Overtime: Understanding California’s laws and employee rights

California’s overtime laws require non-exempt employees to receive extra pay for working over 8 hours a day or 40 hours a week. Employees must be compensated at 1.5 times their regular rate for hours beyond these limits and double pay for excessive hours on the 7th consecutive workday.

By Brad Nakase, Attorney

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Have a quick question? I answered nearly 1500 FAQs.

Introduction

According to California’s general overtime laws, an employee who is not exempt and who is at least eighteen years old, or a minor who is sixteen or seventeen years old and is not additionally forbidden by law from working, cannot work in excess of 8 hours in a day or over forty hours in a workweek unless they are paid one and a half times their standard rate of pay for each hour over 8 in a workday and more than forty in a week of work (or twice as much as stated below). 8 hours of labor is considered a full day’s job, and if an employee works longer than 8 hours on a weekday or over six days in a workweek, they should be paid at least:

  • The employee will receive 1.5 times their regular rate of wage for any hours beyond 8 in a workday, including up to 12 hours, as well as for the initial 8 hours spent on the 7th day of labor in a week; and
  • If a worker works more than twelve hours in a day or more than 8 hours on the 7th day of labor in a week of work, they will be paid twice their usual rate of compensation.

Nonetheless, the overtime statute has several exceptions. A specific category of workers is considered to be exempt from the overtime law when there is an “exemption”. The broad overtime law mentioned above has some exceptions as well. An “exception” occurs when overtime is given to a specific employee classification based on a different formula than what is specified above. To put it another way, an exception is a unique rule. (For more guidelines about overtime specifically for workers in agriculture, check Overtime for Agricultural Workers.)

Q1: What is meant by the “regular pay rate,” and by what method is it ascertained?

A: Your typical rate of pay—the amount you typically receive for the job that you do—is the basis for overtime calculations. Hourly wages, salaries, commissions, piecework income, and other forms of compensation are all included in the regular pay rate. Regular pay rates cannot ever be lower than the appropriate minimum wage.

The hours that are considered in determining the regular pay rate typically cannot be more than the maximum permissible number of regular hours, which is typically eight hours per day and forty hours per week. The amount of days worked in a week of work can also have an impact on this threshold. Finding the highest amount that is permitted in each situation is crucial. The regular rate of pay, and that in this instance would also be calculated on a basis of 40 hours each week of work, is unaffected by the different approaches of planning and calculating overtime according to the majority Industrial Welfare Commission Pay Rules. This alternate method relies on an alternative week of work schedule of four days of ten hours or three days of twelve hours.

If the legally permitted maximum number of regular hours is not met, the mutually agreed upon normal hours have to be used. For instance, if you do thirty-two to thirty-eight hours in a week, your normal rate of compensation is based on 35 hours, which is the agreed-upon average week of thirty-five hours. The legislation does not, however, mandate paying out of the overtime bonus in situations when a week’s work is under 40 hours unless the worker puts in over 8 hours of work per day or over forty hours per workweek.

Stated otherwise, if your policy stipulates a 35-hour week of work, then your company is exempt from paying the overtime payment until after 8 hours of workdays or forty hours of workweeks. With the exception of working more than 8 hours in a day or forty hours in a week, you will be compensated for any additional hours worked if you do in excess of 35 but less than 40 in a week.

Examples of ways to determine the usual rate of compensation are as follows:

  1. If your salary is hourly, this figure is your usual pay rate. It includes but is not limited to, shift variations and the hourly equivalent for all non-hourly payments you have received.
  2. In the event that you get the salary, the standard rate is established as follows:
  • The yearly pay can be calculated by multiplying the monthly compensation by 12.
  • The weekly wage is calculated by dividing the annual income by 52.
  • The standard hourly rate is calculated by dividing the weekly pay by the 40 lawful maximum usual hours.
  1. The usual pay rate for calculating overtime can be established using any of the techniques that follow when you get compensated by a piece or commission:
  • You get paid 1.5 times the piece rate, also known as the commission rate, for production in the initial 4 overtime hours of a workday and twice as much for any additional hours done beyond twelve hours during a weekday.
  • Take the total amount of money you made during the week of work (including overtime) and divide it by the total number of hours you worked. You have a right to a further half of the standard rate for time and a half hours worked, as well as the entire rate for double time hours, on every overtime hour that you work.

