour workweek

Let’s look at these overtime scenarios in a bit more detail, remembering that employees in California are not able to relinquish their rights to be paid for overtime hours worked. Therefore, an agreement like that would not prevent an employee from recovering the difference between the normal wages paid and the overtime compensation.

a) Working Over Eight Hours During a Single Day

When employees work for over eight hours during one day, non-exempt workers are usually able to get overtime pay. Alternately, non-exempt employees are usually also paid for overtime hours worked if they log over ten hours in one single day during what is known as an alternative workweek schedule. Alternate workweeks usually include four ten-hour days of work, but there are different formulas and schedules, and these sorts of weeks are becoming more and more common.

A single workday stretches from 12 AM to midnight unless otherwise stipulated by an employer. Workers who work over 8 hours in one day might be unable to collect overtime if their hours stretch across two unique days.

Also, workers are still to be compensated with overtime for working over 8 hours during a specific day. This is true even if workers normally log eight or fewer hours on average.

b) Working Over Forty Hours During a Single Week of Work

Usually, employees who are considered non-exempt are able to receive overtime compensation if they log over 40 hours during a single week of work. If employees work over 40 hours during one week, this does not mean they are entitled to overtime, though, if the forty hours are spread across two or more separate weeks.

It is also worth noting that a worker’s overtime hours per day should not be factored into their weekly tally of overtime hours. Therefore, an employee needs to work a minimum of 40 hours, be paid at their accepted pay rate and can be waged overtime for over 40 hours of work during one week. This holds true even when the individual is getting paid overtime already for working past eight hours during a workday.

Why is this rule kept in place in California? This prevents employees from doing something called “pyramiding.” What is pyramiding? It is the frowned-upon practice of getting credited twice for hours worked.

It is also worth noting that individuals who usually work less than 40 hours per week do not receive payment for overtime for 40 hours during the week. Normal wages would be paid out until 40 hours are completed, and then the rate would change.

c) Working Over Six Straight Days During a Single Week

Employees who are non-exempt are usually able to get overtime compensation for the seventh workday in a row that occurs during one single workweek.

However, employers have the authority to choose when the workweek begins. It is important to remember that working for seven straight days does not entitle workers to overtime pay if the seven days take place over the course of two separate weeks.

Finally, it is also essential to remember that employers might provide different workweek schedules for unique workers. That is to say; different workers might work different schedules under the same employer based on their demands or needs or those of their bosses. Employers are not able to simply switch up the workweek schedules to avoid overtime pay, of course, either.

8) Who is Eligible to Receive Higher Wages for Working Extra Hours

Some people believe that every worker is eligible for higher wages based on working extra hours. However, not everyone can get California overtime pay. Here are some categories of workers who are not able to get overtime pay:

  • Employees with alternate workweek schedules
  • Independent contractors
  • Outside salespeople
  • Exempt employees
  • Unionized employees under collective bargaining agreements
  • Workers with specified occupations that have their own OT rules

Let’s take a quick look at these different exemptions. Keep in mind that the only workers entitled to receive overtime (OT) pay are employees who are:

  • 18 years old (or who are 16 or 17 years old and are legally allowed to work instead of going to school)
  • Non-exempt

a) Employees with an Alternate Work Schedule

California laws for overtime do not apply to employees whose employer has instituted an “alternative workweek schedule.”

What is this type of schedule? An alternate workweek schedule is an agreement between a group of employees and their employer, specifying that the employees can work up to 10 hours per day without being paid overtime.

Workers are still owed overtime if they log over the number of hours authorized by the alternative workweek schedule or if they record over forty (40) hours per single workweek. Additionally, California labor laws state that employers cannot retaliate against employers for their opinions concerning having an alternative workweek.

b) Independent Contractors

In California, independent contractors are not able to receive overtime pay. Independent contractors are defined as workers who:

    • maintain control over the means through which a result is accomplished
    • perform a specified service under an employment contract that stipulates he/she will produce a specific result for pay that has been agreed upon

Based on this, contractors work for themselves, and since they can set their own hourly rate and decide on their own hours, they do not qualify for overtime. In our new gig economy, contractors can be found driving ride-share cars, delivering food, and working traditional jobs in the trades.

c) Outside Salespeople

Door-to-door salespeople still exist in many forms, and they are also not entitled to overtime payments in the state of California if:

    • At least half of their work is done away from their place of business
    • They are 18 years old, at least
    • They sell facility usage, contracts, or services

d) Exempt Employees

As we have mentioned, overtime laws in California do not apply to exempt employees, nor do additional wage and hour laws that require rest and meal breaks. But what constitutes an exempt employee?

Exempt employees usually:

    • Work what is casually known as a “white collar” position. This means that their job consists of executive duties, or those considered professional or administrative. These workers usually are required to exercise independent judgment and discretion at the workplace.
    • Are salaried employees, as opposed to being paid hourly. Their salaries are no less than twice California’s minimum wage of $15 per hour for a full-time job of 40+ hours per week.

Importantly, exempt employees who work on an hourly basis still need to be paid for extra hours. So, if an employee is not salaried, they will receive overtime pay. But, this overtime pay will be no different—and no higher—than their regular pay.

e) Unionized employees Under Collective Bargaining Agreements

In California, unionized employees are not to receive overtime pay if their union’s collective bargaining agreement addresses:

    • An hourly wage that is 30% or greater than the minimum wage in California
    • Work conditions, wages, and work hours
    • Pay rates for overtime hours

If the collective bargaining agreement does not meet these conditions, then unionized employees are considered “non-exempt” workers. This means they may be compensated with overtime pay consistent with California wage and hour laws.

f) Workers With Specified Occupations and Corresponding Overtime Rules

In California, there are certain occupations that do not qualify for overtime pay. Some of the most common are:

    • Personal attendants
    • Nursing home managers
    • Employer’s husband, wife, parents, or children
    • Live-in home workers
    • Farmworkers
    • Camp counselors
    • Some nannies
    • Other qualifying occupations

California Lawyers You Can Trust

We hope that this has answered all your questions about California’s overtime policies. Whether you are dealing with an employer that will not pay you the overtime earnings you are rightfully owed or an employee making a false wage claim, or our attorneys can help you quickly recover your losses, saving you time and money in the process.

If you’d like to consult with a licensed attorney about any of these issues, please contact our California business lawyers and corporate attorneys at Nakase Wade.

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