What California Employers Need to Know About Overtime for Employees

California labor laws are designed to protect employees from having to work too many hours without fair compensation for their time. These laws apply at the daily and weekly level.

Here is a summary of what California law requires when it comes to overtime pay.

What Is the Overtime Law in California?

Nonexempt employees in California who work more than eight hours in a day are entitled to 1.5 times their regular rate of pay for every hour worked beyond eight. (The regular rate of pay is the compensation that employees normally earn for the work they perform, plus certain additional sums, such as nondiscretionary bonuses.) If employees work more than 12 hours in a workday, they are entitled to two times their regular rate of pay for every hour worked beyond eight.

For example, if an employee works 10 hours on one day in a week, the employee will be entitled to two hours of overtime. If, instead, an employee works five hours a day on six days of the week and then 10 hours on the seventh day, the employee would be entitled to 8 hours of overtime paid at 1.5 times their regular rate AND two hours of overtime at double their regular rate.

If someone who is nonexempt works 40 hours in a week, they are entitled to 1.5 times their regular rate of pay for every hour worked beyond 40. If they work seven consecutive days in a week, they are entitled to two times their regular rate for all hours worked in excess of eight on that day.

So, if an employee works 54 hours in a week, the employee is entitled to 14 hours of overtime paid at 1.5 times their regular rate.

Nonexempt employees may either be hourly or salaried. However, employers should note that many salaried workers, such as those classified as executive, administrative and professional employees, are not entitled to overtime. An hourly employee’s regular rate of pay is calculated as including the hourly rate plus any shift differential (work outside of normal business hours). 

A salaried employee’s regular rate is calculated as follows: multiply the employee’s monthly compensation by 12 (the number of months to get the yearly salary), then divide that salary by 52 (the number of weeks to get the weekly salary) and, finally, divide that sum by 40 hours.

Special rules apply to employees who are paid a piece rate (per unit) or those who receive a commission.

A final caution: Any employee who works overtime without the employer’s permission must still be compensated appropriately for those hours worked.

Paid Time Off and California Laws for Overtime

Some employers in California offer paid time off (PTO), also referred to as planned time off or personal time off as an employee benefit. Generally, workers have the freedom to use this specific number of days or hours as they see fit, such as for vacation time, sick days or handling personal or family issues. 

Under California overtime law, PTO does not count toward the accumulation of overtime hours because it does not fall under the state’s laws or the Federal Labor Standards Act (FLSA) definition for hours worked. Therefore, employers should not consider this time when calculating daily or weekly work hours. 

Are There Exceptions to the California Overtime Laws?

California laws for overtime do not apply to these workers:

• Camp counselors or instructors
• Workers at hospitals and care centers that treat patients on-site
• Personal attendants in nonprofit organizations
• Resident managers in retirement homes with less than eight beds
• Employees in the health industry who work alternate schedules
• Workers who provide around-the-clock residential care for minors
• Employees who work alternative weekly schedules

Also, the FLSA doesn’t apply to agricultural workers engaged in crop processing or transportation within the same state. However, these workers in California must receive overtime pay when working 10 hours in a day and for the first eight hours on the seventh consecutive day when harvesting crops or preparing soil. They are also entitled to double-time pay for all hours after eight on the seventh day.

Employer Responsibilities and Penalties for Violating California’s Overtime Laws

Employers must pay overtime wages no later than the next payday after they are earned; regular wages must still be paid on time. If an employer fails to do so, an employee can file a wage claim with the California Division of Labor Standards Enforcement (DLSE) or file a lawsuit.

California employers that fail to pay overtime may owe interest on unpaid amounts as well as the employee’s fees and costs associated with filing a claim. They may also face several DLSE-imposed sanctions. These can include a civil penalty for each violation, ranging from hundreds to thousands of dollars. An employer may also need to pay liquidated damages, which are additional charges above the amount of overdue wages owed to the employees.

Where to Get More Information About California Labor Laws

For further information about employer obligations under California labor laws, including displaying posters regarding overtime, other wage and hour laws, and additional employment-related laws, check out our webpage dedicated to California labor law posting requirements.