Workers and employers in California will find it necessary at some point to know all the ins and outs of California Overtime Law. After all, if you are an employer, you want to ensure that you are working within the confines of the law. And, if you are an employee, you want to make sure that you are being fairly compensated for your hard work.
While it’s important to learn about California Overtime Law, it can also be difficult to sift through all the information out there to get a solid grasp of how the law actually works. The purpose of this article is to make it easier to understand what California Overtime Law entails, how it differs from national overtime laws, and answer any additional questions you may have. Remember, this article will provide information, but is in no way meant to be determined as legal advice or to guarantee any particular outcome. That being said, let’s get started with information about California Overtime Law.
What are the basics of California Overtime Law?
In short, an employee should be paid overtime, or 1.5 times their regular rate, when they work more than 8 hours in a day, 40 hours in a week, and also for the first 8 hours of the 7th day of work in a row. Remember if an employee is contracted to work four 10-hour shifts or three 12-hour shifts, for example, they will not receive overtime pay, unless they work more than 40 hours a week. Additionally, California Overtime Law states that employees who work more than 12 hours in a day or more than 8 hours on their 7th consecutive day of work should be paid 2 times their regular rate. Let’s talk a little bit now about the eligibility requirements an employee must meet to receive overtime.
What are the eligibility requirements for California Overtime Law?
To be eligible for these overtime rates in California, employees must meet certain qualifications. They are as follows:
- Employee must be older than 18 (or 16 if they are legally permitted to leave school for work)
- Employee must be in a non-executive role. An executive role is defined in California as someone who is involved in the management of the enterprise, who directs the work of 2+ employees, can hire or fire other employees, who exercises discretion and judgement, and more. Executives should also make more than 2x the minimum wage.
- Employee must be in a non-administrative role. This means their duties involve non-manual work related to general business operations, administration of an educational system, and more. Administrative employees must also earn a monthly salary that is no less than 2x the state minimum wage for full-time employment.
- Employee must be in a non-professional role. This means the employee is licensed by the state in law, medicine, optometry, architecture, dentistry, engineering, teaching, and more. For a more comprehensive review of what is entailed as a professional role, visit the website of the Department of Industrial relations. Professional employees also should make more than 2x the minimum wage rate.
- Employee must not fall within the lines of any other exemptions as outlined here.
So long as the employee is eligible, then they qualify to receive overtime pay. Take time to thoroughly review the eligibility requirements as well as the exemptions to ensure that everyone is being compensated fairly.
How are workday and workweek defined?
To make sure employers and employees have the same definition of what a workday and workweek entail, they have defined it.
How is a workday defined?
A workday is the equivalent to a regular day, meaning it’s 24 hours long. The work day doesn’t have to start at 12 and end 24 hours later. Rather, the workday can start at anytime during the day or night, and will start over as soon as 24 hours are up. This means that if you start a workday at 4am, then the second workday wouldn’t start until 4am the next day. The employer can change an employee’s schedule, but the change must be permanent and not a blatant attempt to avoid overtime pay.
How is a workweek defined?
Similarly, a workweek is defined as 7 consecutive 24 hour periods, or 168 consecutive hours. A workweek can begin at any time, but once the 168 consecutive hours are up, so is the workweek. Just as with a workday, a workweek can be changed if it is permanent and not an attempt to avoid overtime pay.
This should clear up any confusion about when to calculate a workday and a workweek. The important thing is not to continually reschedule employee schedules to try and skirt around overtime laws.
How is overtime pay calculated in California and when should it be paid?
To avoid any confusion, there are also policies about how to calculate overtime pay.
California Overtime Law states that employers should calculate pay based on the regular rate of pay, not the hourly wage. The regular rate of pay includes the hourly pay as well as any other type of compensation the employee regularly receives. This is not simply the hourly wage they are paid.
If an employee is paid by the hour, then the overtime pay is calculated based on the regular rate of pay as stated above. For example, if an employee’s regular rate of pay is $10 an hour (after the wage and other compensation are totaled), then standard overtime pay would be $15 an hour in the overtime period, and if they reach the qualifications for double overtime, then the pay would be $20 an hour in the qualifying overtime period.
On the other hand, if an employee is paid an annual salary, and qualifies for overtime, then the overtime calculation would be their annual salary divided by 52 and then by 40.
In the event that an employee receives two different rates during a workweek, then overtime law requires that you take a weighted average of the two rates.
Overtime in California is only calculated for days that the employee actually worked. For example, if an employee took 8 hours off for personal leave, then these hours don’t count towards overtime work. The reason? If they are taking time off, then they haven’t actually worked for over 40 hours that week. Again, to qualify for overtime, the employee has to have actually been physically present at their place of employment for over 40 hours.
California Overtime Law also states that you should pay out overtime on the employee’s next paycheck.
Rules about authorization and mandatory overtime
An employer has a right to authorize overtime and refuse overtime work by their discretion. This means the employee should disclose when they are running into overtime and let their managers make a decision to approve the time or not.
However, this law gets a bit tricky when it comes to the Fair Labor Standards Act (FLSA). This act states that an employer has to pay overtime whether or not the overtime was authorized.
In theory and if you are looking to develop a good relationship between employees and employers, there should be a conversation about when overtime is authorized and when it is not. Then, employees and employers should do their best to live up to the agreement. Legally, however, employers must pay their employees overtime regardless of if they approve the time or not.
