Overtime Pay Laws in California for 2024: How Are They Different?

Overtime laws in California are quite unique compared to everywhere else in the United States. In fact, they are so comprehensive and stringent, they can catch even the most diligent employers off guard.

But getting overtime pay wrong is more than just inconvenient for your employees — it’s also illegal. You could even be responsible for paying back up to three years’ worth of unpaid overtime wages, in addition to some hefty legal penalties.

To protect your organization from non-compliance, it’s important to understand how overtime pay is different for California and develop a payroll system that accommodates this pay for all employees.

Let’s take a closer look at California’s overtime pay laws for 2024 and how they may apply to your organization.

Legal Disclaimer

This content should not be considered legal advice. Criterion HCM provides this information to help improve your understanding. However, for the most accurate details regarding California overtime pay laws, consult the California Department of Industrial Relations or a lawyer with expertise in California employment law.

What Is Overtime?

Overtime pay isn’t unique to California. It’s outlined by the federal government in the Fair Labor Standards Act (FLSA) as follows:

Employees covered by the Fair Labor Standards Act (FLSA) must receive overtime pay for hours worked in excess of 40 in a workweek of at least one and one-half times their regular rates of pay. - (Department of Labor)

To help understand this policy, we need to cover a few basic concepts first:

• Regular Rate of Pay: This is essentially the amount an employee earns per hour of work. For hourly employees, this is straightforward — it's their hourly wage (e.g. $7.25/hr). For salaried employees, the regular rate of pay can be calculated by dividing their weekly salary by the number of hours they are expected to work each week.
• Minimum Wage: While the federal minimum wage is defined as $7.25 per hour, states have the authority to set their own minimum wage rates. In California, the minimum wage is significantly higher, reflecting the state's cost of living and the legislative decisions aimed at ensuring a livable wage for workers. As of January 2024, the minimum wage in California is $16.00 per hour for all employers. However, as of April 2024, fast food workers are required to be paid $20.00 per hour. Similarly, covered healthcare workers will have a minimum wage of $21.00 per hour starting June 1st, 2024.
• Overtime Pay Rate: This is typically calculated at 1.5 times the regular rate of pay, and is often referred to as "time and a half." However, the calculation and applicability of overtime pay can vary significantly depending on state laws. In the example of a minimum wage worker in California making $16.00 per hour, the overtime pay rate (at 1.5x) would be $24.00 per hour. However, California overtime laws are a bit different than standard federal laws.

How To Calculate Overtime

Federally and in many other states, overtime is calculated on a weekly basis only. This means that overtime pay is only required for the hours worked beyond 40 in a given workweek.

For example, in Kentucky, an employee may work 9, 10, or even 15 hours in a day and still only be paid their regular hourly rate (as long as they have not exceeded 40 hours in the week). If that employee works 10 hours each day for four days (totaling 40 hours), they will receive their regular pay. However, if they work 10 hours each day for four days and then 5 hours on the fifth day, the additional 5 hours are considered overtime, paid at 1.5 times the regular rate.

Overtime Pay Example

Let's calculate the basic overtime for an employee who works 42 hours in a week and gets paid $16.00 per hour (not in California).

Regular Pay Calculation:

• Regular rate of pay: $16.00/hour
• Regular hours worked: 40 hours
• Regular pay: 40 hours x $16.00/hour = $640.00

Overtime Pay Calculation:

• Overtime hours: 42 total hours − 40 regular hours = 2 overtime hours
• Overtime rate: $16.00 × 1.5 = $24.00/hour
• Overtime pay: 2 hours × $24.00/hour = $48.00

Summary:

• Regular pay: $640.00
• Overtime pay: $48.00
• Total pay: $688.00

In this example, the employee's total pay for the week (including both regular and overtime pay) would be $688.00.

Overtime Laws in California: An Overview

California overtime rules are based on California Labor Code 510. The law states that:

• Employees are entitled to overtime pay (in the amount of 1.5x the regular rate of pay) for any hours worked beyond 8 in a single day.
• Any hours worked beyond 12 in a single day must be paid at double (2x) the regular rate of pay.
• Employees are entitled to 1.5x overtime pay for the first 8 hours worked on the 7th consecutive day of working in a single workweek and 2x overtime pay for all hours beyond 8 on the 7th consecutive day of working in a single workweek. (More on this later).

