Let’s begin this article with the latest news about Overtime Laws in California.

Overtime along with the rate of pay that Exempt Employees must make will be increasing in 2017.  Here is an excellent link that will explain the complex maze that we know as Overtime Pay here in California.

As a rule, anyone over the age of 18 who is not attending school for legal reasons such as homeschooling, will be entitled to overtime.  Once an employee works over 8 hours in a day or 40 hours in a week, the employee becomes eligible for overtime pay.

Let’s take a quick look at how Overtime Laws in California work.

  • Any hours worked over 8 in one day.
  • Any hours worked over 40 in a week.
  • Most work days consist of 8 hours in a day, so in most cases, if any employee works six days the sixth day starts at time and a half.

How is overtime paid?

  • Once an employee reaches 8 hours in a day, the employee will then have his or her pay increase to time and a half. This increase continues through the 12th hour of the work day. Once the 12th hour of the work day is passed the employee will get double time.
  • If an employee works seven days in a row, the first 8 hours of the 7th day are paid at the rate of time and a half.
  • Double time kicks in when an employee has worked beyond 12 hours in a workday or over 8 hours on the 7th consecutive day of work.

 Exempt Employees:

Some employees depending on their job descriptions may be exempt from overtime.  While there are a few exemptions, most employees do qualify for overtime once they have worked over 8 hours in a day or 40 hours in a week.

How is the regular rate of pay determined?

Overtime is based on your standard rate of pay.  In other words, the amount of compensation that you get for the job duties that you perform.  There are several compensation methods or rates of pay.  Next, we will list a few.

  • Hourly
  • Commissioned Sales
  • Piece Rate

Under no conditions can an employee be paid less than the minimum wage.  In most cases, the hours that are to be used in determining the regular rate of pay cannot be more than the legal maximum hours that an employee can work before overtime kicks in.  For most California Employers that would mean a 40-hour work week.

One of the exemptions to the 40-hour work week would be in the field of agriculture.  If your employer has determined that a regular workweek consists of 35 hours instead of the traditional 40 hours, you cannot ask to be paid for 40 hours per week because that is the standard work-week.

Employees who earn different rates of pay for the different jobs that they perform.

According to overtime laws in California, if an employee is paid at different rates of pay, or if the employee receives a bonus the employer must add up the total of all of the methods of pay.  Once the employer has done that the dollar per hour rate is established by dividing the gross pay of all of the methods of payment by the number of hours worked.  That is how the dollar per hour rate is established.

Once the employer has established the dollar per hour rate, the employer will then be able to easily compute what the overtime rate of pay should be.

What about Unauthorized Overtime?

Many employers have taken the time to establish a policy that says all employees must either be invited to work overtime or secure permission in order to be paid for hours worked over and above the standard.

While this is an excellent policy to have in place, it does not provide a way for employers to withhold paying their employees for all hours worked.  California Labor Laws have established that it is up to the employer to enforce the policies that they have set up, not the employees. The same can be said in connection with Cal-OSHA and OSHA Safety Policies as well.

Should an employee work unauthorized overtime, the employer can discipline the employee.  If the employee has made this a habit, the employer may even fire him.

All of this demonstrates just how important it is to bring on board a Cal-OSHA consultant along with a Human Resources Consultant.

While we are talking about consultants, it is a very wise idea to get one who knows and understands that there is a difference between what the Labor Laws and Cal-OSHA Standards says, versus how they are enforced.

Is a bonus considered a part of wages for the purpose of calculating overtime in California?

For the purpose of overtime laws in California, there are two types of bonuses, one is a Discretionary Bonus, and the other is considered to be a Production Bonus.  A Discretionary Bonus is not tied to job performance.  Each employer may give out one Discretionary Bonus each year. A Discretionary Bonus is not linked in any way to an employee’s performance.  A good example of a real Discretionary Bonus is a Christmas bonus.

A Non-Discretionary Bonus is always tied to the performance of the employee in some form or fashion.

Examples of types of pay that are excluded from the regular rate of pay.

  • Gifts
  • Reimbursements
  • Payments that are made during slow periods when there is no work done
  • Vacation Pay
  • Holiday Pay
  • Paid Sick Leave

Is it true that salaried employees must be paid overtime?

Since this is an election year, this is the perfect time for me to be politically correct.  The answer is maybe yes or maybe no depending on some key issues.

The answer is yes if the employee does not meet both the duties test and the financial test of an exempt employee.  In times past employers thought that if they paid an employee a salary that they did not have to pay overtime because the employee had agreed to work for a set amount per month, notwithstanding the number of hours worked in that month.

Can an employer require an employee to work overtime?  The answer to this question is yes; California Labor Law provides that employers can require employees to work overtime.  This is one of the places that Labor Laws California allows companies to run their business as they see fit.

Can an employee choose to waive their right to be paid overtime?

The answer to this question is no.  No employee can sign away any of their rights as employees here in California.  In times past some employees would do that because they wanted to be a team player and enjoyed both the company the people they worked with.

Even if an employee does sign away his or her rights, it will not hold up, so employers beware!

 What happens if I choose not to pay my employees overtime?

Now here is where things will really get messy if you are the employer.  Should you fail to pay your employees correctly, the employee has many options, and none of them will be a pleasant experience for the employer.

The employee may file a claim with the Division of Labor Standards and Enforcement, meaning the Labor Board.  The Labor Board will issue a judgment, and then the employer must pay.  However, in addition to the original amount, there will be penalties attached as well.

  • These penalties will be punitive in nature for the purpose of discouraging an employer from ever making this choice again.
  • The 2nd choice for the employee is to just go to an attorney, and this could even be costlier.  The attorney after reviewing the case may choose to see about getting other staff involved in what would become a class action lawsuit.
  • Most employers are not aware that a class action needs only 2- 3 employees to take part.  So the best advice I can give you is to make sure that you are in fact paying your employees correctly.

California Employer’s Services

California Employers Services has been helping employers here in California to get and stay in compliance with all of the Labor Laws, and the Cal-OSHA Standards.  We have been involved in several cases regarding both California Labor Laws as well as OSHA.

We fight hard to protect your rights as an employer here in California.  We are good at what we do, and we have a network of attorneys and consultants that we work with.  That means if we don’t know the answer we can get the answer and the right answer in a very timely fashion.

Should you have any questions, please give us a call, we love questions, and the best part of our day is winning thus allowing California Employers to enjoy the rights that should be theirs as employers.

Once again, should you have any questions please give us a call.  Remember, the only dumb question is the one that does not get asked.

Don’t Delay Call Today; We Can Help (888)358-2221.