Do wages include overtime in California? Is overtime pay required?
Wages Include Overtime Pay in California
In California, wages are considered compensation for an employee’s personal services, whether paid by check or cash, or the fair cash value of noncash payments such as meals and lodging.
Payments are considered wages even if the employee is a casual worker, a day or contract laborer, part-time or temporary worker, or paid by the day, hour, or any other method or measurement.
In California, wages include, but are not limited to:
- Salaries, hourly pay, piece rate, or payments by the job.
- Commissions and bonuses.
- Overtime and vacation pay.
- The reasonable cash value of compensation other than cash.
Required Pay for Overtime for Nonexempt Employees in California
In California, the general overtime provisions are that a nonexempt employee 18 years of age or older, or any minor employee 16 or 17 years of age who is not required by law to attend school and is not otherwise prohibited by law from engaging in the subject work, shall not be employed more than eight hours in any workday or more than 40 hours in any workweek unless he or she receives one and one-half times his or her regular rate of pay for all hours worked over eight hours in any workday and over 40 hours in the workweek (or double time as specified below).
Eight hours of labor constitutes a day’s work, and employment beyond eight hours in any workday or more than six days in any workweek requires the employee to be compensated for the overtime at not less than:
One and one-half times the employee’s regular rate of pay for all hours worked in excess of eight hours up to and including 12 hours in any workday, and for the first eight hours worked on the seventh consecutive day of work in a workweek; and
Double the employee’s regular rate of pay for all hours worked in excess of 12 hours in any workday and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.
In California, there are, however, a number of exemptions from the overtime law. An “exemption” means that the overtime law does not apply to a particular classification of employees. There are also a number of exceptions to the general overtime law stated above. An “exception” means that overtime is paid to a certain classification of employees on a basis that differs from that stated above. In other words, an exception is a special rule.
What is the “regular rate of pay,” and how does it relate to overtime?
Overtime is based on the regular rate of pay, which is the compensation you normally earn for the work you perform. The regular rate of pay includes a number of different kinds of remuneration, such as hourly earnings, salary, piecework earnings, and commissions. In no case may the regular rate of pay be less than the applicable minimum wage.
CLICK HERE for more information about computing the regular rate and for examples of how to calculate the regular rate of pay.
If an employee works unauthorized overtime is the employer obligated to pay for it?
Yes! California law requires that employers pay overtime, whether authorized or not, at the rate of one and one-half times the employee’s regular rate of pay for all hours worked in excess of eight up to and including 12 hours in any workday, and for the first eight hours of work on the seventh consecutive day of work in a workweek, and double the employee’s regular rate of pay for all hours worked in excess of 12 in any workday and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.
An employer can discipline an employee if he or she violates the employer’s policy of working overtime without the required authorization. California’s wage and hour laws, however, require that the employee be compensated for any hours he or she is “suffered or permitted to work, whether or not required to do so.” California case law holds that “suffer or permit” means work the employer knew or should have known about.
Is a bonus included in the regular rate of pay for purposes of calculating overtime?
Yes, if it is a non-discretionary bonus. A non-discretionary bonus is included in determining the regular rate of pay for computing overtime when the bonus is compensation for hours worked, production or proficiency, or as an incentive to remain employed by the same employer. Incentive bonuses include flat sum bonuses.
Are any amounts excluded from the regular rate of pay?
Yes, there are certain types of payments that are excluded from the regular rate of pay. Examples of some of the more common exclusions are sums paid as gifts for special occasions, expense reimbursements, payments made for occasional periods when no work is performed due to vacation, holiday, illness, failure of the employer to provide sufficient work, premium pay for Saturday, Sunday, or holiday work (where such premium rate is not less than one and one-half times the rate established in good faith for like work performed in non-overtime hours on other days), and discretionary bonuses.
Are salaried employees entitled to overtime?
A salaried employee must be paid overtime unless they meet the test for exempt status as defined by federal and state laws, or unless they are specifically exempted from overtime by the provisions of the California Labor Code or one of the Industrial Welfare Commission Wage Orders regulating wages, hours and working conditions.
Can an employer require an employee to work overtime?
Yes. Generally, an employer may dictate the employee’s work schedule and hours. Additionally, under most circumstances the employer may discipline an employee, up to and including termination, if the employee refuses to work scheduled overtime. However, an employer cannot discipline an employee for refusing to work on the 7th day in a workweek and is subject to a penalty for causing or inducing an employee not to take a day of rest. An employee who is fully apprised of the entitlement to rest may independently chooses not to take a day of rest.
When must I be paid for the overtime hours I work?
Overtime wages must be paid no later than the payday for the next regular payroll period after which the overtime wages were earned. (Labor Code Section 204) Only the payment of overtime wages may be delayed to the payday of the next following payroll period as the straight time wages must still be paid within the time set forth in the applicable Labor Code section in the pay period in which they were earned; or, in the case of employees who are paid on a weekly, biweekly, or semimonthly basis, not more than seven calendar days following the close of the payroll period.
Can an employee waive his or her right to overtime compensation?
No! California law requires that an employee be paid all overtime compensation notwithstanding any agreement to work for a lesser wage. Consequently, such an agreement or “waiver” will not prevent an employee from recovering the difference between the wages paid the employee and the overtime compensation he or she is entitled to receive. (Labor Code Section 1194).
Source: California Department of Industrial Relations (accessed 04.03.2022); Employment Development Department, State of California (accessed 04.03.2022).
Employees in California Who Believe They Have Been Victims of Employer Wage and Hour Violations
EMPLOYEES IN CALIFORNIA WHO BELIEVE THEY HAVE BEEN HARMED BY EMPLOYER WAGE AND HOUR VIOLATIONS ARE ENCOURAGED TO CONTACT KEHOE LAW FIRM, P.C. BY COMPLETING THE FORM ABOVE ON THE RIGHT OR SENDING AN EMAIL TO [email protected] TO REQUEST A FREE, NO-OBLIGATION EVALUATION OF POTENTIAL LEGAL CLAIMS.
