1. What is the California Overtime Law?
2. California Overtime Rules
3. Calculating Overtime
4. Employees Not Covered
5. Common Overtime Myths
6. Additional Employee Overtime Rights
7. Why Employers Don’t Pay Overtime
8. Federal Overtime Laws

What is the California Overtime Law?

California overtime law is the law that governs California employee’s wages and hours and which is most well-known for dictating when an employee must be paid overtime. California is well-known for its employee friendly stance and detailed regulations regarding the employment relationship. Employers and employees alike should become familiar with California overtime law so that they can protect their rights and avoid legal liability. 

California Overtime Rules

Like federal wage and hour law, California considers overtime to be hours in excess of 8 hours per day or 40 hours per workweek. Unless employees fall into an exemption from California overtime law, they are entitled to premium pay for their overtime hours. Usually, employees receive 1.5 times their regular pay for hours over 8 per day or 40 per week. If an employee works more than 12 hours in a day or more than 8 hours on their seventh consecutive day of work, that rate raises to double the employees regular pay rate.

In addition to not falling into an exemption, employees must be over 18, or over 16 and legally allowed to work instead of being at school, to be entitled to overtime pay.

Calculating Overtime

The general rule that non-exempt employees who work over 40 hours in a week are entitled to 1.5 times their regular hourly pay as overtime for all hours over 40 seems simple enough. However, California overtime law has nuance and calculating when overtime is due and in what amount can be more difficult than it sounds.  Accidentally violating a California overtime law due to miscalculations is a common employer mistake but one that is avoidable by learning about the law and consulting with advisory professionals.

The following are some key rules of thumb for calculating overtime:

  • A workday is a 24-hour period that can begin at any chosen time, however, all workday calculations for an employee must begin and end at the same time.  This does not mean that the employee has to start work at the same time every day.  The time just begins ticking at the same time for calculation purposes.
  • A workweek is 7 consecutive 24-hour workdays. Like workday calculations, all workweek calculations must begin one the same day and time each week.  In other words, an employer cannot decide that an employee’s work week starts on Monday one week and Tuesday the next in order to avoid overtime.  Workweeks can be changed for legitimate purposes.
  • In California, overtime is usually based on daily totals. For all time in excess of 8 hours per day, the employer must multiply the employee’s regular rate of pay by either 1.5 or 2.0, depending on what rate of overtime pay the employee is entitled to. The time worked in excess of 8 hours is then multiplied by that overtime pay rate.
  • Only hours worked at the regular rate of pay count towards the employee’s daily and weekly hours. Put differently, the hours of overtime worked do not count towards calculations of an employee’s daily and weekly hours for purposes of determining what overtime rate applies.
  • For employees who receive a salary, rather than hourly wages, their regular rate of pay is calculated by dividing their normal weekly salary by 40.

When making calculations under California overtime law, it is important to understand what “regular” rate of pay means. An employees’ regular rate of pay incorporates more than just their hourly wage. Almost any type of income the employee typically earns are also included to determine what amount the employee typically earns for an hour of work. This rate may change over the course of the employee’s employment with his or her employer. 

Employees Not Covered

Not all California employees are entitled to overtime when they work more than 40 hours in a week. Certain types of employees do not get overtime pay for hours worked over 40 in week. Employees that fall into one of these categories are called “exempt employees” because they are exempt from overtime pay requirements.  There are different categories of exempt workers, each of which has a very specific definition. The exemptions and explanations can be found on California’s Department of Industrial Relations website.

Most categories of exempt employees relate to the type of work performed and incorporate some type of financial requirement. For example, employees are exempt if they earn more than twice the minimum wage for a 40-hour week, currently more than $720 per week, and meet one of the following category descriptions:

  • Had to obtain specialized training for their position, and have discretion to decide how and when their work is performed;
  • Have jobs involving discretion in work performance, and are in the fields of science, optometry, accounting, law, or engineering;
  • Manage a department or entire business and whose responsibilities require managing more than two employees who the manager can hire or terminate.

There are some specific professions like actors, journalists and professional drivers who are also exempt because of the nature of their unique work hours. Some workers, like manual laborers in on-site construction, logging, and certain mining activities are exempt from portions of California overtime law.

