California Overtime Pay & Nonexempt Employees //
Kehoe Law Firm, P.C. is ensuring that California workers know that California overtime pay provisions mandate that nonexempt employees—ages 18 and older, as well as 16- and 17-year-olds who are not required to attend school and are legally permitted to work—cannot be employed for more than eight hours per workday or 40 hours per workweek, unless they receive overtime pay at one and one-half times their regular rate of pay for all hours exceeding these limits.
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 beyond 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 beyond 12 hours in any workday and for all hours exceeding eight on the seventh consecutive day of work in a workweek.
Are there Exemptions from the California Overtime Pay Laws?
YES. To learn more about the exemptions from California’s overtime pay laws, click here.
The “Regular Rate of Pay” and Calculating Overtime
California overtime pay is based on the regular rate of pay, which is the compensation normally earned for the work performed.
The regular rate of pay includes several different kinds of remuneration, such as hourly earnings, salary, piecework earnings, and commissions.
The regular rate of pay may not be less than the applicable minimum wage.
Ordinarily, the hours to be used in computing the regular rate of pay may not exceed the legal maximum regular hours which, in most cases, is 8 hours per workday, 40 hours per workweek.
The agreed upon regular hours must be used, if they are less than the legal maximum regular hours. For example, if you work 32 to 38 hours each week, there is an agreed average workweek of 35 hours, and thirty-five hours is the figure used to determine the regular rate of pay.
In circumstances where the workweek is less than 40 hours, however, the law does not require payment of the overtime premium unless the employee works more than eight hours in a workday or more than 40 hours in a workweek.
Stated differently, assuming you are employed under a policy that provides for a 35-hour workweek, the law does not require the employer to pay the overtime premium until after eight hours in a workday or 40 hours in a workweek.
If you work more than 35 but fewer than 40 hours in a workweek, you will be entitled to be paid for the extra hours at your regular rate of pay unless you work over eight hours in a workday or 40 hours in a workweek.
How to Calculate the Regular Rate of Pay
If you are paid on an hourly basis, that amount, including, among other things, shift differentials and the per hour value of any non-hourly compensation the employee has earned, is the regular rate of pay.
If you are paid a salary, the regular rate is determined as follows:
- Multiply the monthly remuneration by 12 (months) to get the annual salary.
- Divide the annual salary by 52 (weeks) to get the weekly salary.
- Divide the weekly salary by the number of legal maximum regular hours (40) to get the regular hourly rate.
If you are paid by the piece or commission, either of the following methods may be used to determine the regular rate of pay for purposes of computing overtime:
- The piece or commission rate is used as the regular rate and you are paid one and one-half this rate for production during the first four overtime hours in a workday, and double time for all hours worked beyond 12 in a workday; or
- Divide your total earnings for the workweek, including earnings during overtime hours, by the total hours worked during the workweek, including the overtime hours. For each overtime hour worked you are entitled to an additional one-half the regular rate for hours requiring time and one-half, and to the full rate for hours requiring double time.
A group rate for piece workers is an acceptable method for computing the regular rate of pay. In using this method, the total number of pieces produced by the group is divided by the number of people in the group, with each person being paid accordingly. The regular rate for each worker is determined by dividing the pay received by the number of hours worked. The regular rate cannot be less than the minimum wage.
If you are paid two or more rates by the same employer during the workweek, the regular rate is the “weighted average” determined by dividing your total earnings for the workweek, including earnings during overtime hours, by the total hours worked during the workweek, including the overtime hours.
For example, if you work 32 hours at $11.00 an hour and 10 hours during the same workweek at $9.00 an hour, your weighted average (and thus the regular rate for that workweek) is $10.52. This is calculated by adding your $442 straight time pay for the workweek [(32hours x $11.00/hour) + (10 hours x $9.00/hour) = $442] and dividing it by the 42 hours you worked.
Is an Employer Required to Pay Employees for Unauthorized Overtime?
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.
Is a Bonus Factored into the Regular Rate of Pay when Calculating Overtime?
YES – if it is a nondiscretionary bonus. A nondiscretionary 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. To properly compute overtime on a flat sum bonus, the bonus must be divided by the maximum legal regular hours worked in the bonus-earning period, not by the total hours worked in the bonus-earning period. This calculation will produce the regular rate of pay on the flat sum bonus earnings.
Overtime on a flat sum bonus must then be paid at 1.5 times or 2 times this regular rate calculation for any overtime hour worked in the bonus-earning period.
Overtime on production bonuses, bonuses designed as an incentive for increased production for each hour worked are computed differently from flat sum bonuses.
To compute overtime on a production bonus, the production bonus is divided by the total hours worked in the bonus earning period. This calculation will produce the regular rate of pay on the production bonus.
Overtime on the production bonus is then paid at .5 times or 1 times the regular rate for all overtime hours worked in the bonus-earning period. Overtime on either type of bonus may be due on either a daily or weekly basis and must be paid in the pay period following the end of the bonus-earning period.
Discretionary bonuses or sums paid as gifts at a holiday or other special occasion, such as a reward for good service, which are not measured by or dependent upon hours worked, production or efficiency, are not subject to be paid at overtime rates and thus are not included for purposes of determining the regular rate of pay.
Are any Amounts Excluded from the Regular Rate of Pay?
YES. Certain types of payments 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?
It depends. 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.
An employer, however, 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 to forego 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.
Can an Employee Waive His or Her Right to Overtime Pay?
California law requires that an employee be paid all overtime compensation notwithstanding any agreement to work for a lesser wage. Such an agreement or “waiver” will, therefore, 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.
Source: State of California, Department of Industrial Relations.
What Are My Options if My Employer Fails to Pay Overtime Wages?
If you have not been paid required overtime, you may have legal claims. Our experienced class action attorneys are dedicated to protecting workers’ rights. For a free, no-obligation evaluation of potential legal claims, send us a message or contact Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected], [email protected].
About Kehoe Law Firm, P.C.
Kehoe Law Firm, P.C. is a nationally recognized, plaintiff-side class action law firm dedicated to protecting investors and consumers from fraud and misconduct. Our attorneys have served as Lead or Co-Lead Counsel in major securities cases, recovering over $10 billion for institutional and individual investors. We litigate securities fraud, fiduciary breaches, unfair mergers and acquisitions, and antitrust violations, while also representing whistleblowers and advocating for victims of data breaches, consumer fraud, vehicle and product defects, employment law violations, retirement plan mismanagement, and other corporate and business misconduct. With a results-driven approach, we pursue justice and substantial recoveries for those we represent.
KLF’s class action legal services are provided on a contingency-fee basis, meaning clients are not responsible for any fees or litigation expenses.
