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Overtime: California

Overtime requirements for other states

Federal law and guidance on this subject should be reviewed together with this section.

Author: Anthony J. Oncidi, Proskauer Rose LLP

Updating Author: XpertHR Editorial Team

Summary

  • In California, employees must be paid overtime not only when they work more than 40 hours in a workweek, but also when they work more than eight hours in a workday or work a seventh consecutive day in a workweek. See Overview.
  • Arrangements in which nonexempt employees agree to be paid a fixed salary for all hours worked including overtime are prohibited. See Fixed Salary Agreements.
  • California law permits employers to allow nonexempt employees to work more than eight hours in a day at straight time rates if that time is considered "make-up time" for time an employee missed during the same workweek to attend to personal obligations. See Make-Up Time.
  • Overtime must be paid in accordance with California law where work is performed in California by out-of-state residents for California-based employers. See Non-Resident Employees.
  • Different overtime requirements apply to agricultural employees and personal attendants, among others. See Exceptions to the General Overtime Rules.

Overview

Under California law, every employee is covered by state overtime requirements unless an employer establishes that the employee qualifies for an exemption.

Like the federal Fair Labor Standards Act (FLSA), the California Industrial Welfare Commission (IWC) Wage Orders require employers to pay employees overtime for all hours worked in excess of 40 hours in a workweek.

Unlike the FLSA, California also requires employers to pay employees overtime when they work more than eight hours in a workday or work a seventh consecutive day in a workweek.

Employees are owed one and one-half times their regular rate of pay for all hours worked:

  • In excess of 40 hours in any workweek;
  • 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.

Employees are owed double their regular rate of pay for all hours worked:

  • In excess of 12 hours in any workday; and
  • In excess of eight hours on the seventh consecutive day of work in a workweek.

See, e.g., +8 CCR 11010(3).

In California, the term hours worked is interpreted as the time during which an employee is subject to the control of his or her employer, and includes all of the time the employee is suffered or permitted to work, regardless of whether he or she is required to work. For example, on-duty lunches are counted as hours worked, but off-duty lunches are not.

Defining the Workweek and the Workday

Because California has both weekly and daily overtime requirements, a California employer must establish both a workday and a workweek to determine whether an employee is entitled to overtime.

California defines a workweek as a fixed and regularly recurring period of 168 hours (or seven consecutive 24-hour periods), starting with the same calendar day each week and beginning at any hour on any day - the same as federal law. An employer may establish different workweeks for different employees, but once an employee's workweek is established, it must remain fixed regardless of his or her working schedule. An employee's workweek may be changed only if the change is intended to be permanent and is not designed to evade the employer's overtime obligation.

California defines a workday as a consecutive 24-hour period, which may begin at any time of day but must begin at the same time each calendar day. The beginning of an employee's workday need not coincide with the beginning of that employee's shift, and an employer may establish different workdays for different shifts. However, once a workday is established, it may be changed only if the change is intended to be permanent and is not designed to evade overtime obligations. The averaging of hours over two or more workdays is not allowed.

If an employer has not established a workweek and workday - through either a statement in the employee handbook, a stand-alone written policy or some other means - the California Division of Labor Standards Enforcement (DLSE) for enforcement purposes will use the calendar week, from 12:01 a.m. Sunday to midnight Saturday, with each workday ending at midnight. +Cal. DLSE Manual § 48.1.3.1.

No Pyramiding of Overtime

Employers are not required to pay both daily overtime and weekly overtime for the same hours worked. Therefore, time worked in excess of eight hours in a day can be excluded for purposes of calculating weekly overtime.

Practical Example

If Sally Singer works 10 hours at $10 per hour Monday through Friday for a total of 50 hours, she would be entitled to payment at her overtime rate for only 10 hours. Thus, her total compensation for the week would be $550 (($10 per hour multiplied by 40 hours) plus ($15 per hour multiplied by 10 hours)). She would not be entitled to receive time-and-a-half for both daily overtime (two hours per day for five days) and weekly overtime (the 10 hours worked past 40).

The Regular Rate

In computing the regular rate of pay, the hours used may not exceed the legal maximum regular hours. In California, the regular rate of a full-time salaried, nonexempt employee is typically calculated by dividing the employee's weekly salary by 40. Similarly, where alternative workweek schedules (based on four 10-hour days or three 12-hour days) under the Wage Orders are utilized, the regular rate is computed on the basis of 40 hours per week. However, if a specific number of hours is contracted for and that number is less than the legal maximum regular hours in the workweek, then that number must be used as the denominator. See, e.g., +8 CCR 11010(3).

