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California Overtime Law

Here is everything you need to know about how California overtime law works.
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Essentially, California overtime law is designed to protect both employers and employees, and reward the employees for working more than the standard eight-hour workday or forty-hour workweek. To provide guidance and save you time, our experts have performed an extensive research on overtime laws in California. 

This in-depth article covers everything you need to know about overtime pay in this state. In addition, we've made sure to use easy-to-understand language to ensure you stay compliant and understand your obligations as an employer. 

Let's learn how California overtime law works, how to calculate it, and all the other essential tidbits you may need down the road! 

Understanding California OT Laws

California overtime laws are designed to ensure employees are fairly compensated for working extra hours. Under California overtime law in 2022, all non-exempt employees are entitled to overtime for the actual hours worked more than 8 hours in a workday or 40 hours in a workweek, whichever is greater. 

To better understand how California overtime laws work, we need to lay the foundation first. To do so, we'll address several essential terms and topics, one by one. Then, once you've read each section, you'll understand this country's overtime legal framework. 

Workweek, Workday, and Full-Time: What Are They in Legal Terms?

Eight hours of work are what constitutes a day's work. According to the Department of Industrial Relations in California, a workday is "any consecutive 24-hour period beginning at the same time each calendar day". According to these regulations, it's also important to know that the 24-hour period may begin at any hour of the day. Still, it has to be consistent and unchanged. 

A workweek in California constitutes seven consecutive 24-hour periods. It is a fixed and regularly recurring period of 168 hours. Similar to how the workday is defined, it has to start on the same day and at the same time every week. Employers have the freedom to establish time and the day when the workweek begins, as long as they are fixed and regularly recurring. 

There are a few other essential things that employers need to be aware of:

  • Changes to the workday and the workweek. Employers in California can set different workdays and workweeks to the typical ones (five eight-hour days of work) for different employees or different shifts under certain circumstances. But once the workdays and workweek are changed, this modification needs to be fixed and permanent. Again, the motivation behind this change mustn't be avoidance of overtime pay.

  • Alternative Workweek Schedules. The Labor Code and the IWC Orders allow for certain flexible scheduling arrangements without overtime pay, even if an employee has worked more than 8 hours in a workday. 

To implement the alternative work schedule, there are some requirements an employer has to meet. If the implementation hasn't been executed correctly, they may face significant liability. In the healthcare industry, it's not unusual to see a workweek schedule that consists of 12-hour workdays. This arrangement will be valid only if strict procedures are followed. For instance, there can only be three 12-hour days in a workweek in the case above. 

What is Considered Full-Time Under California Laws? 

Historically, working 40 hours per week qualified employees as full-time workers. However, with the introduction of the Affordable Care Act, things have changed. Under California law, a full-time employee is the one who works at least 30 hours per week or at least 130 hours per month. 

But there is more to this. For example, employers can classify workers who work under 40 hours per week as part-time in California. 

How Does Overtime Work in California? Complying With California Overtime Law

So far, we have covered the basics and learned that employers in California are required to pay overtime to employees who qualify for overtime, but at what rate?

How Much Is Overtime Pay in California?

Suppose an employee has worked more than 8 hours in a day or 40 hours during a workweek. In that case, they are eligible to receive overtime pay at 1.5 times the employee's regular pay rate. This overtime rate applies to the first eight hours worked on the seventh day of work in any workweek.

Suppose we are talking about working more than 12 hours in one day and more than 8 hours on the seventh day of a workweek. In that case, a different overtime rate applies. This type of overtime in California is paid no less than twice the regular pay rate.

Let's sum up overtime pay rates under California OT Laws:

California OT laws

Whether authorized or not, California overtime law requires employees to compensate for the extra hours worked. 

We'll discuss this in more detail later on. Still, it's important to emphasize that exempt employees are excluded from the overtime rules in California. 

California's Overtime Minimum Wage

Also called "time and a half pay," California's hourly overtime minimum wage is $21 per hour. It's one and a half times an employee's regular minimum hourly wage in California, $14 per hour. 

What Is the Longest Shift Employees Can Legally Work in California?

