Overtime Rules In California

Under California overtime rules, an employee who works over eight hours a day or over forty hours per week is entitled to overtime pay at one and one-half times the regular rate of pay.

By Brad Nakase, Attorney

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Introduction

An employee who works in excess of 40 hours in a workweek must be paid overtime at one and one-half times the employee’s regular rate of pay for all hours worked over 40 in the workweek. Any work in excess of 12 hours in one day shall be compensated at the rate of no less than twice the regular rate of pay for an employee. Therefore, a day’s work comprises eight hours, and any employment that goes beyond those eight hours is considered overtime and compensated as such:

  • The employee’s regular pay rate will be multiplied by one and a half times for all the hours worked over eight hours, including 12 hours of any workday. This pay rate will also go into effect for the first eight hours that are worked on the seventh straight day during a week of work.
  • The employee’s regular pay rate will be doubled for all hours over 12 hours in one day and for working over eight hours on a seventh straight workday during one week.

These rules are strictly enforced, and employers must abide by them. At the same time, there exist several exemptions from these overtime laws which you should contact a San Diego employment lawyer to discuss. In some cases, this implies that an overtime law is not applicable to a specific group of employees. In other cases, it means that there is an exception to the fundamental laws regarding overtime work and payment that we have just gone over. In this case, an exception is a unique rule that implies that overtime is compensated to certain employees in a different manner than normal.

Does California have overtime after 8 hours or 40 hours?

In California, overtime is when an employee works more than 8 hours per day. Also, when employee works more than 40 hours per week, that is also overtime.

For example: If Jane works 9 hours on Monday, she worked 1 hour overtime. By Friday, if Jane works a total of 45 hours, that is 5 hours of overtime.

The Regular Rate of Pay

The regular rate of pay an employee works for encompasses a variety of different types of compensation. For example, commissions, an employee’s salary, and an employee’s hourly earnings all figure into this amount, and it differs from employee to employee. One’s overtime earnings are based on their regular rate of pay, and the regular rate of pay is simply the payment an employee normally receives for the work they do. Importantly, regular pay cannot be less than the applicable minimum wage in California, which is $15 per hour.

Under overtime rules, the hours that are used to compute the regular pay rate cannot go over the legal maximum. In most cases, the legal maximum is an eight-hour workday, with 40 hours in total per week. The total number of maximum hours is sometimes impacted by the number of days an employee works out of one week, so therefore it is essential for employers to be aware of the legal maximum for their employees.

There is also an alternate method of calculating overtime. Under the majority of Industrial Welfare Commission (IWC) Wage Orders, an employee working, for example, four days of 10 hours each or three days at 12 hours per day, is still able to be paid regularly and not for overtime.

If the agreed regular hours are less than the legal maximum in California, then those hours must be used to compute the regular rate of pay. If an employee works 30-36 hours per week, the agreed regular workweek stands at 33 hours, and that number will be used in determining the pay rate. However, if the employee is working less than 40 hours, they cannot be paid overtime legally. This is unless the employee works over eight hours per day or over 40 hours during the workweek.

Basically, this means that if an employee is working under a policy that enforces a 33-hour workweek, the employee will not be paid overtime wages unless the employee goes over eight hours per day or 40 hours per week. If the employee does work more than 33 hours but less than 40, they will still be paid at their regular pay rate.

Calculating the Regular Pay Rate

Here are some examples of how employers can determine the regular rate of pay for their companies.

  • For employees who are paid by the hour, that amount is the regular rate of pay. The amount will, of course, include other aspects that are dependent on the specific job, such as the value per hour of non-hourly compensation that is paid, if that exists, differentials between shifts, and other things.
  • For employees who are paid a salary, the calculation is different. Employers can multiply the monthly payment by 12, since there are 12 months in a year, to obtain the salary figure. For the weekly salary, that number can be divided by the 52 weeks that make up a year, and the weekly salary can be divided by the number of hours, which is 40, in order to find out the hourly rate of pay.
  • For employees who are paid based on commission, the process gets a little more complex. There are two main methods that are used to figure out their regular rate of pay.

The first process uses the commission rate as the regular rate. The employee is then paid one and a half times this rate during the first four overtime hours of a workday and then double-time for all the hours worked over 12 in one workday.

The second divides the employee’s total earnings for the week (including overtime earnings) by the total of hours that are worked during that week. So for each overtime hour that is worked, the employee gets an additional half of the regular pay rate for hours requiring time and a half. The employee also gets the full rate for hours that require double time.

