There’s no doubt that California has some of the most complex labor laws in the United States, such as the overtime law. Often, the complexity of California overtime law leads to wrong interpretation, which in turn causes many employers to contravene its stipulations.
In this in-depth guide, we’ll cover everything you need to know about the overtime law in California. We’ll tell you what the law says, who’s eligible to get overtime pay, how much the overtime rate and the consequences of breaking the law.
We’ve turned every stone to help you get overtime pay right. We’ll also tell you how using the best time-tracking app lets you stay compliant. Let’s dive in.
To better wrap your head around the California overtime pay, you should first understand all the provisions. The core of the overtime law states:
“A non-exempt employee in California shall not be employed more than 8 hours a workday or 40 hours a workweek unless he or she is compensated one-half times (or two-times under specific conditions) their regular rate of pay for hours worked over 8 hours in a workday and over 40 hours in a workweek.”
Put simply; 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. Moreover, employees are entitled to double time, or two times their regular rate of pay, for work over 12 hours in a workday.
The law throws around three terms that may appear simple but are usually misconstrued. They include non-exempt workers, workday, and workweek. We’ll discuss the meaning of non-exempt employees in the eligibility section; let’s shed light on the other two:
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. California employers are free to establish the 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:
There are some requirements an employer has to meet when implementing an alternative work schedule. They may face significant liability if the implementation hasn’t been executed correctly.
In the healthcare industry, it’s not unusual to see a workweek schedule comprising 12-hour workdays. This arrangement will be valid only if strict procedures are followed. For instance, in the case above, there can only be three 12-hour days in a workweek.
Historically, working 40 hours per week qualified employees as full-time workers. However, things have changed with the introduction of the Affordable Care Act. Under California law, a full-time employee 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.
Beyond the core, we dug deeper to comprehend other California overtime stipulations prone to misinterpretation.
Yes, 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. Even so, you must compensate them for hours “suffered or permitted” to work. According to the California case law, “suffer or permit” refers to work you knew or should have known about.
Yes, you’re free to create work schedules as you see fit, even if that entails requiring employees to work overtime. You may discipline employees for refusing to work scheduled overtime; the punishment may include termination. However, you cannot penalize an employee for refusing to work on the 7th day of their workweek.
Employers aren’t allowed to schedule their teams for more than 8 hours in a workday without overtime. Translated in a workweek, this boils down to 40 hours without overtime.
However, when you bring overtime into the equation, there isn’t a legal limit on the number of hours an employee can work in a day.
California overtime laws ensure employees are fairly compensated for working extra hours.
However, these laws don’t apply to all employees: some are exceptions, while others are exempted.
Before we get to the “exceptions” and “exemptions,” let’s see who’s entitled to California overtime pay.
The general provisions are that non-exempt employees are entitled to overtime pay in California. Non-exempt status means the employee is covered by the Industrial Welfare Commission Orders.
Besides that, the non-exempt employee must be 18 years or older or a minor employee (16 or 17 years) who’s not prohibited from engaging in work or required by law to attend school.
Certain groups of employees are exempted from the California overtime law. An exemption means that the overtime law doesn’t apply to these groups of employees. Examples of workers who are exempted include:
In addition, employees who’ve entered into a collective bargaining agreement under the Railway Labor Act are exempted. Read the California exemption guide for more details.
An exception means that the employee is entitled to overtime pay. Still, the basis differs from the one stated in the California overtime law. Some exceptions include:
The exceptions also extend to employees with a valid adopted alternative workweek schedule.
The California law is specific on how to apply overtime pay for each of these classifications of employees. Check out the complete California overtime exceptions for the nitty-gritty details.
Also, bear in mind that the Fair Labor Standards Act (FLSA) explicitly covers specific jobs by the overtime pay laws. Example of overtime protection includes all first responders like paramedics, police, and firefighters. Several other professions that endure long work hours are protected under the FLSA, too: practical nurses and paralegals, although they would otherwise be exempt.
Yes, you should compensate salaried employees for overtime work unless they qualify as exempt employees per requisite federal and state laws. Moreover, salaried employees exempted from overtime by IWC wage orders and the California Labor Code are not entitled to overtime pay.
Note: If you have doubts about your employees’ eligibility, always consult employment lawyers or labor consultants who are well-conversed with California labor laws.
We have covered the major provisions in the California overtime law. We now get into the gist of the law and answer the questions:
According to the California overtime law, employers should compensate employees for overtime work at least:
To compensate employees fairly for overtime work, you should accurately track their work hours — which isn’t easy, mainly if you use manual timecards. We’ll show you how Timeero simplifies overtime tracking, but first, what’s the employee’s regular rate of pay?
Assuming you track employee overtime hours accurately, the final piece of the overtime pay puzzle is computing their regular rate of pay. Employee’s regular pay rate is the quotient of their total weekly earning divided by total work hours in the said workweek.
There are four ways of calculating the regular rate of pay depending on employees mode of payment:
If you pay employees by the hour, the hourly wage represents their regular rate of pay. For example, if you pay an employee $20 per hour and they work 40 extra hours in a month, then the overtime pay will be ($20*40*1.5 = $1,200), assuming they’re entitled to one and a half times their regular pay rate.
If you have salaried or white-collar employees who qualify for overtime pay, this is how you compute their regular pay rate. First, multiply their monthly salary by 12 (months) to get their annual salary. Then, divide it by 52 (weeks) to get weekly earnings. Lastly, divide the figure by 40 — the legal maximum regular hours — to get the regular hourly rate.
Let’s assume the employee earns $4,000 per month; the regular hourly rate will be:
($4000*12)/(52*40)= ~ $23.08 per hour
Suppose the employee works 40 extra hours that month, under the 1.5 times stipulations, they are entitled to ($23.08*1.5*40 = $1,384.8). You multiply the regular pay rate by the legal overtime rate and the number of hours the employee worked to get their overtime pay.