Common Overtime Myths

When it comes to California overtime law, many employers and employees learn about it by word of mouth. Few read the laws themselves or consult with an employment law attorney. A number of myths have evolved about overtime through this word of mouth information sharing. Some common myths are:

Myth: If you are in a white-collar job, you are exempt from overtime. This is not true. This myth has its basis in the professional exemption to overtime pay requirements in California.  However, professional has a very distinct meaning under the law, covering roles like doctors and attorneys, and does not cover all office workers.  Dressing up for work does not mean you are entitled to overtime,

Myth: If you receive a salary that means you are not entitled to overtime. Earning overtime is not dependent on how you are paid for your work. Salaries are just a form of making payments, they can be broken down into hourly pay amounts when needed. Also, employers often genuinely make mistakes regarding classification and may pay an employee a salary under the incorrect belief that the employee is exempt.

Myth: If you don’t clock in and out, you don’t get overtime. This myth comes from the idea that if you don’t clock in and out, there is no way to show you worked over 40 hours. It can make it harder to prove exact hours worked but employees can generally testify to approximately how many hours were worked per week. If the employer disagrees, it is their duty to show otherwise in overtime proceedings.

It is actually the employer, not the employee’s responsibility to track how much time its employees work every single week. Although a common practice, employers are not supposed to merely state that a non-exempt employee worked 40 hours in a week regardless of how many hours were actually worked. Employers cannot get out of paying overtime just by failing to track time.

Myth: All managers of two or more people are exempt from overtime pay requirements. This is not true under California law. Supervising at least two employees is simply one of the many requirements of the executive exemption. There are many other requirements for this exemption which is one of the hardest exemption tests to meet.  Titles like “manager” or “supervisor” are only relevant to the extent they provide insight into the duties of the job.

When it comes to California overtime law, it is the duties, not the title that count. As a rule of thumb, California will look at how much of a managers time is spent doing the same work as those under them.  If it exceeds 50%, California has historically found that employee was not exempt

Myth: Travel time never counts towards overtime hours. Employers often direct employees not to count their travel time towards their hours. However, there are many types of travel time that do count towards hours worked for California wage and hour and overtime law. 

Most notably, while employees are not entitled to pay for their normal commute to the workplace, they are entitled to pay (and the time counts towards hours) for traveling from the workplace to other locations – for example, traveling to one or more construction job sites. Employees are also entitled to pay and counting time towards their hours for out of town travel. All time spent traveling out of town – driving to and from the airport, sitting and riding on a train, etc. – is work time.  The fact that travel was done at night or on weekends does not matter.

Additional Employee Overtime Rights

Under California overtime law, employers cannot trick employees into knowing that if they continue working in a day or week, they will be working overtime hours.  In theory, this is to allow the employee to opt out of overtime, but this is not always a realistic possibility.

Employees are not allowed to refuse overtime pay. If they worked overtime hours, they must be paid overtime wages for those hours. People are often confused by this requirement. The reason for it is that if employees were allowed to opt out of overtime, it would encourage employers to pressure employees to opt out. This would likely result in employees who want their overtime wages opting out because of threats or pressure from their employers.

Employees who do not receive their required overtime pay can sue their employer for the back-pay owed to them. Employees can usually find attorneys to help them with their case because the law allows attorneys to recover their fees for the time they spent on your case.

Why Employers Don’t Pay Overtime

Failure to pay overtime due to an employee is a big problem in California and across the country. One of the reasons this occurs, is it is often in the company’s best financial interests to classify employees as exempt even when they are not. 

The financial risk of misclassification is low because unlike discrimination lawsuits where large adverse judgments can be awarded, the employer is usually only required to pay the back-pay for one employee if they lose in court on an overtime issue. Sometimes additional penalties are assessed but the legal standard for assessing penalties for overtime violations is difficult to meet. Even when the penalty requirements are met, it only applies to 30-days of pay. 

While employers can be subjected to larger liability if a lot of members of its workplace file overtime suits, this does not happen that often. Class-actions for overtime are possible but they are expensive and complex to bring. Because of this, class action law suits are usually only viable against large employers. Most employers end up only dealing with one employee’s wage and hour case at a time keeping the financial risk low.

California has several laws in place to help employees pursue their overtime claims. One is the ability to obtain attorney’s fees, which as mentioned above, helps employees find legal counsel to take their case. Another are the possible penalties, which though not easy, do provide an incentive for employees to bring a case and for employers to comply with overtime laws and avoid suit.

Federal Overtime Laws

In addition to California overtime law, certain employers, usually of a specific size are also subject to federal overtime laws. California and federal overtime laws have many similarities. Federal overtime laws have been in the process of undergoing changes in the past few years so it is important to keep up to date on those changes.

Whether you are an employee or an employer, if you’d like assistance with filing an overtime claim, defending an overtime claim, creating overtime policies, understanding overtime, or anything else related to the legal side of the employer-employee relationships post your legal need on Upcounsel’s platform and wait as responses from attorneys interested in assisting you begin to roll-in.