Practical Example

John Smith, a file clerk, is paid a fixed weekly salary of $500 to work not more than seven hours per day, Tuesday through Saturday, for a total of up to 35 hours. In order to reduce a backlog in the filing department, John's employer asks him to work an additional eight hours on Sunday. To determine John's regular rate of pay, the employer divides his $500 weekly salary by 35 hours, which equals $14.29 per hour. John's overtime rate is thus $21.44 per hour ($14.29 multiplied by one and one-half). For the week he works on Sunday, John will be paid his regular weekly salary of $500, plus $14.29 per hour for the hours worked between 35 and 40, and $21.44 for the hours worked between 40 and 43. His total compensation will be $635.77 (his $500 weekly salary plus $71.45 ($14.29 multiplied by five) plus $64.32 ($21.44 multiplied by three)).

Bonuses

When a bonus is based on a percentage of production or some formula other than a flat amount (see flat-sum bonuses) and can be computed and paid with the wages for the pay period to which the bonus is applicable, overtime on the bonus must be paid at the same time as the other earnings for the week or no later than the payday for the next regular payroll period. Since the bonus was earned during straight time as well as overtime hours, the overtime "premium" on the bonus is half-time or full-time (for double time hours) on the regular bonus rate. The regular bonus rate is found by dividing the bonus by the total hours worked during the period to which the bonus applies. The total hours worked for this purpose will be all hours, including overtime hours.

'Flat-Sum' Bonuses

So-called flat-sum bonuses - such as $300 for continuing to the end of the season, or $5.00 for each day worked or an "attendance bonus" for employees who are scheduled to work on a Saturday or Sunday and complete a full work shift - are factored into an employee's regular rate of pay by dividing the amount of the bonus by the total number of nonovertime hours actually worked during the relevant pay period and using 1.5, not 0.5, as the multiplier for determining the employee's overtime pay rate. Alvarado v. Dart Container Corp., +2018 Cal. LEXIS 1123 (Cal. Mar. 5, 2018), citing +Cal. DLSE Manual § 49.2.4.2. The Alvarado decision is limited to flat-sum bonuses. Other types of nonhourly compensation, such as a production or piecework bonus or a commission, may increase in size in rough proportion to the number of hours worked, including overtime hours, and therefore a different analysis may be warranted.

Defining the Workday and Workweek

Under both California and federal law, employers must establish a fixed workweek, the start of which triggers the accumulation of hours worked for purposes of determining weekly overtime. Because of California's daily overtime requirement, employers in the state must also establish a workday.

A workweek is a fixed and regularly recurring period of 168 hours, seven consecutive 24-hour periods. A workday is a consecutive 24-hour period commencing at the same time each calendar day. The beginning of the workday need not coincide with the beginning of an employee's shift, and the employer may establish different workdays for different shifts or different employees as long as the workday is fixed and recurring. Once a workweek is established, it should only be changed if the alteration is intended to be permanent and is made for bona fide reasons unrelated to the avoidance of overtime obligations. Daily overtime is due based on the hours worked in any given workday. See, e.g., +8 CCR 11010(2)(P) and +8 CCR 11010(2)(Q).

Practical Example

A call center employee has an established workday commencing at 2 a.m. and typically works the center's 2 a.m. to 10 a.m. shift, Monday through Friday. One week, she is asked to switch shifts on Thursday and work from 6 p.m. to 2 a.m. (beginning Thursday and going into Friday) instead of her regular shift. She will not be due overtime for any of the hours she worked on Thursday or Friday because they will have been worked on different workdays. If instead she is asked to pick up the 6 p.m. to 2 a.m. shift in addition to her regular shift, she must be paid time and one-half from 6 p.m. to 10 p.m. on Thursday and double overtime for the remaining four hours of the extra shift (because she will have worked more than 12 hours), but her regular shift on Friday can be paid at her straight time hourly rate even though she will have worked 16 hours continuously (with meal and rest breaks, of course).

The workweek and workday may be set at the discretion of the employer and are usually consistent with the seven-day period used for payroll purposes. If a workweek is not set, however, the California Department of Labor Standards Enforcement will assume that it begins at 12:01 a.m. on Sunday and ends at midnight the following Saturday, with each workday ending at midnight.

Fixed Salary Agreements

Explicit mutual wage agreements (similar to "Belo" plans in the federal arena; see Employee Compensation > Overtime > Guaranteed Compensation), whereby payment is made to a nonexempt employee in the form of a fixed salary for all hours worked, including overtime, are prohibited under state law. +Cal Lab Code § 515.

Make-Up Time

California law permits employers to allow nonexempt employees to work more than eight hours in a day at straight time rates if that time is considered make-up time for time an employee missed during the same workweek to attend to personal obligations. Both the Labor Code and the IWC Wage Orders (except for Wage Order 14, which applies to agricultural employees) provide employers the option to approve an employee's written request to make up lost work at straight time where the following requirements are satisfied:

  • The work time must be missed because of the employee's own personal obligation;
  • The employee must submit a written request each time he or she seeks to work make-up time;
  • The make-up work must be performed during the same workweek as the time missed;
  • The time made up must not cause the employee to exceed 11 hours of work in a day or 40 hours in a workweek;
  • The employer must approve the request; and
  • The employer must not encourage or solicit the employee to request to work make-up time.

