How do you calculate overtime pay in California?

May 28th 2024

California stands out for its progressive labor laws, ensuring employees are fairly compensated for long hours. With laws that exceed federal standards, understanding how to accurately calculate overtime pay is crucial for both employers and employees. This article serves as a comprehensive guide to navigating the specifics of California’s overtime calculation.

This Article Covers

Understanding Overtime in California
Overtime for Hourly and Salaried Employees in California
Overtime for Complex Pay Structures in California
Additional Considerations for California Overtime

Understanding Overtime in California

Which Overtime Laws Apply in California?

Both federal and state overtime laws, including the Fair Labor Standards Act (FLSA) and the California Labor Code section 510 apply in California. When there’s a difference between federal and state laws, the more employee-friendly regulation applies, often making California’s laws the standard for workers in the state.

How are Overtime Laws in California Different from Federal laws?

California’s overtime laws offer greater protections than federal regulations, mandating not only weekly but also daily overtime pay. This distinctive approach ensures employees receive overtime pay for any work over eight hours in a day, not just over 40 hours in a week.

California also recognizes “daily double overtime” and “seventh-day overtime” for extensive work hours, ensuring employees receive the highest possible compensation.

How Much is Overtime Pay in California?

California’s overtime laws stipulate that employees must receive overtime pay for hours worked over eight in a day and 40 in a workweek. Specifically:

  • Daily Overtime: Employees earn 1.5 times their standard rate for hours worked between eight and twelve in a single day.
  • Daily Double Time: Employees earn double their standard rate for hours worked beyond 12 in a single day.
  • Weekly Overtime: Employees earn 1.5 times their standard rate for hours worked beyond 40 in a week.
  • Seventh Consecutive Day: Employees earn 1.5 times their standard rate for the first eight hours worked on the seventh consecutive day of work in a workweek, and double time thereafter.

If you want to learn more, check out our guide on California overtime laws

Who is Eligible for Overtime Pay in California?

Almost all employees over 18, and those 16 or 17 not mandated to attend school, are eligible for overtime. This encompasses hourly, salaried, and piece-rate workers, eligible for 1.5 times their standard pay past eight hours in a day or 40 hours weekly. Beyond twelve daily hours or eight hours on the seventh consecutive day, the rate doubles.

Check out our guide on overtime rights in California.

Who is Exempt from Overtime Pay in California?

Exempt workers typically hold salaried positions that pay at least twice the state minimum wage for full-time employment. Their roles often involve high-level duties with considerable discretion and minimal supervision.

Key exemptions include specific job roles, outside salespeople, some unionized positions, and employees in executive, administrative, or professional capacities:

  • Executive Exemption: Involves managerial roles, direct supervision of two or more employees, discretionary powers, and earning twice the state’s minimum wage.
  • Administrative Exemption: Pertains to non-manual work related to business operations, requiring specialized knowledge or experience.
  • Professional Exemption: Applies to recognized professions requiring advanced knowledge or creative expertise.

For further clarification and exceptions, the Department of Industrial Regulations offers extensive resources.

What is the Regular Rate of Pay in California?

The “regular rate of pay” in California encompasses all forms of compensation, including hourly earnings, salary, piecework, and commissions, and must always meet or exceed the minimum wage. This rate forms the basis for calculating overtime pay.

Overtime for Hourly and Salaried Employees in California

How do you Calculate Overtime for Hourly Employees in California?

In California, the regular rate of pay for hourly employees encompasses not only the base hourly wage but also any extra earnings, such as shift differentials. To calculate it, simply add the hourly wage to any additional per-hour compensation, then divide by the total hours worked.

For overtime calculation, hourly employees are entitled to receive 1.5 times their regular rate for any hours worked beyond the typical eight-hour workday or 40-hour workweek. It’s crucial to note that the rules for daily double overtime, weekly overtime, and overtime for working seven days consecutively apply equally to hourly employees in California. 

Consider an hourly employee with a wage of $20 per hour working a 10-hour day. 

