How do you Calculate Overtime Pay in California?

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.

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.

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.

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.

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?

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.

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.