Complete Overtime Guide for California Employers

July 20th 2024

For employers, navigating the overtime regulations is crucial to ensure compliance and foster a fair and productive workplace. Understanding when and how to calculate overtime, who is entitled to it, and the penalties for non-compliance are fundamental aspects of managing a workforce in California.

This comprehensive guide provides answers to commonly asked questions about overtime in California.

This Guide Covers

What is Overtime Pay in California?

Overtime pay in California refers to the additional compensation eligible employees receive for working beyond certain daily or weekly thresholds defined by state labor laws. Non-exempt employees who are entitled to overtime pay must be compensated at a rate of 1.5 times their regular hourly wage for hours worked:

  • Beyond eight hours in a single workday.
  • Beyond 40 hours in a workweek.
  • For the first eight hours worked on the seventh consecutive day of work in a workweek.

Additionally, employees must be paid at double their regular rate of pay for:

  • Hours worked beyond 12 hours in a workday.
  • Hours worked beyond eight hours on the seventh consecutive day of work in a week.

Which Hours Count as Overtime in California?

In California, overtime hours are determined based on daily and weekly thresholds. Overtime hours are counted under the following conditions:

  • Any hours worked beyond eight hours in a single workday.
  • Any hours worked beyond 40 hours in a workweek.
  • If an employee works seven consecutive days in a workweek.

Employers must accurately track and report employees’ hours worked to comply with these overtime regulations and avoid legal issues with wage and hour violations.

How Much is Overtime Pay in California?

Overtime pay in California is calculated based on the employee’s regular hourly rate and the number of hours worked. The overtime pay rates are as follows:

  • One and a half (1.5): Employees must be paid 1.5 times their regular hourly rate for hours worked beyond eight hours in a single workday, hours worked beyond 40 in a workweek, or for the first eight hours worked on the seventh consecutive day of work in a workweek.
  • Double: Employees must be paid twice their regular hourly rate for hours worked beyond 12 hours in a single workday or for hours worked beyond eight on the seventh consecutive day of work in a workweek.

Who is Entitled to Overtime Pay in California?

In California, almost all employees aged 18 and over and those aged 16 and 17 who are not required to attend school are eligible for overtime pay. This applies to workers paid hourly, non-exempt salaried, or on a piece-rate basis. Eligible employees must receive 1.5 times their regular pay rate for hours worked beyond eight hours in a day or 40 hours in a week, while double pay for hours worked over 12 in one workday or over eight hours on the seventh consecutive day of work.

Who is Exempt from Overtime Pay in California?

In California, overtime provisions do not apply to the following employees and occupations:

  • Executive, administrative, and professional employees who earn a minimum of $1,280 weekly ($66,560 annually)
  • Employees in the computer software industry
  • Employees of the State and its political subdivisions
  • Outside salespersons
  • Individuals who are the spouse, child, or parent of the employer
  • Drivers
  • Taxicab drivers
  • Airline employees

How Do You Calculate Overtime Pay in California?

Calculating overtime pay in California involves determining the employee’s regular pay rate and applying the appropriate overtime multipliers for hours worked beyond the standard daily and workweek thresholds. Here’s a quick guide on how to calculate your overtime pay:

  • Determine the employee’s regular rate of pay: This is usually the employee’s hourly wage. For salaried employees, divide their weekly salary by the weekly hours worked to determine the regular hourly rate.
  • Identify overtime hours: You have to determine the hours worked beyond eight hours in a single workday or hours beyond 40 in a workweek.
  • Apply the overtime rate: The overtime rate in California is either one and a half (1.5x) or double (2x), depending on the circumstances. For hours worked beyond eight in a day, 40 in a week, or the first eight hours on the seventh consecutive workday, they must be compensated at 1.5x. In comparison, hours worked beyond 12 in a day or eight hours on the seventh consecutive workday must be compensated double time.
  • Calculate overtime pay: Multiply the number of overtime hours by the overtime rate.