On top of this, regular overtime laws still apply, meaning you must pay employees overtime at least 1.5x the regular rate of pay for all hours over 40 in a given workweek.

As you can see, this can get complicated. However, California law has specific rules regarding overtime for both salaried and hourly employees. While these overtime laws predominantly apply to hourly employees, it’s crucial to ensure that salaried employees are correctly classified to avoid penalties.

California Overtime Pay Examples

Let’s look at a couple of examples to see how this works out.

California Overtime Pay Example 1

Let’s assume a nonexempt employee makes $16.00 per hour, and works the following schedule:

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First, let’s add up the total regular hours.

• 8 (Mon) + 8 (Tue) + 8 (Wed) + 7 (Thu) + 6 (Fri) = 37 hours

Then, let’s calculate the regular pay.

• 37 hours x $16.00/hour = $592.00

In this schedule, the employee worked 2 hours of overtime on Monday and 1 hour of overtime on Tuesday. That’s a total of 3 overtime hours. The total number of hours worked in the entire week comes out to an even 40, so there is no weekly overtime to calculate here.

Let’s calculate the daily overtime pay.

• Overtime pay rate = $16.00/hour x 1.5 = $24.00/hour
• Overtime pay = 3 hours x $24.00/hour = $72.00

Finally, let's calculate the total gross pay.

• Total pay = $592.00 (Regular Pay)  + $72.00 (Overtime Pay) = $664.00

In this example, the employee’s total gross pay (including regular pay and overtime pay) would be $664.00 for the week.

California Overtime Pay Example 2

Let’s assume a nonexempt employee makes $16.00 per hour, and works the following schedule:

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NOTE: In this schedule, the logic is that the employee already works 1 hour of overtime (1.5x) on Wednesday. Then, on Friday, they work 8 hours of regular time, 4 hours of overtime (1.5x) and 1 hour of double time (2x). Notice the hours only get counted once, meaning the one hour of OT the employee worked on Wednesday does not get counted in the regular 40 hours. That said, if the employee had worked on Saturday, those hours would have been OT since there would be more than 40 regular hours per week.

For this example, it’s probably more clear to calculate it on a daily basis.

Monday:

• 8 hours at the regular rate.
• Regular pay: 8 × $16.00 = $128.00

Tuesday:

• 8 hours at the regular rate.
• Regular pay: 8 × $16.00 = $128.00

Wednesday:

• 8 hours at the regular rate and 1 hour at the overtime rate (1.5x).
• Regular pay: 8 × $16.00 = $128.00
• Overtime pay: 1 × $24.00 = $24.00
• Total pay for Wednesday: $128.00 + $24.00 = $152.00

Thursday:

• 8 hours at the regular rate.
• Regular pay: 8 × $16.00 = $128.00

Friday:

• First 8 hours at the regular rate: 8 × $16.00 = $128.00
• Next 4 hours (hours 9 to 12 of the day) at the overtime rate: 4 × $24.00 = $96.00
• Last 1 hour (over 12 hours) at the double time rate: 1 × $32.00 = $32.00
• Total pay for Friday: $128.00 + $96.00 + $32.00 = $256.00

Total Pay for the Week

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• Total pay: $128.00 + $128.00 + $152.00 + $128.00 + $256.00 = $792.00

In this example, the employee’s total pay would be $792.00.

Regular Rate of Pay: Salary vs. Hourly

For hourly employees in California, the regular rate of pay is straightforward (it’s their hourly wage). However, for salaried employees, calculating the regular rate of pay can be more complex. The regular rate for salaried employees is determined by dividing the weekly salary by the number of hours the salary is intended to cover.

For example, if a salaried employee earns $1,000 per week and the salary is intended to cover 40 hours of work per week, the regular rate of pay would be $25 per hour.

A 40-hour workweek is the most common basis for the regular rate of pay. However, in California, an exception to the 40-hour workweek rule applies when there is an agreed-upon schedule of fewer than 40 hours per week (such as 35 hours). In this case, the agreed upon hours (note you can use an average figure in some cases) must be used to calculate the regular rate of pay, like this:

• Average Hours Per Week: 35
• Weekly Salary: $1,000
• Regular Rate of Pay: $1,000 / 35 = $28.57.