  • Regular Pay for Eight Hours: 8 hours x $20 = $160
  • Overtime Pay for Two Hours: 2 hours x $30 ($20 hourly wage x 1.5 overtime rate) = $60
  • Total Pay for the Day: $220

This example demonstrates the basic overtime calculation for a single day. However, if this employee works beyond 12 hours in a day, beyond 40 hours in a week, or on the seventh consecutive day, the calculations would adjust to incorporate double time and additional overtime rates as per California’s labor laws.

To learn more, you can read our guide on your rights as an hourly employee in California.

How is Overtime Calculated for Salaried Employees in California?

In California, determining overtime pay for salaried employees involves a few steps to convert their salary into an hourly rate, based on a standard 40-hour workweek. Here’s how it’s done:

  • Step 1: Convert Monthly Salary to Annual Salary: Multiply the monthly salary by 12.
  • Step 2: Determine Weekly Salary: Divide the annual salary by 52 to get the weekly earnings.
  • Step 3: Find the Hourly Rate: Divide the weekly salary by 40 hours to calculate the hourly rate.
  • Step 4: Calculate Overtime Pay
    • Daily Overtime (1.5x): Employees are entitled to 1.5 times their hourly rate for hours worked beyond eight in a single day.
    • Weekly Overtime (1.5x): Similarly, hours worked over 40 in a workweek qualify for overtime at 1.5 times the hourly rate.
    • Daily Double Overtime (2x): For hours worked beyond 12 in a single day, employees receive double their hourly rate.

Consider an employee with a $4,000 monthly salary:

  • Annual Salary: $4,000 x 12 = $48,000
  • Weekly Salary: $48,000 ÷ 52 = $923.07
  • Hourly Rate: $923.07 ÷ 40 = $23.08

Daily Overtime and Double Overtime Calculation: If this employee works 14 hours in a day:

  • The first eight hours are paid at the regular rate: $23.08
  • The next 4 hours (hours 9 to 12) are paid at 1.5 times the hourly rate: $23.08 x 1.5 = $34.62 per hour
  • The final 2 hours (hours 13 and 14) are paid at double the hourly rate: $23.08 x 2 = $46.16 per hour

Weekly Overtime Calculation: If the total hours worked in the week are 50:

  • The first 40 hours are compensated at the regular rate
  • The additional 10 hours are paid at the overtime rate of 1.5 times: $34.62 per hour

Total Compensation: The employee’s total weekly compensation would include their standard weekly salary plus overtime earnings from both the additional daily hours beyond eight and weekly hours beyond 40, factoring in the double overtime rate for any work done past 12 hours in a day.

For more details, check out our guide on your rights as a salaried employee in California.

How do you Calculate Overtime for Seven Consecutive Working Days in California?

On the seventh consecutive day of work, California labor laws stipulate two levels of overtime compensation:

  • First Eight Hours: Employees earn overtime at 1.5 times their regular rate for the first eight hours worked on the seventh consecutive day.
  • Beyond Eight Hours: Any hours worked beyond the initial eight hours on this seventh day are compensated at double the employee’s regular rate of pay.

Let’s consider an employee, Alex, who has been working for six consecutive days and is entering the seventh day of work in the same workweek. On the seventh day, Alex works a total of 10 hours. Assuming Alex’s regular rate of pay is $20 per hour:

  • For the first Eight hours: Alex is entitled to 1.5 times their regular rate, which equates to $30 per hour. Therefore, for eight hours, Alex earns 8 x $30 = $240.
  • For the additional 2 hours: Alex receives double time, which is 2 x $40 ($20 x 2) = $80.

Alex’s total compensation for working on the seventh consecutive day would be $240 (for the first eight hours) + $80 (for the additional 2 hours) = $320.

Overtime for Complex Pay Structures in California

How do you Calculate Overtime for Piece Rate or Commission Employees in California?

In California, employees compensated through piecework or commission have two methods available to calculate their regular rate for the purpose of determining overtime pay. This flexibility ensures that workers are fairly compensated for extra hours worked, regardless of their unique pay structures.

Method 1: Direct Calculation from Piece or Commission Rate

The first method involves using the piece rate or commission rate directly to compute the overtime rate. This means the earnings from piecework or commissions are divided by the total hours worked to find the regular rate, which is then used as the base for overtime calculations.