If you pay employees by commission, there are three methods to compute their regular rate of pay:
For example, assume you have ten employees producing 7500 cups per week. If you pay employees $1 per cup and an employee works 50 hours in the workweek, this is how you compute the regular rate of pay.
((7,500*$1)/10)/50 = $15
You can use that figure to compute employee compensation based on their overtime hours. Remember that if piece employees worked different hours during the week, you have to calculate the regular pay rate individually.
If you pay employees different rates, the law requires you to use the “weighted average” as the regular rate of pay. In other words, you should divide the employee’s total earnings (including overtime) in a workweek by total work hours (including overtime).
For example, if an employee works 34 hours at $15.50 (minimum hourly wage in California 2023) an hour and 11 hours the same week at $10, here’s how you calculate their regular rate of pay:
First, compute their total workweek earnings (34*$15.50) + (11*10) = $637. Second, divide the total earnings by (34+10) = 44. Their regular pay rate is $14.48; you can use that to compute their overtime pay.
In addition to the things we mentioned above, you have to consider certain payments and bonuses when calculating the regular rate of pay.
For example, you should include an employee nondiscretionary bonus when computing the regular rate of pay if that bonus is:
On the other hand, exclude certain payments when determining the regular rate of pay. These payments include, but aren’t limited to:
Most importantly, an employee’s regular pay rate cannot be less than their minimum wage, regardless of how you pay them, the nature of work, or working conditions.
Once you compute employee overtime pay, you must make the payment on time. The law requires that you pay overtime wages on or before the payday for an employee’s regular payroll period.
If you pay employees weekly, biweekly, or semimonthly, there’s a slight rule change. You can still pay employees overtime wages on the next payday. However, if that’s not tenable, you can delay their overtime wage, but not for more than seven days following the end of their payroll period.
If you don’t pay overtime wages within the legal timeframe, the payment is late. According to the California late payment provisions, an initial late wage payment attracts $100 for each violation per employee. If you have 100 employees, the penalty will be ($100 *100) = $10,000.
The penalty is double ($200) for each subsequent violation or intentional or willful violation. Besides the $200, you’ll be required to pay each employee an additional 25% of the unpaid wages.
No, employees cannot waive their overtime compensation. Even if you have such an agreement or one that requires employees to work for lesser wages, it doesn’t prevent them from filing a wage claim with the labor commissioner or Division of Labor Standards Enforcement (DLSE).
With the complexity of the California Overtime Law, many things can go wrong. This could result in authorities slapping you with thousands of dollars in penalties for mistakes you could have avoided.
One of the best ways to stay out of trouble is to use reliable time-tracking software, such as Timeero. You can read our Timeero review for in-depth details, but here’s a sneak peek at how Timeero helps California business owners stay compliant:
First and foremost, we’ve built custom features for businesses in California, such as the California Overtime Rule and California break tracker (which helps you track meal and rest breaks), which we covered in detail in our California break law guide.
.webp)
Timeero gives you two options when configuring your overtime rules: create custom rules or use the California overtime rule. It automatically applies the California overtime hour laws when you choose the latter.
It tracks employee hours and records any hours over 8 hours in a workday or 40 hours in a workweek as overtime. In this case, the app computes employee overtime pay at the rate of one and a half times the base pay.
Even better, Timeero is configured to track employee overtime and double overtime in California automatically. It records any hours over 12 hours in a work day and work over 8 hours on the seventh consecutive day of the workweek as double overtime. In this case, it calculates employee overtime pay at the rate of two times the employee’s base pay.
Timeero’s California overtime feature isn’t for employees on hourly wage only. If you have salaried employees, pay others by commission or piece, or have employees with more than one rate, fret not. You only need to compute their regular pay rate using one of the formulas mentioned above.
Once you do that, head over to that employee and click the pencil icon. Click “additional settings” and add their regular rate of pay. Click “update user,” and that’s it. Timeero will track their overtime and calculate the payment without lifting your finger.
Under California Labor 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 employees fail or forget to clock in or out, their time entries could be erroneous. To minimize the chances of inaccurate timecards, Timeero sends employees timely punch reminders. It notifies employees when a shift is about to start so they can clock in immediately and accurately track time.
California Employment Law requires you to compensate employees for overtime whether you authorize it or not. Timeero doesn’t only let you track authorized overtime; we’ve devised a tool to help you prevent unauthorized overtime.
You only need to toggle the “notify when a user goes overtime” button. Timeero will instantly notify you when an employee triggers the overtime threshold. If you didn’t authorize the overtime, you can contact the employee and stop them from working.
Understanding labor state and federal law is fundamental if you’re an employer. 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.
Remember that violations of California overtime law come in many shapes and forms. For example, calculating overtime wage rates inaccurately and misclassifying your employees as exempt are possible avenues for violations. Not to mention, if you don’t track employee time accurately, you can’t compensate employees fairly, which is a breach, too.
As the saying goes - it’s better to be safe than sorry. Use Timeero’s California Overtime feature to compensate employees fairly to boost their morale. It also helps you avoid costly penalties, including interest earned by the unpaid overtime. Start a 14-day free trial and take the California Overtime feature for a whirl, risk-free.
The California overtime law states that non-exempt employees are entitled to 1.5 times their regular pay for work over 8 hours a day or 40 hours a workweek. In addition, employees are entitled to double time for work over 12 hours in a workday.
Overtime in the state of California is over 8 hours in a workday or over 40 hours in a workweek.
While the State of California stipulates when overtime starts, it doesn’t cap the number of hours an employee can legally work in a day.
