California’s 2025 overtime laws define strict rules for daily and weekly compensation, including double pay in certain cases. Employers must calculate rates accurately across salaried and hourly roles to avoid wage violations and penalties.
By Brad Nakase, Attorney
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California has substantially different overtime legislation than any other state in the US. They are indeed so thorough and demanding that they often surprise even the most conscientious employers.
In addition to being inconvenient for your workers, incorrect overtime compensation is illegal.
Apart from the possible legal consequences that may involve some significant difficulties, you might even be forced to repay up to 3 years of the overtime wages that have not been paid.
Learning the facts about overtime compensation in California and developing a payroll process that accommodates this compensation on behalf of all your staff will ensure that you are not exposed to non-compliance risks with your staff.
Now that we have some understanding of California’s 2025 overtime pay laws, let us take a closer look and determine how it may impact your company.
California is not the only state that pays overtime. The following is how the federal government describes it under the Fair Labor Standards Act:
If an employee works over 40 hours in a week, they are entitled to earn overtime pay equal to at least 1.5 times their normal rate of pay under the Fair Labor Standards Act.
We must first go over some fundamental ideas in order to better comprehend this policy:
Overtime is only computed on a weekly schedule at the federal level and in several other states. Accordingly, overtime compensation is only necessary for hours exceeding 40 in a workweek.
So long as they haven’t worked more than 40 hours in a week, an employee in Kentucky, for instance, can work nine, ten, or even fifteen hours on a day yet continue to receive their usual hourly wage. However, in case that the employee works 10 hours per day for four days, which brings 40 hours in total, this employee will also be compensated as per usual. The five hours are, however, considered overtime and will be paid at the rate of 1.5 times the regular rate in case they work 10 hours a day for four days and five hours on the fifth.
California Labor Code Section 510 is the basis of CA overtime laws. As per the law:
There is also the usual overtime mandate, so in case of any work time that accumulates beyond 40 hours in a week, you must match the overtime earnings of workers with at least 1.5 of their typical pay rate.
This becomes challenging, as can be observed. Nonetheless, CA overtime laws include specific regulations on overtime, which apply both to hourly workers and salaried workers. Although these overtime laws mainly cover hourly workers, special attention should be paid to salaried ones to define their adequate classification to avoid fines.
The standard (regular) rate of compensation for hourly workers in California is simple: their hourly wage. Establishing the regular pay rate for salaried workers, however, might be more difficult. For workers on a salary, the regular rate is calculated by dividing the income (weekly) by the number of hours that the pay is supposed to cover.
It is important that you get it right when classifying employees as either nonexempt or exempt in accordance with California law. In most cases, exempted workers like those in executive, professional, or administrative roles are not eligible for overtime salaries. Nonexempt employees are qualified for overtime, whether their forms of payment are salaried or paid per hour.
Among many more, there are a few noteworthy exceptions for children, certain nonprofit workers, and agricultural laborers. The California Labor Code and the website of the California DIR (Department of Industrial Relations) provide more thorough details on CA overtime laws.
You should also take into account a number of California regulations pertaining to timetables and breaks. Maintaining compliance with these rules may have an impact on your overtime computations, even if they are not explicitly related to overtime.
According to California labor rules, nonexempt workers must take two different kinds of breaks:
Rest periods must be compensated and are consequently considered working time, although the worker is not “working,” whereas meal breaks are unpaid. Stated differently, rest periods are considered a component of their shift and need to be taken into account for calculating overtime.
For the first eight hours performed on the seventh successive day of work (in one workweek), employees have the right to overtime compensation at a rate of 1.5 times their ordinary rate of pay, as we previously mentioned. Employees must also receive double their regular rate of pay for any hours beyond eight on the seventh consecutive day of work.
Keep in mind that this only pertains to seven days in a workweek, as determined by the employer. According to the legislation, a workweek consists of seven consecutive days that begin at the same time and day each week. Monday through Sunday, Tuesday through Monday, Saturday through Sunday, and so on could be used. The hitch is that if the seventh straight day of work comes on the initial day of the fresh workweek, the employee might not be eligible for overtime on that day.
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