January 24, 2019 |
Labor laws define overtime as work done in excess of the standard eight hour day or the standard 40 hour week. Employees are entitled to earn additional compensation on top of their hourly wage for the hours that they’ve worked past the standard work day or work week. However, every state has different overtime laws that include exemptions, exceptions, and penalties. Both employers and employees need to be familiar with the overtime laws in California so that they know what to expect in terms of payments–and so employers avoid making costly mistakes. This article presents a detailed guide into the overtime laws in the state of California.
Although the federal Fair Labor Standards Act requires that workers be paid overtime, California has its own set of overtime laws as well, as outlined in the California Labor Code. If there are differences between the two sets of laws, the general rule is that the law that is most favorable to the employee is the law that must be followed.
California has four main overtime laws. These laws were put into place for several different reasons. First, they prevent employers from taking advantage of their employees by forcing them to perform excess work. Secondly, they incentivize employers to hire more employees to avoid having to pay higher rates as a result of overtime work. Finally, they provide employees with a reward for working longer than they are expected to.
Federal law and California state law require that employees pay time-and-a-half for every hour worked over 40 hours within a work week. So if a nonexempt employee making $20 an hour worked 50 hours in one work week, they would get time-and-a-half ($30 an hour in this case) for those additional ten hours they worked (which would amount to $300 on top of their typical $800 weekly pay).
In California, employers are required to pay time-and-a-half to nonexempt employees if they work more than eight hours in a single day. For example, if an employee making $20 an hour works ten hours in a row, they will be paid $30 an hour for those two extra hours of work they put in. This means they will be paid $220 instead of the $200 that they would have made at their regular pay rate without overtime calculations. This helps protect employees from having to work four consecutive 10-hour workdays without it being considered overtime.
California law also requires that employers pay twice the regular pay rate to employees that work in excess of 12 hours within one day. This means if an employee makes $20 an hour, they will be paid $160 for the first eight hours, $30 an hour for the following four hours, and then $40 an hour for any time worked after the 12-hour mark. An employee making $20 an hour who works a 14-hour day will make a total of $360 (compared to $280 if they worked 14 hours at their regular pay rate).
Not only does this prevent employers from overworking their employees, it incentivizes them to hire more employees if it gets to the point where they need their existing employees to work this much in one day.
California state law requires that employers pay twice the employee’s pay rate for any work done in excess of eight hours on the seventh consecutive workday in a workweek. Essentially, employers have to be careful about overtime: if an employee hits the 50 hour-mark after working eight hours a day for the seventh straight day, the pay rate will go from time-and-a-half to double time.
The Fair Labor Standards Act’s definition of overtime is not as thorough as California’s definition of overtime. Under the FLSA, nonexempt employees are entitled to a minimum of time-and-a-half for any hours worked in excess of 40 hours within a workweek. Unlike California state law, there are no limits to how many hours a nonexempt employee can work within a single workday.
California overtime laws do not cover all employees. There are a number of exemptions, including the following types of workers:
Executives include anyone who earns more than twice the minimum wage and who either run a company or one of the company’s departments and manages at least two employees with the power to hire and fire them. It’s worth noting that the minimum wage in California is currently $11 an hour for employers who have 25 employees or less and $12 an hour for employers who have 26 employees or more. However, the minimum wage will increase by a dollar every year until January 1, 2023.
Administrative employees are employees who make more than twice the minimum wage and who require special training (which does not require manual labor). They must also decide how and when their work is performed with minimal supervision.
Professional employees are employees who make more than twice the minimum wage and whose position involves one of the following:
Art (as long as their work can’t be measured by a unit of production)
Sciences (as long as no manual labor is involved)
Professional employees must also be able to decide how and when the work they do is done, and with little supervision.
The standard shift pattern is considered eight hours a day, five days a week. However, not all employees work this shift pattern. Professionals, such as drivers, student nurses, and actors (to name a few examples) work different shift patterns, such as three 12-hour days a week. If their shift patterns differ than what’s standard, they will only receive overtime if they work more than 40 hours in a week.
Misclassifying an employee can result in serious penalties for employers. There are many different criteria that apply for determining that an employee is exempt from overtime that go well beyond deciding how and when the work will be performed. Employers should consult with a professional or legal counsel before making this determination to ensure that they are in compliance with state and federal laws regarding exempt employees. A full list of exemptions from California overtime laws is provided on the State of California Department of Industrial Relations webpage.
Since paying accurate overtime wages is not only California law, but also federal law, employers must calculate the overtime wages owed to their employees accurately. Properly calculating California overtime requires these steps:
Although most people might consider the typical workday to be nine to five with the typical workweek being Monday through Friday, this is not how workdays and workweeks are defined by California law. California law provides employers with some flexibility when it comes to establishing their own workdays and workweeks since not all businesses function the same. This means that an employer’s designated workweek may not match to a typical calendar week. Some employers may have rotating or alternating schedules that require their employees to work at different times on different days.
However, the employer must be able to justify the difference between their designated workweeks and workdays with a legitimate business purpose. Depending on the circumstances, employers can adopt alternative schedules that permit employees to work up to 10 hours a day without being paid overtime. This is called an alternative workweek; however, even though an employer may schedule an employee for ten hours in a workday in such an alternative workweek without having to pay overtime, they will still be required to pay overtime if that employee passes the 40-hour mark within the workweek.