When determining the usual rate of compensation for piece staff members, the group rate might be used. By dividing the total quantity of pieces the group produces by the overall number of members, each member is compensated proportional to their contribution. Each worker’s regular rate is calculated by dividing their take-home compensation by the total amount of hours they put in.  The usual rate must not be lower than the legal minimum wage.

  1. If an employer pays you at least two different rates during the course of a week, the standard rate will be the “weighted average,” which is calculated by dividing the overall earnings during the week—including overtime—by the total number of hours worked—including overtime. For instance, the weighted average (and hence the standard rate for the given week) is $10.52 if you do thirty-two hours at 11 dollars per hour and ten hours at 9 dollars per hour in the same week. To compute this, add your week’s straight-time payment of $442 [(32 x $11 /hour) + (10 x $9 /hour)] and split it by the forty-two hours that you worked.

Q2: Does the employer have to cover overtime that is not authorized?

Yes, employers are required by California law to pay overtime, regardless of whether it is unauthorized. The pay rate for overtime is 1.5 times the standard rate of pay for every hour worked beyond 8 in the day up to & including 12 hours, as well as for the initial 8 hours performed on the 7th successive day of work in a week. For every hour beyond twelve in the day and for every hour exceeding 8 on the 7th successive day of work in a week, the regular pay rate is doubled for overtime.

If a worker works overtime without getting permission, they may face disciplinary action from their company. All the same, the wage & hour regulations in California mandate that the worker receive payment for every hour that he or she “permitted or suffered to work, regardless of whether they’re obligated to do it.” According to California legal precedent, “permit or suffer” refers to work that the company knew or ought to have learned about. While an employer is required to maintain precise time sheets and pay for the work that it permits to be done and benefits from, a worker cannot purposefully keep the company from learning about the unauthorized overtime they worked and then return later to ask for recovery.

Q3. Does the standard pay rate include a bonus when determining overtime?

Sure, if the bonus is non-discretionary. When a bonus is given as payment for hours labored, proficiency, production, or as a motivation to stay with the same company, it is factored in figuring out the standard rate of pay for computing overtime. Bonuses with a set amount are considered incentives. Instead of dividing the bonus by the entire number of hours worked during the bonus-earning duration, the bonus should be divided by the greatest number of normal hours worked during that time in order to calculate overtime for a flat amount bonus. Based on the flat amount of bonus income, this computation will yield the regular pay rate.

If an employee works overtime during the bonus-earning duration, they will be compensated at a rate that is either 1.5 or 2 times higher than the ordinary rate. Bonuses intended to encourage higher productivity for every hour worked, such as production or overtime bonuses, are calculated differently than lump sum bonuses. A production bonus’s overtime is calculated by dividing the bonus amount by the entire amount of hours worked during the bonus-generating period. The standard pay rate for the bonus (production) will be obtained from this computation.

For every overtime hour performed throughout the bonus-earning duration, overtime for the bonus (production) will be reimbursed at 0.5 or 1 times the standard rate. Either a weekly or daily overtime payment is required for any form of bonus, or it must be made during the period of pay that follows the conclusion of the bonus-making time.

When calculating the standard rate of pay, discretionary bonuses and amounts given as gifts on holidays or other particular occasions—like a reward for excellent service—that are not based on production, hours worked, or efficiency aren’t included in the calculation and aren’t tied to rates of overtime.

Q4. Are there any sums that are not included in the standard pay rate?

Indeed, some forms of compensation are not included in the base pay rate. Expense reimbursements, and payments given for periods when no work takes place due to holiday, holidays, illness, or the company’s inability to provide enough work are just a few of the more common exclusions. Other examples include premiums paid for Sunday, Saturday, or holiday jobs (where the rate for such premiums is at least 1.5 times the rate that was genuinely established for similar work completed during non-overtime periods on different days), as well as discretionary bonuses.

Q5. Are salaried workers eligible for overtime pay?

That depends. Paid overtime is a requirement for salaried employees unless they satisfy the requirements of state and federal legislation for exempt status, or unless the Labor Code of California or a Wage order of the Industrial Welfare Commission specifically exempts them from overtime regulations. These wage orders govern working conditions, hours worked, and wages.

Q6. Is it legal for an employer to demand overtime from a worker?

