How to Calculate Daily and Weekly Overtime in California

California Overtime Law:

An employer must pay an employee 1.5X of the regular hourly pay when:

• • The employee works over eight hours in day, and
  • The employee works over 40 hours in one week, and
  • The Employee works six or more days per week.

A normal day’s work is seen to be eight hours of labor, so working beyond that during one day, or working over six days in any workweek, means that the employee should receive overtime pay.

Specifically, for hours worked over eight hours and up to 12 hours on any day, overtime should be paid. Also, working on a seventh straight day, for the first eight hours, should trigger overtime. It is important to note that for both of these scenarios, employees are paid 1.5 times their normal wages.

When employees see fit to work over twelve hours in one day or work more than eight hours on a seventh straight day, they will also be paid overtime; but the overtime will be double their normal pay, so their pay rate X 2.

While this may seem fairly simple, there are many exemptions to these rules. Some of these overtime regulations do not apply to a certain employee, and sometimes overtime is received on a different basis. We will go over these special rules and exceptions to the main rules here because it is important that both employers and employees are familiar with them.

The Regular Rate of Pay

Also known as the “regular pay rate,” this is what any paid overtime is based on. The pay rate cannot go below California’s minimum wage. A normal pay rate includes:

• Commissions and Piecework
• Hourly Pay
• Salaries

Usually, when you calculate the normal pay rate, you base it on working 8-hour days that make up a 40-hour week. Of course, some people work a different number of days in a week. According to the Industrial Welfare Commission Wage Orders, it all comes down to the number of eight hours per day and especially 40 hours per week. If a worker has an alternate schedule and works less than 40 hours per week (say, 35), they will not be paid overtime if they work 36 or 37 hours. They would have to work over 40, just like anyone else.

Regular Rate of Pay Formula

• • Your hourly rate = your regular rate, including any shift differentials and whatever rate you are paid per hour.
    
    
  • If you are salaried, your monthly salary can be multiplied by 12 to get your annual salary, divided by 52 to find the weekly sum, or even divided by the number of hours to find your hourly pay.
    
    
  • If you work on commission, your commission rate is recognized as your normal pay level, and you get 1.5 X your rate during your first four overtime hours logged and 2 X your rate for hours beyond 12 in one day. You can also divide total weekly earnings by total hours.
    
    
  • Some workers are paid different sums and rates. If this is true, you need to find the average of what you are paid, so divide total weekly earnings by total hours.

Unauthorized Overtime Work Must Be Paid 1.5X

In California, workers must be paid for overtime work even if the overtime work is not authorized. 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. If you have unpaid overtime, you should contact an attorney to help you get paid for the overtime hours worked.

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.”

Bonuses and Overtime Pay

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 May 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
• other exclusions

These payments can be excluded from the normal pay rate.

Are Bonuses Included in the Normal Rate of Pay?

A bonus is included in the normal rate of pay if it is a nondiscretionary bonus. This type of bonus is often based on employee or group performance, production or skill, hours worked, or as an incentive. When calculating overtime, a nondiscretionary bonus is included in figuring out the regular rate of pay.

Incentive bonuses take into account what are called flat sum bonuses. To calculate overtime on a flat sum bonus, the bonus needs to be divided by the maximum usual hours worked in the bonus period, not by the total hours worked in that period. Doing this computation will result in the normal rate of pay on flat sum bonus pay. Overtime according to a flat sum bonus needs to be paid at 1.5 times or twice the regular rate for each overtime hour worked in the bonus period.

Overtime on production bonuses is calculated differently. A production bonus is an incentive for increased production for every hour of labor. To calculate overtime on this type of bonus, one should divide the production bonus by the total hours worked in the bonus period. The result of this computation will be the normal rate of pay on the bonus. Overtime on the production bonus is paid at one-half or one times the regular rate for each overtime hour worked in the bonus period.

For either of these bonus types, overtime can be paid on either a daily or a weekly basis and should be paid in the pay period at the conclusion of the bonus period.

Discretionary bonuses are often given as holiday gifts or as a prize for good work. These bonuses are not the result of hours worked or productivity. Therefore, they are not to be given at overtime rates. As a result, they are not relevant to the discussion of figuring out the normal rate of pay.

Amounts Not Included in the Normal Rate of Pay

Some kinds of payments are not included in the normal rate of pay. Common exclusions include the following:

• Sums given as awards for holidays or special occasions
• Reimbursements
• Vacation
• Illness
• Holiday
• Failure of employer to supply enough work
• Discretionary bonuses
• Premium pay for Saturday, Sunday, or holidays

Whether Salaried Employees Are Permitted Overtime

Depending on the situation, a salaried worker may or may not be entitled to overtime pay. A salaried employee should be given overtime unless they are exempt according to federal and state laws. Similarly, they should be paid overtime unless they are specifically exempt from overtime thanks to the California Labor Code or the Industrial Welfare Commission Wage Orders. These Orders regulate hours, wages, and working conditions.

Filing a Claim for Overtime Wage Loss

After the claim is finished and filed with the local DSLV or Division of Labor Standards Enforcement, it is sent to a Labor Commissioner. They will figure out how to proceed. The choices are a conference, hearing, or dismissal. For more information about each of these important legal processes, please contact a lawyer.

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 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.

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.

Commonly Asked Overtime Questions about California Overtime

• What if my employer suddenly commences retaliatory actions because I informed him/her that I was filing 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 I win a hearing for a work-related issue, but my employer does not pay the wages owed and also does not appeal the decision? How can I move things along and obtain the money that is owed to me? Also: what is meant by “Order, Decision, or Award?”

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.

Great question! 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.

• After I file a claim for overtime pay that I believe is owed to me by my employer, what are the next steps?

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.

• My boss just said they would not provide the OT pay that I know I am owed! What do I do?

If your employer does not pay them 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.

You can also contact a business lawyer for more help with this issue, as well.

• I worked Monday, Tuesday, Wednesday, and Thursday last week, as well as Sunday, for eight hours each day. I was out sick on Friday. I was paid 48 hours at only my regular hourly rate. Shouldn’t I get eight hours of overtime pay?

No. 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 relinquish my right to OT pay as an employee?

No, you may not do this under California law. As we said, employees are unable to waive overtime pay. CA 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.

All You Need to Know

We hope this has been both productive and helpful and that we have cleared 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. Whether you are dealing with an employee making a false wage claim or an employer that will not pay you the overtime earnings you are rightfully owed, our attorneys can help you quickly recover your losses, saving you time and money in the process. Contact our skilled California lawyers at Nakase Law Firm today for a free consultation.