The Group Rate for Those Who Work On-Commission

Another accepted process for calculating the regular rate of pay is known as the group rate. This method divides the total number of pieces that are created by the group by the number of people in the group. Each employee is then paid according to that sum. The regular pay rate, then, can be found by simply dividing the pay received by the number of hours worked, with the qualifier that the regular rate can’t be less than minimum wage in California.

Additionally, if an employee is compensated at two or more rates by the same employer during a workweek, the regular rate is found in the “weighted average.” This weighted average is figured out by dividing the total weekly earnings by the total hours worked, including earnings from overtime and overtime hours.

Unauthorized Overtime Payments

When California employees work overtime that is not authorized, the employer must pay them for it. This unauthorized overtime is normally paid at one and a half times the employee’s regular pay rate. Overtime is defined as working more than eight and up to 12 hours in a single workday, and also the first eight hours of the workday on a seventh straight workday. If the employee works over 12 hours in a single day, their pay is doubled, and if they work more than eight hours on the seventh day in a row, their pay is also doubled.

However, employers in California are able to discipline employees who violate policies and if working unauthorized overtime is an agreed-upon policy. But, even if this extra overtime is recognized as an offense, the laws require that the employee be paid for the extra hours. In California, case law says that employees must be paid for hours that he/she is “permitted to work, whether or not required to do so,” and this means that it is the employer’s responsibility to know about and be aware of the work their employees are doing.

It is also true that an employer cannot be prevented from knowing about the overtime that is worked. An employee cannot then purposefully hide the overtime hours they have worked and then later claim that they are owed the overtime payment. However, the responsibility lies with the employer to keep records of time worked and pay for the work that they are allowed to be completed. Thus, much of the ownness is on the employer.

Nondiscretionary Bonuses

Many people are curious if bonuses can be included in the regular pay rate in order to calculate overtime. In fact, they can, as long as they are nondiscretionary. When the bonus is derived from compensation paid for hours worked, employee proficiency, or production, or when the bonus is seen as an incentive to stay employed by the same company.

These incentivized bonuses do include flat-sum bonuses, as well. To calculate overtime based on a flat-sum bonus, you simply divide the bonus by the maximum regular hours (legal hours) worked during the earnings period, as opposed to dividing by the number of total hours worked. Once you do this, you will have the figure of the regular pay rate based on the earnings of the flat sum bonus.

It is important to remember that overtime on a flat sum bonus needs to be paid at 1.5 or 2 times the aforementioned regular rate calculation for any overtime hour that is worked during the period when the bonus was earned. This can be complicated and employers should contact an employment litigation attorney to ensure compliance.

Production bonuses, which are designed to incentivize increased production, are treated differently. For this figure, an employer divides the amount of the bonus by the total hours worked during this period. Since this produces the regular pay rate on the production bonus, the overtime is compensated at .5 times or one times the normal rate for the overtime hours worked.

For either bonus type, overtime may be due on a weekly or daily bases and needs to be paid within the pay period that follows the period when the bonuses were earned.

Lastly, sums paid as holiday gifts or paid for the reason of other special occasions (good service, for example, or longevity at the company), and which are not measured based on hours worked, efficiency, or production, are not subject to overtime rates. These types of discretionary bonuses are not included in the calculations that determine the normal or regular rate of pay.

Excluded Amounts from Regular Pay

There are specific payments that are excluded from the regular pay rate at certain times. These are usually, but are not limited to:

  • sums in the form of gifts, usually for special occasions
  • payments made during periods when no work is done due to vacation, illness, holidays, or the employer’s failure to provide suitable work
  • expense reimbursements
  • premium payments for weekend or holiday work (dependent on the rate being more than one and a half times the established rate for work done during non-overtime hours
  • bonuses made at the discretion of the employer

Based on your unique workspace, there may be other occasions for payments to be excluded from an employee’s regular pay rate.

Overtime and Salaried Employees

Whether or not salaried employees can earn overtime pay is dependent upon multiple factors. Generally, salaried employees will be paid overtime pay for their overtime work unless they are tested for and meet the requirements for exempt status. Exempt status in California is defined by state and federal laws. Also, employees can be specifically found exempt from overtime pay based on the rules of the California Labor Code or regulation of working conditions, wages, and hours based on the Industrial Welfare Commission Wage Orders that all employers and employees must ascribe to.