However, normal 8-hour-day and 40-hour-week overtime laws still apply. In this case,  the employee wouldn’t earn weekly overtime if they simply worked 36 hours — only if they work more than 40 in a week or more than 8 in a day.

In addition to hourly and salaried employees, California's overtime laws apply to nonexempt employees paid by piece rate, daily rate, or other methods.

Exempt vs. Non-Exempt Employees

It’s important to classify employees correctly as exempt or nonexempt under California law. Exempt employees, such as those in executive, administrative, or professional roles, are typically not eligible for overtime pay. Nonexempt employees, regardless of whether they are paid a salary or an hourly wage, are entitled to overtime pay.

There are several notable exceptions for agricultural workers, certain nonprofit employees, and minors — among many others. For more detailed information on California's overtime laws, refer to the California Department of Industrial Relations (DIR) website and the California Labor Code.

Breaks and Other Scheduling Rules

California also has several rules regarding breaks and schedules that you’ll want to consider. While not all directly related to overtime, remaining in compliance with these laws may affect your overtime calculations.

Meal and Rest Breaks

California labor laws specify 2 types of required breaks for nonexempt employees:

• Meal Breaks: When an employee works more than five hours in a day, they must get a 30-minute unpaid meal break that is uninterrupted. If an employee works more than 10 hours in a day, they are entitled to another unpaid 30-minute meal break.
• Rest Breaks: If an employee works four hours or more, they are entitled to a paid 10-minute rest break. If possible, these rest breaks should be taken in the middle of each work period​.

While meal breaks are unpaid, rest breaks must be paid and therefore counted as working time (even though the employee is not “working”). In other words, rest breaks count as part of their shift, and must be factored into overtime calculations.

For example, if an employee works 8 hours in a day, they should receive two 10-minute rest breaks, and one 30-minute meal break (unpaid). So, the employee may work the following schedule:

• [WORK] 9:00 AM - 11:00 AM
• [REST BREAK] 11:00 AM - 11:10 AM
• [WORK] 11:10 AM - 1:00 PM
• [MEAL BREAK] 1:00 PM - 1:30 PM
• [WORK] 1:30 PM - 3:30 PM
• [REST BREAK] 3:30 PM - 3:40 PM
• [WORK] 3:40 PM - 5:30 PM

Even though the employee is only “working” 7 hours and 40 minutes, pay is calculated for 8 hours that day (since 20 minutes of rest breaks are paid). Notice the 30-minute meal break is unpaid.

Now, let’s say the employee works the same schedule, but works until 6:30 PM. Overtime would look like this:

• 8 hours regular time (20 minutes of break)
• 1 hour of overtime
• Regular pay: 8 x $16.00 = $128
• Overtime pay: 1 x $24.00 = $24.00
• Total pay: $152.00

7th Day of Consecutive Work

As we noted before, employees are entitled to overtime pay at 1.5 times the regular rate of pay for the first 8 hours worked on the 7th consecutive day of work (in a single workweek). Additionally, on the 7th consecutive day of work, employees must be paid 2 times the regular rate of pay for all hours worked beyond 8 hours.

Note that this only applies to 7 consecutive days in a workweek, which is defined by the employer. The law defines a workweek as 7 consecutive days, starting on the same exact day and time every week. This could be Monday to Sunday, Tuesday to Monday, Saturday to Sunday, etc. The catch here is that an employee may not be owed overtime on the 7th consecutive day of work if the 7th consecutive day technically falls on the first day of a new workweek.

For example, if an employer defines the workweek as Monday to Sunday, and the employee works Tuesday to Monday, that’s 7 working days in a row. However, since the workweek begins on Monday, the 7th consecutive day is technically the beginning of a new workweek, and the 7th day overtime laws do not apply.

Alternative Workweek Schedule Exception

California law also allows certain employers to create alternative schedules, which changes how overtime laws work. It’s called the Alternative Workweek Schedule (AWS) exception, and it's designed to allow employees to work longer hours each day in exchange for a shorter workweek.

For example, you might have employees who work four 10-hour shifts. Another common example is the 9/80 Schedule (eight 9-hour days and one 8-hour day over a two-week period, with an extra day off every other week).

With an AWS exception, daily overtime rules don’t apply, since it’s agreed that shifts will be longer each day. However, this exception only applies to employees whose work falls under Wage Orders 1 through 13, 16, and 17. Even then, the business unit considering this schedule must vote collectively to adopt it (with at least two-thirds of the affected employees voting in favor of the change).