Without overtime, employers aren't allowed to schedule their teams for more than 8 hours in a workday. Translated in a workweek, this boils down to 40 hours without overtime. But when it comes to overtime in California, there are daily and weekly limits you need to be aware of.

Daily and Weekly Overtime Limits

The daily overtime limit is set at 15 hours per day, while the weekly overtime limit is 40 hours a week.

California overtime minimum wage

Are Employers Required to Pay Extra for Weekend or Nightwork?

According to the Fair Labor Standards Act (FLSA), extra pay for nights and weekends isn't mandatory. Instead, it's a matter of agreement between the employee and the employer. 

Overtime Wage Payments Obligations

Now is the perfect time to address a few other important matters related to California labor laws on overtime. First, there are rules to when overtime in California should be paid, and another requirement employers need to be aware of. 

  • The extra hours worked need to be paid in the worker's next paycheck. 
  • Overtime in California has to be paid to eligible employees, whether authorized or not. Otherwise, your employees have the right to file a lawsuit against their employer to recover lost wages.

Do Managers and Employers Have to Authorize Overtime in California? 

No, under the California overtime law, employees are eligible to receive overtime pay in their next paycheck, whether authorized or not. In other words, employers must pay for all overtime worked by their staff, even if it wasn't authorized. 

Still, bear in mind that an employer has the right to discipline an employee if they have violated the company's policies related to overtime. 

Mandatory Overtime in California: Can You Fire an Employee for Refusing to Work Overtime?

Mandatory overtime law isn't prohibited under California law. Therefore, employers are allowed to require their staff to work overtime. Furthermore, there are no limitations to the amount of overtime the employer can ask for too (if we exclude daily and weekly limits), as long as their workers are compensated. 

If an employee refuses to work overtime, their employer can penalize them. In addition, they have the right to fire an employee for refusing to work overtime

According to California labor laws regarding overtime, this isn't considered discrimination.

Are All Workers Entitled to Overtime Pay?

Unfortunately, not everyone can get higher wages for working excess hours. There are several exemptions in California overtime law. In addition to these exemptions, overtime rules in California also have several exceptions. 

There are exceptional circumstances when a particular category of employees is eligible to receive overtime pay in California. The basis for this overtime differs from the ones we've cited above. 

Who do the exemptions apply to? Let's take a look at some of the workers who aren't entitled to overtime pay:

  • Commissioned employees
  • Union Employees
  • Physicians and surgeons
  • Independent contractors
  • Certain agricultural and farm workers
  • Employees with an alternative workweek schedule are not entitled to overtime pay in California either.

Overtime Exemptions in California: Who Are Exempt Employees? 

What is an "exemption" in the first place? This term is used when the overtime laws in California don't apply to specific categories of employees. For example, under the Fair Labor Standards Act, executives and administrators don't have to be paid for working overtime hours. This applies to other professionals who earn at least $455 a week. 

To determine whether a worker is exempt from paying under California overtime law, three conditions apply in most cases:

  • Their monthly salary is no less than twice the California minimum wage for full-time employment
  • Their primary duties boil down to executive, administrative or professional 
  • These job duties involve regular use of discretion and independent judgment

There are four main exemption categories to California overtime law:

Executive Employees 

Executive personnel is defined as being responsible for the full-time management of two or more employees. Aside from this, for a job to be classified as an Executive position, other work activities mustn't take more than 20% of the worker's time (40% in the retail industry). In addition, it needs to be a salaried position as well.  

Administrative Employees

For a job to be classified as an Administrative position, it must be salaried. The primary duty needs to be non-manual work related to business operations, administrative training, or management policies. To fall under this classification, other work activities mustn't take more than 20% of a worker's time (40% in the retail industry).

Professional Employees

Salaried jobs that require extensive education and advanced knowledge as primary duties are classified as Professional positions. They include the use of discretion and judgment too. A job is classified as a Professional position if activities that aren't directly related to these duties take no more than 20% of the worker's time. For example, computer professionals and certified teachers fall under this category. 

External Sales Employees

Outside sales positions' primary duties include making sales or taking orders. For a job to be classified as an Outside Sales position, an individual needs to spend 80% of their time doing work related to the sales outside of the employer's central workplace. The pay can be either salaried or commission-based. 

