California’s regular rate of pay affects overtime, sick leave, and premium pay; what counts, exclusions, and common errors are covered. Calculation methods, examples, and legal options for miscalculated overtime, meal or rest premiums, and minimum wage violations.
By Brad Nakase, Attorney
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Your regular rate of pay in California is typically calculated by dividing your total earnings by the number of hours completed during a workweek. It is used to determine overtime compensation for non-exempt workers, which is 1.5 times their regular rate of pay.
You may pursue a wage & hour lawsuit against the company or file an appeal with the California Labor Commissioner if your regular rate of pay in California is inadequately determined.
Employers in California calculate overtime compensation for non-exempt workers based on the “normal rate of pay.” One and a half to twice your regular pay is what you get paid for overtime. If it is not computed accurately, you might not be getting the right rate of overtime compensation.
The calculation of paid sick leave can additionally be based on the regular rate of pay in California.
Keep in mind that your hourly wage is only one part of the regular rate of pay in California. The California Labor Code states that “wages” encompass “any amount for labor performed by workers of all kinds, regardless of whether that amount is set or determined by the:
To ensure that you receive the appropriate amount for overtime & sick leave, you must be aware of your usual rate of pay. A minor math error could lead to a lower salary. Employers might attempt to compute it incorrectly to underpay you for overtime.
1. Overtime Pay
If you happen to be a non-exempt worker who is not on an alternate workweek schedule, you are entitled to overtime pay under California labor regulations if you put in more than:
Overtime hours of work are compensated at 1.5 times the base pay of the worker. You will be paid double the normal hourly rate if you work more than 12 hours in one weekday or more than eight hours on the seventh day of a workweek (“double time”).
2. Paid Sick Leave in California
Either of the following methods may be used to determine paid sick leave in accordance with the California Labor Code.
Persons employed in professional, clerical, technical, mechanical, or related vocations, whether paid on an hourly basis, piece rate, commission, or other grounds, are included as exempt employees. In California, you have to fulfill the following conditions to be regarded as an exempt employee:
Under the Fair Labor Standards Act (FLSA), “any compensation for work provided to, or on account of, you shall be assumed to be included in the ‘regular rate’ for which you are engaged.” Thus, your base salary, commissions, and work differentials are all included in the regular rate of pay in California.
Additionally, your regular rate of pay in California is determined by piece rates and non-discretionary/production incentives (as opposed to discretionary bonuses).
Nonetheless, a variety of payments are typically not included in calculating the “normal rate.” These are:
The relevant minimum pay cannot ever be less than normal wages. Paying you below the minimum wage is against the law in California.
Hourly wages, salaries, commissions, piece compensation, or production bonuses could all be used to determine your income.
1. Workers on an Hourly Basis
Your normal rate of pay and your hourly rate of pay are the same if you receive compensation on an hourly basis.
For example, Elena puts in roughly thirty hours a week as a temporary legal secretary. She often calculates $20 per hour as her compensation rate. To get ready for a trial, Elena’s employer encourages her to put in work late on a particular night. On that particular day, Elena worked eleven hours. Elena’s regular compensation of $20 an hour will be multiplied by one and a half to determine overtime for the additional three hours of work.
Your normal pay rate is just a weighted mean of the hourly rates you work at during a workweek.
Keep in mind that non-discretionary incentives are also included in your normal pay rate.
Charlie, for instance, makes $16.50 per hour working 40 hours per week. Additionally, he receives an additional $40 each week as a “non-discretionary bonus” for meeting a production target. His initial salary is $16.50 per hour + $1 per hour for the bonus (forty dollars divided by forty hours worked), thus his normal rate of pay is $17.50 per hour.
As a non-exempt worker, you should also be aware that employers are required to give you an additional hour of pay, known as a “premium payment,” if they are unable to:
Before 2021, premium payments were calculated by companies using your base pay minus any contingent bonuses. In Ferra v. Lowes Hollywood Hotel, the California Supreme Court ruled that the premium pay, including optional bonuses, must match your regular rate of pay in California.
In the event that Charlie, in the aforementioned scenario, was forced to work through his meal break, his employer would be obligated to give him an extra wage equal to $17.50, which is his usual rate of pay.
James, for example, works forty hours a week plus 10 hours extra. James also gets a $400 flat-sum incentive.
The hourly salary plus the bonus’s hourly value is the employee’s regular rate of compensation. James’s incentive is worth $10 per hour (four hundred dollars divided by forty non-overtime hours performed). James’ manager is unable to reduce the bonus’s hourly value by dividing it by 50, which is the total number of hours worked.
2. Employees on Salaries
If you get a salary, the following formula is used to determine your usual rate of pay:
Weekly compensation is calculated by multiplying the monthly compensation by 12 and dividing the result by 52 (weeks). The regular hourly rate is calculated by dividing the weekly compensation by the number of legally permitted normal hours worked.
Generally speaking, the maximum normal hours are eight hours per day and forty hours per week. The regular rate of pay, which is based on forty hours of work per week, is usually unaffected whether you have an alternate workweek plan that consists of four ten-hour days or three twelve-hour days.
For example, Ian is a salaried, non-exempt worker of an insurance company. Ian receives a $50,000 yearly pay in addition to a $2,000 output lump sum incentive. A local farmer filed an insurance claim when a barn burned to the ground, so Ian’s employer had him put in additional work on the weekends.
The following factors are used to determine Ian’s pay: A $50,000 yearly salary plus a $2,000 production incentive equals $52,000 in compensation annually. 52,000 dollars divided by fifty-two (weeks) equals $1,000 every week. Weekly compensation $25 normal hourly wage is obtained by dividing one thousand dollars by 40 (the legal maximum number of regular hours per week).
Ian will be paid one and a half times the regular twenty-five-dollar hourly rate for any overtime beyond his typical 40-hour week.
3. Commission workers, piece workers, or production bonus workers
Your normal rate of pay is typically determined using the following factors if you are a commission, production bonus, or piece worker:
Divide your weekly total income (including overtime pay) by the total number of hours worked throughout the week, including overtime, if you work as a commission worker. Employers might be required to pay premiums in two installments due to the unpredictability of commission pay: the first installment would be equivalent to the base pay, & the second installment is considered a “true-up” pay following the commission calculation.
If you receive a production bonus, your normal rate of pay is determined by dividing the total amount of money you received over the week of work, which includes the bonus, by the total number of hours you put in.
If you get compensated on a piece rate, your usual rate of pay is determined by dividing the number of hours worked in the week for which you received compensation by the sum of your earnings from your piece rate and all other sources throughout the workweek.
You can sue employers for incorrectly determining your usual rate of pay or file a wage & hour complaint with the Labor Commissioner for wage theft. Often, these cases involve incorrect overtime pay calculations.
If an employer is successfully sued, damages may be awarded for repayment of court expenses and attorney fees, interest, and back wages.
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