To establish a legitimate alternative workweek, the employer must create a written agreement for the alternative workweek schedule. This schedule must be disclosed to employees during a meeting held at least 14 hours before voting. The effects of such a schedule must be discussed. A vote must then be held in which two-thirds of the employees must approve of the alternative workweek schedule via a secret ballot. The results will have to be submitted to the Division of Labor Standards Enforcement within 30 days of the vote’s results being finalized.
The employer will need to tally up the number of hours that every employee worked during the employer’s designated workweek. The hours worked within each day that the employee worked should be tallied up as well.
Using the number of hours worked every day, the employer should determine if overtime is owed. If the employee is nonexempt and the employer is using a traditional workday schedule, calculate if any hours of overtime are owed. Depending on how much overtime an employee logged in a single day, they may be owed time-and-a-half or even double time.
If an employee has worked over 40 hours within the employer’s designated week, they will be owed weekly overtime even if they did not work more than eight hours on the days that they worked.
Things can get a little tricky if an employee worked both daily overtime as well as weekly overtime. Employees cannot count the same hours against both overtime limits as this is known as “pyramiding.” Unfortunately, it’s one of the more common payroll mistakes that small businesses make. According to California law, the employer pays overtime hours based on whichever amount is greater between the daily overtime hours that are worked and the weekly overtime hours worked.
For example, if an employee worked 13 hours in a single workday but worked a total of 43 hours for the week, then they should be paid for their daily overtime work and not for their weekly overtime. However, if an employee worked six nine-hour days, it means that even though they only worked six overtime hours, they worked 54 total hours, which means that they should be paid for their weekly overtime.
The easiest way to ensure that an employer isn’t counting the same hours twice is by paying what’s owed on the daily overtime hours, then taking the total number of daily overtime hours and subtracting them from the total number of hours worked in the workweek. If more than 40 hours remain, then the employee should be paid time-and-a-half for any hours exceeding the 40-hour mark.
To calculate how much money is owed in overtime wages, you will need to know what the employee’s regular rate of pay is. If they are paid salary, you will need to take their yearly salary, divide it by 52 (the number of weeks in a year) and then divide it by 40 to get their hourly rate.
Determining the rate of pay for an employee becomes more difficult if they earn two or more rates during the workweek (this can happen if an employee has more than one position at the company). If this is the case, their regular rate is determined by multiplying the hours worked within a workweek by their respective rates and then adding them together. The total should then be divided by the number of hours worked to get the “weighted average,” which will be used as their regular rate of pay.
Because of how complicated it can get abiding by California’s different overtime thresholds, it’s wise to use an overtime tracker app, of which there are many available online.
Once the amount of overtime wages owed to an employee has been identified, they must be included along with their normal rate of pay in their next paycheck.
Employees will want to be aware of potential overtime violations since they have the right to sue their employer if they occur. Of course, employers will want to avoid such violations for that very same reason. Here are some of the common overtime violations employers should avoid:
Employers who tell their employees that they are exempt from overtime law even if they are not are violating both California and federal regulations. Employers who think their employees might be exempt must be absolutely sure of it by double checking the exemptions listed in the California overtime law.
Employers cannot legally ask their employees to work off the clock. Employers must pay the regular pay rate plus overtime for any hours the employee worked as well as any hours that the employer knew or should have known that the employee was working. This means that even if the employee works unauthorized hours that the employer did not know about, they are still entitled to compensation. However, employees cannot conceal unauthorized work from an employer and still expect to be compensated.
Additionally, employers cannot ask employees to borrow hours from a week in which they won’t be scheduled to work as much. Nor can they ask employees to take their work home with them.
Employers cannot get around paying their employees overtime by requiring that they take “comp time,” which is paid time off. However, they can request that the employee take comp time if they meet the following conditions:
The employee requested comp time off in writing from the employer instead of overtime compensation.
Comp time is provided in accordance with a written agreement between the employee and employer before work is performed.
The employee’s regular schedule is no less than 40 hours a workweek.
The employee hasn’t accrued over 240 hours of comp time.
Every one of these conditions has to be met, otherwise, the employee must be paid the overtime rate they are entitled to. Additionally, comp time has to equal the overtime rate. This means that if an employee is entitled to time-and-a-half, then they must be given an hour-and-a-half off for each hour of time-and-a-half overtime pay they are owed.
Some employers may attempt to avoid paying overtime hours by saying that the hours the employee worked doesn’t actually count as work. For example, an employee spends time performing a task to prepare for work, such as setting up a machine before operating it, or is required to spend time traveling somewhere to perform a special assignment. In these situations, the prep time and travel time must be counted towards the hours an employee works.
Independent contractors are paid differently than employees. Whereas employees are on the company payroll and receive a steady paycheck, independent contractors are usually paid by the job, which means they aren’t paid overtime.
Independent contractors also have control over where they work, when they work, and who they work with, whereas employees must report to work at specific times. Additionally, contractors have their own equipment, tools, and materials. Employers cannot treat employees like independent contractors unless they clearly meet the definition of one. Treating an employee as an independent contractor when they clearly aren’t’ one is a violation of the FLSA as well as of California labor laws.
This blog post is intended for informational purposes only and does not constitute legal advice. No attorney-client relationship is created between the author and reader of this blog post, and its content should not be relied upon as legal advice. Readers are urged to consult legal counsel when seeking legal advice.
Before trying to navigate the law on your own, consider speaking to a professional.