There is no legal basis in California for employees to refuse overtime, but there are limitations on the amount of time you can require employees to work. Additionally, there are some restrictions posed by specific wage orders, union contracts, or varying company policies. The best way to determine what these limitations may be is to do your research before requesting or requiring employees to work overtime.
What are some common misconceptions about California Overtime Law?
It’s easy for anyone to get confused about overtime laws. That’s why they are outlined so specifically. Here are some common misconceptions about overtime law that you should know about.
- Salaried employees don’t get overtime – One of the biggest misconceptions about overtime law in California is that salaried employees don’t qualify. This is a huge myth. There are many people who get paid a salary that don’t qualify because they meet certain exemptions, but being paid a salary in and of itself is not an exemption.
- Professional employees don’t get overtime – The term “professional” used in one of the exemptions can be confusing. Some people take it to mean anyone who is professional doesn’t qualify. However, it just means anyone who works as a lawyer, doctor, CPAs, architects, etc. doesn’t qualify. There are plenty of other professional jobs like computer programmers, insurance agents, and more that qualify for overtime. When in doubt, look up what the term “professional” is referring to before refusing to pay overtime. It will save you a legal battle.
- Comp time replaces overtime – Another problem with employers skirting around overtime pay is when they offer comp time in exchange for overtime pay. For example, if an employee works 48 hours, they may “comp” them a day next week, rather than paying overtime. This is a violation of overtime laws. The employer, instead, should pay overtime and require the employee to work next week.
- Travel time doesn’t count – Of course employees don’t get paid for traveling to and from work. However, if they are traveling from one workplace to another workplace, and it’s all considered time on the clock, then the employee should be paid overtime. This means if an employer sends an employee on a company trip, then the time they spent on an airplane would count as overtime.
These are some of the most common misconceptions and/or illegal practices by employers. The biggest potential problem, however, is employers not keep track of time at all. If employers are going to offer an hourly rate, then it’s vital to keep track of when employees are on the clock. This means employees should be using a time tracking device to show when they are working and when they are not working. It’s not fair for employees to be paid a standard hourly rate based on 40 hours if they are working much more than that, and not clocking hours doesn’t justify not paying overtime.
This is especially important because if employers don’t clock hours, then the testimony of an employee may be sufficient. For example, if the employer doesn’t clock time and an employee might say they worked 50 hours and that would be enough to prove overtime.
How does California Overtime Law differ from Federal Overtime Law?
California Overtime Law provides employees with a little more of a benefit than standard Federal Overtime Law. The biggest difference is that employees in California that work overtime are eligible to receive double the amount of their standard hourly wage or of the percentage of their annual salary if they meet the qualifications for double overtime. Federal Overtime Law typically caps out at 1.5x the rate.
This is an added incentive for employees to work overtime in California as opposed to other states in the nation.
Why should people be aware of overtime laws?
The main reason employees should be aware of overtime laws is for protection. If an employee is not aware of overtime laws, then they won’t know when they are not being fairly compensated. When employers don’t have to pay overtime, it saves their firm a lot of money. This is one reason why some dishonest firms will refuse to pay overtime. When employees are aware of overtime laws, then they can easily state their case and get paid what they are worth.
Employers should also be aware of overtime laws. It’s not enough to plead ignorance in a court of law when an employee takes and employer to court. Laws are set up to protect employees and employers, and it’s the duty of the employer to be fully aware of how the law works. When you are aware of the overtime laws and work hard to comply with overtime laws, then you can rest assured that you are creating a positive company culture.
You’ll find when you are happy to abide by the laws and transparent about your policies, you show your integrity, show that you care about your employees, and attract and keep top talent. This can be worth more to your firm and save your company much more in the long run than if you were to find a dishonest way to avoid paying overtime.
What can an employee do if their employer refuses to pay overtime?
If you are an employee who has been denied overtime, then you have options to get the overtime pay you earned.
You can file a wage claim with the Division of Labor Standards Enforcement. This is an individual wage claim form that helps you recover unpaid wages such as overtime, commissions, bonuses, and more. There are several other reasons you may need to file a wage claim and you can learn about them here.
After you file a wage claim, a Deputy Labor Commissioner will review your claim and determine what action needs to be taken next. Sometimes they will make the decision to hold a conference with interested parties to work out the details of the claim. Other times, the Deputy Labor Commissioner will call for a hearing or will dismiss the claim. If the claim is dismissed, it usually means there was insufficient evidence. If a hearing is called, parties will testify under oath and then a decision will be made with regards to an order, decision, or award.
In the event, you feel like an employer retaliates against you for filing a claim, there are protections for that too. You can file a retaliation/discrimination claim and go from there.
If you don’t want to file a wage claim, then another option you have is to file a lawsuit against the employer. This may be a good idea depending on the kind of representation you can get.
Wrap-up
California Overtime Law is a law implemented to protect both employees and employers. It means that employees that are eligible that work over 40 hours a work week are paid overtime. The amount an employee is paid depends on the amount of hours they worked and is calculated based on their regular pay rate. It serves both employees and employers to be fully aware of California Overtime Law. In the event an employer abuses these laws, there are protections set in place to make sure the employee gets compensated.
Remember nothing in this article will guarantee a specific result. The purpose of this article is purely informational. For more information about California Overtime Law, visit the website for the State of California’s Department of Industrial Relations. It is your duty to fully understand the ins and outs of the law as represented on the website and to seek legal representation as needed.
Greg Digneo writes for TimeDoctor.com, a time monitoring and productivity monitoring software designed for tracking hours and productivity of remote teams. If you would like to see where you and your team are spending your time during work, try Time Doctor free for 14 days.