Jobs that fall under the listed categories aren't protected by the federal and California overtime regulations. Consequently, employers aren't required to pay these workers for overtime. 

Check the State of California's Department of Industrial Relations for more information on overtime exemptions.  

Eligible Employees

The Fair Labor Standards Act (FLSA) explicitly covers specific jobs by the overtime pay laws. For example, overtime protection includes all first responders like paramedics, police, and firefighters. Several other professions that endure long hours of work are protected under the FLSA, too: practical nurses and paralegals, although they would otherwise be exempt. 

Also, jobs that involve manual labor like construction, cashier, and factory attendant are typically protected under California OT laws. 

To be eligible to receive overtime, workers must:

  • Be older than 18 years of age
  • They can also be older than 16 if they are legally permitted to leave school for work
  •  Work in a non-exempt industry

Eligible employees earn under $455 per week on hourly rates. 

How Are Nonexempt Workers Paid for Overtime?

Commonly, non-exempt workers are paid on an hourly basis, but this is not the only or exclusive way to pay the employees for hours worked over 8 hours within 24 hours or the extra hours within an established workweek.

Non-exempt employees can also receive overtime compensation on a daily rate, piece rate, hourly rate, on a salary basis, or by commissions

How to Calculate Overtime in California

Under California law, employers are required to track the hours worked by their teams. This includes the start of the shift, the start and stop of the meal breaks, and the end of the shift. These time records are then used to determine the hours worked on each workday and workweek.  

If you are unsure how overtime is calculated in California, read this section carefully. 

There are several types of overtime compensation based on how workers are paid:

  1. Their hourly rate is considered the regular rate of pay for hourly workers.
  2. For salaried workers, there is a specific way to calculate the regular rate:

-monthly remuneration by 12 months is multiplied to determine the annual salary

-the annual salary is divided by 52 (weeks) to compute the weekly salary

-the weekly salary is divided by the number of legal maximum regular hours (40) to calculate the regular hourly rate

For workers paid by the piece or commission, two methods can be used to determine their regular rate of pay:

  1. The piece or commission rate is used as the regular rate. An employee is paid one and a half this rate during the first four overtime hours in a workday. For all hours worked over 12 in a workday, an employee gets paid double the time.
  1. The second methodology comes down to dividing an employee's total earnings for the workweek (earning during overtime included) by the total hours worked during the workweek OT hours had). And that is not all - according to this method, for every overtime hour worked, an employee is entitled to an additional one-half the regular rate for hours requiring time and one-half. For hours requiring double time, the full rate applies.
  2. For workers who are paid two or more rates by the same employer during the workweek, the "weighted average" is considered to be their regular rate of pay. This weighted average is calculated by dividing an employee's total earnings for the workweek (earning during overtime included) by the total hours worked (OT hours included).  

How to Compute OT in California: Example 

To make the subject of how is overtime calculated in California crystal clear, let's take a look examine the example below: 

california overtime law

We can see that the imaginary employee from the example above has worked six days. However, this person has worked more than eight hours on two days - Tuesday and Thursday. Under the overtime rules in California, the hours worked in excess of eight hours must be paid at 1.5 times the employee's regular pay rate. 

But, on Thursday we have a bit more complicated situation. The hours worked over 12 are paid using a different rate: double time. So therefore, this person would be paid double their regular pay rate for the three extra hours over 12 worked on Thursday.

California Overtime Law: Key Takeaways

If you're an employer, understanding labor laws is fundamental. The same applies to the California overtime law. It's crucial how you implement overtime, as you want to use it to reward your employees and avoid any legal issues. For example, misclassifying your employees as exempt and failing to pay them overtime can negatively affect the employer.

Unpaid overtime wages can quickly add up, even if the person earns a low amount. There is the question of legal costs and attorney fees as well. In some cases, even penalties can be incurred.

As the saying goes - it's better to be safe than sorry. Following California overtime law is your best bet in staying compliant, avoiding legal issues and extra costs, and keeping your team motivated and engaged.

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