Non-Resident Employees

California's overtime laws apply to work performed in California even by nonresident workers. In Sullivan v. Oracle Corp., +51 Cal. 4th 1191 (2011), the California Supreme Court held that when out-of-state employees perform work in California for California-based employers, they must be paid in accordance with the Wage Orders. Because most other states do not have a daily overtime requirement, it is easy for employers to overlook the Sullivanrule when bringing out-of-state workers into California to perform assignments.

The Fluctuating Workweek

Fluctuating workweek arrangements are not allowed in California. Under the federal "fluctuating workweek" method, the regular rate of pay is calculated by dividing the weekly salary by the total number of hours worked in a week, including overtime hours. Thus, the more hours an employee works, the lower the employee's regular rate. See Employee Compensation > Overtime > The Fluctuating Workweek. California courts have determined that this method of calculating the regular rate is inconsistent with the state's policy of penalizing overtime - that is, California considers premium pay for overtime hours a "penalty" for requiring additional work ostensibly to deter employers from requiring overtime and potentially overworking employees.

Alternative Workweek Schedules

The California Labor Code authorizes several types of "alternative workweek schedules" involving work in excess of eight hours per day at straight-time rates in exchange for reduced work time on other days. To implement an alternative workweek arrangement, both the employer and two-thirds of the affected employees must consent. A strict set of alternative workweek rules applies and should be faithfully followed, but in no event may an employee on an alternative workweek schedule be required to work more than 10 hours per day at straight time rates. See, e.g., +8 CCR 11010(3)(B).

School Employees

The governing board of a school district or a county superintendent of schools may establish alternative workweek schedules for school employees, as long as the employee organization (or, absent an employee organization, the affected employee) agrees.

For most school employees (other than school police, discussed below), the alternative workweek will be nine hours per day and 80 hours per every two weeks, consisting of eight nine-hour days and one eight-hour day. Overtime must be paid for all hours worked in excess of the required work day.

The workweek must either:

  • Begin at noon on Friday and end at noon the following Friday, with the employee working nine hours each day except on alternate Thursdays when the employee will work eight hours, and on alternate Fridays when the employee will not work; or
  • Begin at noon on any other day of the week and be defined so that no employee will be required to work more than 40 hours during any given workweek.

For school police, an alternative workweek of 12 hours per day and 80 hours per every two weeks may be established if the school police department consents to it in a collective bargaining agreement that contains:

  • Express provisions for the wages, hours of work and working conditions of employees;
  • Express provisions for meal periods of employees, and final and binding arbitration of disputes concerning application of the meal period provisions;
  • Premium wage rates for all overtime hours worked; and
  • A regular hourly rate of pay at least 30 percent more than the state minimum wage rate.

The workweek for school police must consist of six 12-hour days and one eight-hour day. Overtime must be paid for all hours worked in excess of the required work day, and employees may not be required to work more than 40 hours during any given workweek.

+Cal Ed Code § 45133.

Exceptions to the General Overtime Rules

There are many exceptions to the general overtime rule. Most are narrow in scope, applicable only to highly specific types of employees such as camp counselors, employees of ski establishments and ambulance drivers. However, the exceptions for agricultural employees and personal attendants are broader in scope and merit further discussion:


Agricultural Employees

Separate overtime requirements apply to agricultural employees.

Agricultural employees must paid one and one-half times their regular rate of pay for any hours worked in excess of the following:

Effective Date Hours Per Workday Hours Per Workweek
Large Employers (26 or more employees) Small Employers (25 or fewer employees)
January 1, 2019 January 1, 2022 9.5 55
January 1, 2020 January 1, 2023 9 50
January 1, 2021 January 1, 2024 8.5 45
January 1, 2022 January 1, 2025 8 (and double the regular rate of pay for hours in excess of 12) 40

+Cal. Lab. Code § 860.

Personal Attendants

Domestic personal attendants must be paid one and one-half times their regular rate of pay for all hours worked:

  • In excess of 45 hours in any workweek; and
  • In excess of nine hours in any workday.

+Cal Lab Code § 1454.

The exception for domestic personal attendants had been scheduled to expire on January 1, 2017, but was extended indefinitely under +2015 Bill Text CA S.B. 1015.

Personal attendants working in the public housekeeping industry are exempt from overtime requirements if they do not work more than 40 hours in a workweek or six days in a workweek. However, in cases of emergency, they may be allowed to work more than these limitations as long as they receive overtime at one and one-half times their regular rate of pay for all hours worked:

  • In excess of 40 hours in the workweek; and
  • For days in excess of six.

Future Developments

The separate overtime requirements for agricultural employees will be phased out between 2019 and 2025.

There are no other developments to report at this time. Continue to check XpertHR regularly for the latest information on this and other topics.