October 3, 2019 |
Although there are federal laws regarding overtime pay outlined in the Fair Labor Standards Act (FLSA), they are relatively limited. Many states, including California, have additional overtime laws in place. As a result, California business owners should be aware of how the California Labor Code defines overtime to ensure that they remain compliant when paying their employees for any overtime work.
Things can be a little tricky when it comes to overtime in California. This is because overtime pay must be paid if the employee works a specific range of hours in excess of the standard work day or week. Once an employee works past a certain amount of overtime hours, they must be paid double time. We’ve compiled a thorough breakdown of California’s overtime laws, outlining the difference between paying for overtime hours and double time hours.
There are no provisions for double time pay in the FLSA, but there are several provisions requiring double time pay in certain situations in the California Labor Code.
There are a couple cases in which you will need to pay your employees double time (which amounts to twice the normal wage rate of the employee). This includes the following:
The FLSA establishes the standard workweek as being 40 hours long. It does not establish a standard workday length; however, the California Labor Code establishes that the standard workday is 8 hours. Anything worked in excess of 8 hours is considered overtime work.
The FLSA only requires overtime pay (1.5 times the employee’s normal wage rate) if an employee works more than 40 hours in a week. The California Labor Code has additional overtime provisions that employers in California must abide by. These include the following overtime laws:
These are the overtime laws in California that you are legally obligated to follow:
It can be a little confusing calculating the overtime you owe to an employee because there are different overtime pay rates based on the hours that they worked. The following should help you properly calculate what you owe to your employees for their overtime work:
Calculating the double time pay you owe an employee can be difficult because you could accidentally pay them more than they’re owed if you don’t do your calculations correctly. This is because if you’re not keeping track, you could accidentally pay them both double time and regular overtime rates for the same hours worked.
Take for example an employee that has worked 14 hours in a row. The incorrect way of calculating what you owe them would be to pay them 1.5 times their normal wage rate for 6 hours of overtime and then 2 times their normal wage rate for 2 hours of double overtime. As you can see, you’d be paying overtime rates for 8 hours total, even though they only did 6 hours of overtime.
The proper way to calculate double time is to calculate how many hours of overtime the employee performed (in this case, 6). Then do a separate calculation of how many double time hours you owe (2). Pay them for the 2 double time hours, but then subtract 2 from 6 to calculate what you owe in regular overtime (4 hours).
Calculating normal overtime is a little easier since there aren’t extra steps to do. For example, if an employee worked 10 hours in a single workday, you just pay them the overtime rate for two of those hours. Things can be a bit more complicated if they work both weekly overtime and daily overtime. To do this properly, calculate how many overtime hours they worked for the week. If they worked 50 hours, it means they worked 10 hours of overtime. Then calculate how many daily overtime hours they worked. Let’s say it’s 6 hours. Instead of adding these together (which would equal 16), you would pay for the daily over time hours first, then subtract that number from the weekly overtime hours they worked (10-6). Basically, you would owe 6 daily overtime hours and 4 weekly overtime hours.
In California, the standard workday is 8 hours. The standard workweek is 40 hours, which is the same as that established by the FLSA.
Here’s a reminder of what double time is considered in California:
Any hours worked in excess of 12 hours within a single workday is considered double time.
Any hours worked in excess of 8 hours on the 7th consecutive day an employee works in a single workweek is considered double time.
Hours for which you have to pay a regular overtime rate based on the California Labor Code:
Any hours worked exceeding the standard 8 hour work day is considered overtime work.
Any hours worked exceeding the standard 40 hour workweek is considered overtime work.
Any hours worked on the 7th consecutive day an employee works within a single workweek is considered overtime work.
Exempt employees are employees you are not legally required to pay overtime to. These types of employees are typically paid a yearly salary instead of an hourly wage. They are often executive, administrative, or professional employees. Many exempt employees do not keep track of the hours that they work as they are expected to work on the same schedule every week. However, just because you’re not required to pay exempt employees overtime does not mean that you can’t.
If you want to pay your exempt employees overtime pay, make sure they track their hours carefully. You will also need to determine what their hourly wage rate is since they are likely being paid salary. You can do this by taking their yearly salary and dividing it by 2080 (the number of hours in a standard full time year). However, remember that you will have to take into account other compensation paid to the employee during the week for which you are paying overtime (such as bonuses or commissions).
Once you’ve figured out the employee’s hourly wage rate, determine double time in the same way that you would with a non-exempt employee if you choose to pay them double time. The best way to determine whether you should pay exempt employees double time is to observe what is a standard practice within your industry. For example, some employers may not follow the same double time laws for exempt employees but will pay double time for any hours worked on legal holidays.
You are required to pay non-exempt employees overtime and double time rates when they work hours defined by the state as overtime or double time hours. If you do not pay the overtime or double time rate that your employees are owed, you could be fined in addition to being forced to pay what you owe.
Make sure to pay non-exempt employees what they are owed for overtime work. Use the previously discussed tips on calculating overtime using the non-exempt employees’ individual wage rates.
Using the individual wage rates of your non-exempt employees, make sure to calculate any double time pay that you owe for double time hours that they have worked. One thing to keep in mind is that the California Labor Code does not require employers to pay their non-exempt employees double time for hours worked on legal holidays. However, you can still choose to do so if you want to reward your employees. It’s also a good idea to do so if it’s standard practice within your industry.
There are a number of regulations known as wage orders that were issued by the state’s Industrial Welfare Commission. These wage orders adopted several job-specific exceptions to the overtime laws in California. These job-specific exceptions include live-in household employees, camp counselors, personal attendants, ambulance drivers and attendants, agricultural occupations, managers of homes for the aged, and the children, spouse, or parents of an employer, among others.
Becoming familiar with the overtime and double time regulations outlined by the California Labor Code can only help your business. It is your responsibility to make sure that you pay your employees properly. Not doing so can lead to a number of consequences. Not only can you be fined a significant amount, but you risk hurting the reputation of your company which can become problematic when trying to hire on new employees.
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