It’s important to understand the nuances of California’s overtime law if you work there. California abides by both federal and state law.
According to California labor laws, an employee is entitled to overtime pay if they work above 40 hours in a week, or above 8 hours a day.
This article will provide you with the information to successfully navigate California’s overtime regulations, whether you’re an employer aiming for compliance or an employee defending your rights.
This article covers:
- California Overtime Rates
- Refusing to Work Overtime in California
- Am I Entitled to Overtime Pay in California if I Put in Unauthorized Hours?
- Overtime for Salaried Employees in California
- Calculating California Overtime for Piece or Commission-Based Pay
- Overtime for Bonuses Received in California
- Overtime Exceptions and Exemptions in California
- Penalties for Not Providing Overtime Compensation to Employees in California
- Legal Cases Relating To Overtime Compensation in California
California’s overtime rates are significantly stronger than the Fair Labor Standards Act (FLSA). When the two differ, a company must abide by whichever law provides more benefits to the employee.
Based on the FLSA, employees who clock in more than 40 hours in a workweek are entitled to receive overtime compensation.
Only when an employee clocks more than 40 hours in a single workweek are businesses compelled by FLSA to pay overtime payments.
However, under California law, an employee must receive 1.5 times their ordinary pay rate for all hours worked above eight on a weekday and over 40 in a workweek.
The overtime minimum wage in California stands at $24.00, which is 1.5 times higher than its regular minimum wage of $16 per hour (minimum wage requirement in California varies based on cities). Download U.S. Minimum Wage 2024 Poster now.
In California, a day’s worth of work is 8 hours, and if an employee works above the 8 hours on any day or more than 6 days in a row, they must be paid according to the rate of:
- 1.5 times the employee’s usual pay rate for any hours worked above 8 up to (and including) 12 hours on any weekday, as well as the first 8 hours worked on the 7th day of work in a row.
- 2 times the employee’s usual pay rate for any hours worked above 12 on a single weekday, or more than 8 hours on the 7th day of work in a row.
Employers often have the power to arrange an employee’s work schedule and hours, including overtime shifts. If an employee does not want to work the overtime that was arranged for them, their employer has the right to take corrective measures against the employee which may also end up in termination. There are some exceptions to this case.
For example, according to California laws, an employer may face certain penalties for taking disciplinary action against an employee who refuses to work on the 7th day of a workweek. This is because it will cause the employee to skip their rest day. Employees who are conscious of their right to rest have a choice as to whether or not they want to take the day off despite having overtime arranged in their schedule.
Yes, you are but it’s not as simple as that.
California law requires employers to compensate employees for overtime hours, whether or not it has been authorized. Therefore, employees are still entitled to the California overtime rates even if they have worked those hours without asking their employer first.
However, because no authorization was issued, an employer is allowed to invoke disciplinary actions toward the employees.
It is important to note that an employee cannot knowingly work unauthorized overtime and then attempt to obtain compensation from the employer.
Further, an employer is still obligated to keep track of their employees’ records and hours, thus having to compensate them for the work done as it is work that has been permitted by and benefits the employer.
In California, giving employees a salary does not automatically make them exempt (not eligible) from overtime pay. To be exempted, an employee must earn a monthly salary of no less than 2 times the California minimum wage for full-time employees.
These aren’t the only requirements to be exempted, as there are job duties and salary basis tests as well.
However, the non-exempted (still able to receive overtime pay) salaried workers, must be compensated with overtime.
According to California laws, non-exempted salaried employees are still able to receive 1.5 times their normal pay for any hours worked over 8 in a day, 40 in a week, or on the 7th consecutive working day of a week.
To determine what the overtime rate for salaried employees is, you would have to determine the regular rate your pay is equaled to by the following steps:
- Calculate the yearly wage first by multiplying the monthly income by 12 (months).
- Then, calculate the weekly wage, by dividing the annual income by 52 (weeks).
- Once you get your weekly wage, divide that by the legal maximum number of regular hours (40).
To calculate overtime rates, refer to California overtime rates.
While commission pay is money given to an employee for completing a task (usually by selling goods), piece rate pay is when an employee is paid by the unit produced instead of on a time basis.