Indeed, a worker’s hours and job schedule may generally be determined by their employer. Furthermore, in most cases, if a worker refuses to perform the required overtime, the employer has the right to take disciplinary action against them, which may include firing them. Employers, however, are liable for fines if they force or coerce a worker to miss a rest day; they cannot fire a worker for declining to report for duty on the seventh day of the workweek. When fully informed of their right to rest, employees are free to decide whether or not they need a day off.

Q7. I put in 8 hours of work every day last week from Monday to Saturday, excluding Friday. Friday was a sick day for me. I received payment at my standard hourly rate for 48 hours of labor during the workweek. Do I get paid for eight hours of overtime?

No, you do not have a right to overtime compensation. You worked a total of 40 hours throughout the workweek, and overtime is computed on the basis of hours worked. If you are paid on a holiday even though you are off from work that particular day, this is another instance of receiving your regular pay even though that period is not applied to overtime. In this scenario, there was no labor done, hence the period of time used to calculate holiday compensation is not considered as hours spent for overtime considerations.

Q8. When should I receive payment for the overtime I put in?

Payment of overtime must occur by the next standard payroll period’s payday following the overtime duration in which it was earned. (Section 204 of Labor Code) As long as straight-time payments are given out within the span of the time frame specified in the relevant section of the Labor Code during the time frame when they were obtained, only the overtime wages may be postponed to the subsequent payroll period’s payday. If employees are paid every week, every two weeks, or semimonthly, they must release their wages no later than 7 calendar days after the payroll period ends.

Q9. Can a worker give up their claim to overtime pay?

No, regardless of whether an employee agrees to work at a lower wage, California law mandates that they receive full overtime compensation. This means that a worker will still be able to collect the difference between what they were paid and what they are entitled to in overtime compensation, even if there is a contract or “waiver” in place. (Section 1194 of Labor Code)

Q10. If I’m not getting paid for overtime by my employer, what should I do?

To get back the overtime money you’ve lost to the company you work for, you have two options: either submit a wage grievance/claim to the Division of Labor Standards Enforcement or sue them in court. In addition, you have the right to file an appeal for the period of waiting penalty under Section 203 of the Labor Code if you leave this company.

Q11. What steps are taken once I submit a wage claim?

After completing and submitting your claim to the local DLSE (Division of Labor Standards Enforcement) office, a Deputy Labor Commissioner will review it and decide the appropriate course of action based on the facts provided and the overtime claim’s circumstances. A conference, hearing, or rejection of the grievance may be the first course of action taken in relation to it.

Each party will get a notification by letter regarding the time, date, and location of the conference if it is decided to have one. Determining the claim’s legitimacy and whether a resolution can be reached without the need for a hearing are the goals of the meeting. The dispute is typically referred to a hearing when the claim cannot be resolved at the time of the conference.

Both the parties and the witnesses speak under oath during the hearing, which is videotaped. An ODA (Order, Decision, or Award) by the Labor Commissioner shall be served to the parties following the hearing.

A civil tribunal with the necessary authority may hear an appeal against the ODA by any party. The case will go to trial, and both sides will be given the chance to call witnesses and submit evidence. The testimony and facts offered during the hearing of the Labor Commissioner will not serve as the foundation for the decision of the court. If the employer files an appeal, DLSE may be able to assist a worker who lacks the funds to hire legal representation throughout the court proceedings.

To learn more about the wage claim processing method, go to the Policies and Procedures of Wage Claim Processing brochure.

Q12. What happens if I win the hearing but the employer refuses to pay or file an appeal of the ODA?

Should the ODA be in the worker’s favor, the DLSE will request that the court record the ODA as a verdict against the company in the event that there isn’t an appeal and the company fails to honor the ODA. This judgment is as enforceable as every other court-issued monetary judgment. As such, you have the option of attempting to obtain the judgment on your own or asking that DLSE handle it.

Q13.  Should my employer take adverse action against me due to my announcement that I would be filing a wage claim regarding unpaid overtime, what recourse do I have?

You can report discrimination and retaliation to the Office of the Labor Commissioner Office if your company treats you unfairly or retaliates towards you in whatever manner, such as by firing you for filing a wage grievance or threatening to file one to the Labor Commissioner. As an alternative, you may bring legal action against the company you work for.

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