For example, an employee earns $600 through piecework over a 40-hour workweek. To find the regular rate:

  • Regular Rate: $600 (total earnings) / 40 (total hours) = $15 per hour

For any overtime worked, the employee is entitled to 1.5 times this regular rate for hours worked beyond the standard 40-hour workweek or eight-hour workday.

Method 2: Total Earnings Divided by Total Hours Worked

The alternative method calculates the regular rate by dividing the total earnings for the workweek (including earnings from overtime hours) by the total hours worked during that week. This method provides an averaged hourly rate that reflects the actual earnings and time invested by the employee.

Consider an employee who earns $550 in commissions over 35 hours, with 5 of those hours being overtime.

  • Total Earnings: $550
  • Total Hours Worked (including overtime): 35 hours
  • Regular Rate: $550 / 35 = $15.71 per hour

For the overtime hours, the employee would receive an additional half of their regular rate, amounting to $7.86 extra per overtime hour.

How do you Calculate Overtime with Multiple Pay Rates in California?

In California, when an employee receives varying pay rates in the same workweek, the calculation for overtime is based on a weighted average of these rates. This method ensures a fair assessment of overtime pay reflective of the employee’s overall earnings.

To find the weighted average regular rate for overtime calculation, you add together the total earnings from each pay rate for the week and then divide by the total number of hours worked.

Consider an employee who works at two different pay rates within the same week:

  • Hours and Pay: The employee works 32 hours at a rate of $11 per hour and an additional 10 hours at $9 per hour.
  • Total Earnings: The calculation would be (32 hours x $11/hour) + (10 hours x $9/hour) = $352 + $90 = $442.
  • Weighted Average Regular Rate: To find the weighted average, divide the total earnings by the total hours worked: $442 / 42 hours = $10.52 per hour.

This $10.52 per hour serves as the regular rate for calculating overtime pay. Any hours worked beyond the standard eight-hour workday or forty-hour workweek would be compensated at 1.5 times this weighted average rate.

Additional Considerations for California Overtime

Are there Exceptions to the Standard Overtime Rules in California?

Yes, alternative workweek schedules allow deviations from standard overtime rules but require employee agreement through a voting process. These schedules deviate from the standard eight-hour workday, potentially allowing employees to work up to 10 hours per day without accruing overtime pay, provided certain conditions are met.

  • Adoption Process: For an alternative workweek schedule to be valid, it must be approved by at least two-thirds of affected employees in a secret ballot.
  • Legal Requirements: Employers must propose the alternative schedule in a written agreement and conduct an election among the employees. The details of the schedule, including the specific days and hours to be worked, must be disclosed before the vote.
  • Implications for Overtime: Under an approved alternative workweek schedule, employees do not earn daily overtime for working more than eight hours but less than the hours outlined in the agreement (up to 10 hours per day). However, hours worked beyond the agreed-upon hours in the alternative schedule or beyond 40 hours in a week still qualify for overtime compensation.

For example, an employer proposes a 4/10 workweek schedule, where employees work four 10-hour days each week. After a secret ballot, the majority of employees agree to this schedule.

  • Regular Hours: In this scenario, employees would not receive overtime pay for any of the 10-hour days, as it falls within the agreed-upon alternative schedule.
  • Overtime Pay: If an employee works beyond the 10 hours in a day specified by the alternative schedule or exceeds 40 hours in the workweek, they would then be eligible for overtime pay.

Are there Industry-Specific Overtime Rules in California?

Certain industries, such as agriculture, domestic work, and healthcare, have unique overtime calculations. Familiarizing yourself with these exceptions is crucial for employers in these sectors to avoid penalties.

How can Employers Ensure Compliance with California Overtime Laws?

Compliance is key to avoiding penalties. Proper hour tracking and documentation are essential. Employers must record start/end times, including meal breaks, to accurately compute daily and weekly hours for overtime pay. Check out California break laws for details. 

For efficient tracking, tools like Jibble automate the process, ensuring legal compliance and accurate payroll management.

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.