Either of the following approaches may be used to calculate the usual pay rate to determine overtime if you get piece rate pay or commission:
- For production during the first 4 overtime hours in a workday, the piece rate pay or commission is applied as the normal rate, and you are paid 2 times the rate for any hours worked beyond 12 on a weekday; or
- Subtract the entire number of hours worked throughout the workweek (including overtime hours) from your total weekly earnings (including overtime earnings). You are entitled to an extra 0.5 (of the usual rate for overtime hours) for any overtime hours worked. For hours that require double time, you are entitled to the full rate.
- For piece rate pay in a group, divide the number of pieces created by the number of employees in the group. This will help allocate the appropriate payment amount to each member of the group based on the number of pieces produced by the group.
Bonuses that are “nondiscretionary” only are eligible for overtime in California.
A nondiscretionary bonus is as given as compensation for productivity, the number of hours put in, or even as an incentive to employees to continue working for the company
These bonuses given as incentives include flat sum bonuses (which are fixed amounts promised to an employee).
To calculate overtime given on a flat sum bonus, bonuses must be divided by the maximum legal normal hours worked in the bonus-earning duration.
This will result in the flat sum bonus being paid at the usual pay rate.
Any extra hours performed within the bonus-earning period must be compensated at a rate of 1.5 or 2 times the usual rate.
Overtime on production bonuses (bonuses given as an incentive for greater productivity for every hour put in) will be calculated by dividing the production bonus by the total number of hours worked during the bonus-earning period.
This will produce the normal pay rate for the production bonus. It is then used to pay overtime at either 0.5 times or 1 time the standard rate.
Discretionary bonuses, gifts given on holidays or other special occasions, or amounts given as a reward that are not related to the work done, are not included in overtime compensation and are therefore not taken into account when calculating the regular pay rate.
Overtime Exceptions and Exemptions in California
California has provisions for calculating overtime based on circumstances that differ from the standard state regulations or circumstances where they don’t apply at all. These exceptions are known as overtime exceptions. They can be applied to the following types of employees:
- Employees working on an alternative workweek schedule
- Health industry employees on an alternative workweek schedule
- Hospital and care center employees with on-site patients
- Camp counselors
- Personal attendants of nonprofit organizations
- Resident managers in retirement homes with under 8 beds
- Employees providing 24-hour residential care for minors
- Ambulance drivers or attendants
- Employees in ski establishments
- Live-in employees
For a complete list of categories of affected employees, as well as regulations that apply to each of them, we advise you to visit this official web page of the California Department of Industrial Relations.
There is another category that is important to mention — exemptions. These apply to employees and occupations where overtime provisions do not necessarily apply. Some examples of employee categories that fall under this list are:
- Executive, administrative, and professional employees
- Employees in the computer software industry
- Employees of the State and any of its political subdivisions
- Outside salespersons
- Individuals who are the spouse, child, or parent of the employer
- Taxicab drivers
- Airline employees
As above, we will direct you to a government website listing all exemptions from the overtime laws, and ways the listed employee categories can be affected.
Download U.S. FLSA Exemption Salary Threshold 2024 Poster now.
When an employee is not compensated for each hour worked, they are entitled to two different forms of damages under California law.
First, in the form of actual damages, an employee is entitled to recover the difference between the pay his employer gave him and the agreed-upon rate.
Secondly, as “liquidated damages” (a predetermined amount that is already specified in a contract/law that will be considered when a violation occurs), an employee is entitled to the difference between what his employer gave him and the standard minimum wage.
Other examples of what you may be entitled to if your employer unlawfully withheld your overtime pay are:
- Back pay
- Attorney’s fees
- State civil penalties
- FLSA violation penalty of up to $10,000
Below, we present law cases relating to fair overtime compensation for employees in California:
1. Software Company Violates Former Employees’ Overtime Rights
In the case of Sullivan, et al. v. Oracle Corp., et al., former employees of a California-based software company, Oracle Corp, issued a lawsuit against their former employer, stating that they were not provided with overtime compensation. They claimed that Oracle Corp was violating the Labor Code of California, which requires overtime compensation for hours worked above 8 per day or 40 per week. It is important to note that these employees worked mainly in Colorado and Arizona but had traveled to California on several occasions for work.