For example, if your employee is paid $16 per hour and has worked 50 hours a week, then the employee’s overtime pay for the 10 hours of additional work is $240. Here’s a quick calculation:

  • Overtime rate = Hourly rate x 1.5 = $16 x 1.5 = $24
  • Overtime pay = Overtime rate x Overtime hours = $24 x 10 = $240

Learn more about California Overtime Laws in our detailed guide.

When Should Overtime Pay Be Given Out in California?

In California, overtime pay must be given out no later than the payday for the next regular payroll period following the pay period in which the overtime wages were earned. Employers are required by law to pay their employees at least twice a month on predetermined paydays. Clear information about pay schedules must be provided to all employees, including when and where employees will receive their pay.

Are All Businesses in California Required to Pay Overtime?

As California follows FLSA provisions, not all businesses are required to pay overtime. Coverage under the FLSA depends on whether the company meets specific “enterprise coverage” criteria or if individual employees are engaged in interstate commerce. Enterprise coverage applies to businesses with at least two employees and annual sales or business volume of at least $500,000 or certain organizations like hospitals, schools, and government agencies. Individual coverage applies to employees whose work involves interstate commerce, such as producing goods for shipment out of state or regularly making interstate phone calls. Businesses that meet these criteria must comply with FLSA regulations, which generally require overtime pay for work exceeding 40 hours per week for covered non-exempt employees unless specific exemptions apply.

Which Law Governs Overtime in California?

In California, two primary laws oversee overtime regulations: the federal Fair Labor Standards Act (FLSA) and California Labor Code Section 510. When the provisions of state and federal laws differ, the more favorable law that offers greater protection to the employee prevails.

Under the FLSA:

  • Non-exempt employees are entitled to overtime pay for hours worked beyond 40.
  • The minimum overtime pay rate is 1.5 times the employee’s regular pay rate.
  • The workweek consists of seven consecutive 24-hour periods, and employers can set their workweek independently of the calendar week. No maximum limit exists on how many hours an employee can work a day or week.
  • Overtime pay is not required for weekend or holiday work unless overtime hours are worked on those days.

California overtime law provides additional protections compared to federal regulations. According to California Labor Code Section 510:

  • Employees are entitled to overtime pay for hours worked beyond eight a day, more than 40 a workweek, or for the first eight hours worked on the seventh consecutive day of work in a workweek.
  • Employees must receive double their regular pay rate for hours worked beyond 12 in a day or more than eight on the seventh consecutive day of work.

Who Enforces California Overtime Laws?

California overtime laws are enforced by the California Division of Labor Standards Enforcement (DLSE), which is a part of the California Department of Industrial Relations (DIR). The DLSE is responsible for ensuring compliance with state labor laws, investigating complaints related to unpaid overtime and other wage and hour violations, conducting audits, and enforcing penalties when violations are found.

Employers must adhere to the guidelines and regulations set forth by the DLSE to ensure compliance with the overtime laws in California.

What is the Penalty for not Paying for Overtime in California?

The penalties for not paying overtime in California can be substantial. According to the Labor Code Section 210, the penalties are as follows:

  • For any initial violation, the penalty is $100 for each failure to pay each employee. This applies to the first time an employer fails to pay the required overtime wages.
  • For each subsequent violation or any willful or intentional violation, the penalty increases to $200 for each failure to pay each employee, plus an additional 25% of the amount of wages unlawfully withheld.
  • A higher penalty for subsequent violations is applied after notice to the employer of a previous violation has been established, regardless of whether penalties were assessed in the prior instance.

Employers in California must ensure timely and accurate payment of overtime wages to avoid these significant penalties and comply with state labor laws.

How Can You Ensure Overtime Compliance?

To ensure compliance, employers are encouraged to thoroughly understand and apply the relevant federal and state labor laws, particularly the provisions stipulated in the FLSA and California Labor Code 510. Employers are also advised to establish clear policies and provide ongoing training for managers and HR personnel on overtime regulations to prevent unintentional violations.

In addition, implementing a reliable time tracking system is crucial to record all hours worked by employees accurately. Regularly audit payroll records to verify that overtime is correctly calculated and paid according to legal requirements.

Learn more about California Labor Laws through our detailed guide.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.