Requiring an Employee to Work Overtime

Essentially, it is up to the employer to decide upon and manage the employee’s work schedule and hours. In dictating what hours an employee works, usually, the employer can ask an employee to work overtime or not. Additionally, in most scenarios, an employer can discipline their employees and terminate them if they refuse to work scheduled overtime hours. An important distinction to make here, however, is that employers cannot discipline employees who refuse to work during the seventh day of a workweek. Employers who ask or force employees to give up a day of rest are subject to their own set of penalties. Finally, employees are able to choose not to take a day off and continue working—it is up to them.

Commonly Asked Overtime Questions and Answers You Can Trust

What if my employer engages in retaliatory actions because I informed him/her that I was planning to file a wage claim for my unpaid overtime?

If an employer sees fit to retaliate against an employer, they are encouraged to file a complaint about this action with the office of the Labor Commissioner. Employees also are able to take the matter to court by filing a lawsuit against their employer.

What happens if we have a hearing for a work-related issue, and I win, but my employer does not pay the wages owed and does not appeal the decision? How can I move things along and obtain the money that is owed to me? What is meant by “Order, Decision, or Award?”

Order, Decision, Award, or ODA simply refers to the outcome of the hearing and the nature of what the prevailing employee is able to acquire. When the employee receives a favorable decision, and no appeal is placed by the employer, the employer must pay out the ODA. If they do not, you can notify the DLSE, the Division of Labor Standards Enforcement, and they will register a judgment against the employer. The court will enter the ODA. This judgment will have the same effect as any other financial judgment entered by the court. You could also try to collect the judgment yourself, but it is usually wise to have the DLSE on your side. It also may be useful to speak with a lawyer at this point to make sure that your employer complies with the decision.

After I file a claim for overtime pay that I believe is owed to me by my employer, what do I do?

After your claim is filled out and filed with a local California office of the DSLE, a few different steps will occur. Your claim will be assigned to a Deputy Labor Commissioner, and this person will decide the best manner will be to proceed. They will base this decision on the facts of your case, the circumstances surrounding your claim, and all of the other information that is presented.

Your representative will have several options, including dismissal of the claim, referral to a conference, or referral to a hearing. If a conference is deemed necessary, all involved parties receive notice by mail regarding the date, time, and place of the conference. The goal of the conference is a establish if the claim is valid and legitimate and then to see what the next steps should be. If the claim cannot be resolved during the conference or is simply too complex, a hearing is usually the next step.

During a hearing regarding the wage claim, all of the parties and witnesses involved will testify under oath, and the entire proceeding will also be recorded. After the hearing, expect an ODA to be served to both parties by the Labor Commissioner.

If you would like to appeal the decision, either party is able to contact a civil court of competent jurisdiction. The court will prepare the trial, and each party will be able to present witnesses, evidence, and other relevant information. The basis for the court’s decision will not rely on the testimony and evidence that was presented at the Labor Commissioner’s hearing. If an appeal is made by an employer, DLSE might represent an employee who is unable to afford counsel.

What if my employer will Not Provide OT Pay?

If your employer will not pay the overtime wages that are owed to you; there are a few things you can do. You can file a lawsuit in court against your employer in order to recover lost wages, or you can file a wage claim with the Labor Commissioner’s Office in California.

If you do not work for this employer anymore, you can create a claim pursuant to Labor Code Section 203 for the waiting time penalty.

I worked Monday, Tuesday, Wednesday, and Thursday last week, as well as Saturday, for eight hours each day. I was out sick on Friday. I was paid 48 hours at my regular hourly rate. Should I be receiving eight hours of overtime pay?

Unfortunately, you are not due for any overtime payment. Overtime wages are based on hours worked, and you still only worked 40 hours. It is a similar situation to when you are paid for a holiday but did not work any hours that day. Holiday pay does not count toward your hours worked or your overtime rate because clearly, no work was conducted.

Can I waive my right to OT pay as an employee?

Employees are unable to waive overtime pay. California law necessitates that an employee is paid all overtime compensation, even in spite of any agreement to work for a lesser wage. This means that a verbal or written agreement or a waiver will not prevent employees from getting back any difference between regular pay and overtime pay he/she is entitled to receive.

Good Luck!

We hope this has been insightful and informative and that we have helped to clear up any confusion surrounding overtime (OT) pay in California. If you have questions or would like to discuss these issues with a licensed business lawyer, please contact Nakase Law Firm for a free consultation today.

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