In addition, the employees demanded compensation for the insufficient overtime pay under the federal Fair Labor Standards Act (FLSA) and also claimed that the company was engaging in unfair business practices by failing to pay overtime which violates California’s unfair competition legislation (UCL).
The former employees’ claims were found to be covered by the Labor Code’s overtime rules, and the court determined that these allegations qualified as UCL claims. The court ultimately ruled that UCL allegations could not be premised on FLSA allegations for overtime worked within other states.
In the end, the former employees were awarded $1.3 million in overtime compensation damages. This amount is based on the number of hours they worked in California and in accordance with the California minimum wage.
Key lessons from this case:
- California labor laws, including overtime, related, can apply to employees who work both in California and other states for a California-based employer.
- This case demonstrates how issues involving overtime pay might be the basis for UCL claims in California. By claiming that the employer’s refusal to pay overtime amounts to overtime payments creates an illegal or unfair business act or conduct that is a violation of the UCL, employees can seek compensation for unpaid overtime wages.
- The case highlights that employees have the right to overtime pay under the California Labor Code. To prevent potential legal issues and fines, employers must make sure that these overtime regulations are followed.
2. Employee Fired For Requesting Overtime Wins $99,394 in Overtime Lawsuit Against Employer
In the case of Morales v. Factor Surfaces LLC, an employee, who receives a commission, had their normal pay rate determined by their employer, Factor Surfaces LLS, without taking the commissions into account. The issue arose as a result of the employer’s failure to maintain records or offer an alternate method of computation. The employee, Byron Jerry Morales, expressed dissatisfaction about overtime compensation, which led to his termination.
Morales sued Factor Surfaces, claiming several pay and hours violations, false pay statements, failure to provide wages, failure to give overtime pay or break time, retaliation, and wrongful termination of employment.
While Morales presented documentation and evidence regarding his employment hours and commissions, the employer and his wife provided testimonies throughout the trial but were found to be untrustworthy. Morales’ evidence was accepted by the court, and it was decided that he wasn’t given fair compensation for his overtime hours. Morales was granted a $99,394 settlement that included various damages as well as unpaid overtime pay.
Key lessons from this case:
- The normal rate of pay for an employee must be accurately established before calculating overtime compensation. All kinds of remuneration that are a part of the employee’s regular pay, such as commissions and bonuses, should be included (according to state overtime laws).
- Employees are free to ask for overtime pay without worrying about retribution or unfair dismissal. Employers who retaliate against workers who exercise their rights may face legal repercussions.
- Inaccurate or missing documents might have legal repercussions and expose the company to lawsuits.
3. California Nursing Home Employees Receive $690,000 in Unpaid Overtime and Meal Breaks
A senior care facility in Southern California has been ordered by a federal court to pay their employees $690,696. The employer, Neldy’s R.C. Inc. was found to have broken labor regulations by failing to pay employees their rightful salaries. To conceal their illegal actions, the company purposefully did not add up all hours worked and instead compensated their employees with many paychecks. In addition, they neglected to keep the necessary time and payroll documents and took meal breaks out of their employees’ compensation when they had to work during such breaks.
The court mandated that Neldy reimburse the impacted employees for lost earnings and liquidated damages amounting to $345,348.
Key lessons from this case:
- Employers are required to add up all hours a worker puts in, whether they were spread out over several paychecks or accomplished over several shifts.
- It is against the law to pay workers in successive paychecks to conceal extra hours.
- When employees are obligated to work during break times, their salaries cannot be withheld by the employer. Meal breaks must be offered and paid for work following the relevant labor rules.
Learn more about California Labor Laws through our detailed guide.
Important Cautionary Note
When making this guide we have tried to make it accurate but we do not give any guarantee that the information provided is correct or up-to-date. We therefore strongly advise you seek advice from qualified professionals before acting on any information provided in this guide. We do not accept any liability for any damages or risks incurred for use of this guide.