How Are California Overtime Laws Enforced?

If you fail to pay overtime properly under California law, you face serious consequences. If you’re worried you made an error, or you know that an employee has initiated a wage claim against you, here’s what you can expect:

The DLSE & Wage Claim Investigations

Wage claims (including those regarding overtime violations) are processed by the California Division of Labor Standards Enforcement (DLSE). The DLSE is also in charge of investigating discrimination claims, claims of benefits owed, and generally defending employee rights. All wage claims submitted to the DLSE will be judged according to Labor Code Sections 96 and 98.

Upon receiving a claim, the DLSE reviews it to determine its validity. This involves checking for compliance with state laws regarding wages, overtime, and benefits. If the claim is valid, the DLSE schedules a settlement conference where the employee and employer attempt to resolve the dispute. A DLSE deputy facilitates this informal meeting to encourage an agreement​.

If a settlement is not reached, the case typically proceeds to an administrative hearing. Here, both parties present evidence and testimony before a hearing officer, who then issues a decision based on the findings​. Depending on the outcome, the DLSE may issue an order for the employer to pay the owed wages. If either party disagrees with the decision, they can appeal to the appropriate court​.

Penalties for Wage Violations

Employers who violate wage laws in California may need to pay significant penalties, such as:

• Unpaid Wages: In most cases, you must pay the full amount of unpaid wages. This includes any overtime or minimum wage violations​. This is also the case if you fail to provide the required breaks. Typically the penalty is 1 hour of the regular pay rate for every required break missed.
• Liquidated Damages: For minimum wage violations, you are also liable for liquidated damages, which are typically an additional amount equal to the unpaid wages​.
• Interest and Court Costs: In some cases, you may also be required to pay interest on the unpaid wages and cover the employee's legal costs​.

Legal Protections For Employees

If an employee makes a wage claim against your organization or reports a violation, you are prohibited from retaliating against them. Retaliation can include termination, demotion, or some other adverse action in direct response to the claim​. If retaliation is discovered, the DLSE can order the employer to reinstate the employee and compensate them for lost wages and benefits (as well as other damages​).

In addition, the DLSE ensures that the identity of any employee who files a claim or complaint is protected to prevent harassment or retaliation​.

FAQ

Q: Is mandatory overtime legal in California?

A: Yes. California Employers can require employees to work overtime. There is also no law against disciplining, firing, or demoting any employee who refuses to work overtime, and you aren’t required to give a notice before making that request. However, just because these practices are legal doesn’t make them good for employee engagement. Overtime may be part of your work schedule, but surprising employees with mandatory overtime on a regular basis can have a detrimental effect on morale.

Q: What is the purpose of the DLSE?

A: The DLSE exists to combat wage theft (including unpaid overtime) and protect workers from exploitation. If you fail to pay your employees proper overtime according to California law, the DLSE may conduct an investigation at your organization.

Q: Are employers obligated to pay unauthorized overtime to an employee?

A: Yes. Overtime must be paid regardless of whether or not it was authorized. However, as an employer, you can discipline or even fire the employee for working unauthorized overtime.

Final Thoughts

As you can see, California overtime pay laws are quite unique and can be complex. Even when you understand them, calculating overtime for a small team of employees is laborious and prone to mistakes.

Multiply these calculations by hundreds or thousands of employees. Then add in other complications like multi-location work, variable wage rates for unions, different employee classifications, and more. Your payroll process can quickly become too complicated to manage — especially if you’re doing all of it in spreadsheets.

Luckily a better solution exists.

Criterion HCM is designed to handle complicated payroll rules for unique states and industries. Here’s how it works:

1. Set up your configurations.
2. Track employees’ time.
3. Automatically process payroll according to your unique rules.

It’s that easy.

Employee location, classification, time and wage data, and even union affiliation are all factored in automatically. Many union- and state-specific calculations are built into our platform already. Plus, you can easily integrate Criterion HCM with your ERP so you can automatically enter payroll data in your general ledger for better labor cost allocation, more accurate accounting, and powerful custom reports.

Ready to stop wasting time and money on cumbersome payroll processes? Book a Criterion demo to see what streamlined payroll looks like in action.