California Overtime FAQ

California has unique daily overtime rules that differ from federal law and most other states. Under California Labor Code Section 510, non-exempt employees must be paid overtime at 1.5 times their regular rate of pay for all hours worked over eight hours in a single workday and for the first eight hours worked on the seventh consecutive day of work in a workweek.

Furthermore, employees earn double time (two times the regular rate) for all hours worked over 12 hours in any single workday and for all hours worked over eight hours on the seventh consecutive day of work. This daily overtime protection is significant because federal law only requires overtime for hours exceeding 40 in a workweek.

This means a California employee working four 10-hour days would receive 8 hours of overtime pay each week, even though they only worked 40 total hours. The regular rate of pay for overtime calculations includes not just hourly wages but also non-discretionary bonuses, commissions, and certain other forms of compensation divided across all hours worked. Employers cannot waive or negotiate around these overtime requirements, and employees cannot agree to work overtime without premium pay.

Calculating the overtime rate in California requires determining the employee's regular rate of pay, which is more complex than simply looking at the hourly wage. Under Labor Code Section 510 and the applicable Industrial Welfare Commission Wage Orders, the regular rate includes hourly wages, salary, piece-rate earnings, non-discretionary bonuses, commissions, and the value of certain non-cash benefits.

To calculate the regular rate, add all compensation earned during the workweek (excluding discretionary bonuses, gifts, and certain specified payments) and divide by the total hours worked. For salaried non-exempt employees, divide the weekly salary by the number of hours the salary is intended to cover, typically 40 hours. Once you have the regular rate, multiply by 1.5 for time-and-a-half overtime or by 2 for double time.

For example, if an employee earns $20 per hour base pay plus a $200 weekly production bonus and works 50 hours, the regular rate is ($800 + $200) / 50 = $20 per hour. Overtime for hours 41-50 would be paid at $30 per hour (1.5 times $20). Employers frequently miscalculate overtime by excluding non-discretionary bonuses or using incorrect methods, which can result in significant underpayment.

The distinction between exempt and non-exempt employees determines whether a worker is entitled to overtime pay and other Labor Code protections. Non-exempt employees must receive overtime pay for hours worked beyond eight per day or 40 per week, while exempt employees are excluded from these requirements.

Under California law, to qualify as exempt, an employee must meet both a salary test and a duties test. The salary test requires exempt employees to earn a monthly salary equivalent to at least twice the state minimum wage for full-time employment. As of 2024, with a $16.00 minimum wage, exempt employees must earn at least $66,560 annually ($5,546.67 monthly).

The duties test requires that the employee's primary duty involve executive, administrative, or professional work that requires independent judgment and discretion. Merely having a managerial title or earning a salary does not make an employee exempt. California's exemption standards are stricter than federal standards, so employees who might be exempt under federal law may still be non-exempt under California law. Common exempt categories include executive, administrative, professional, computer professional, and outside sales exemptions, each with specific criteria detailed in the applicable Wage Orders.

Yes, California employers can generally require employees to work mandatory overtime, and refusing to do so can be grounds for discipline or termination, as California is an at-will employment state. However, while employers can mandate overtime, they must pay the proper overtime premiums as required by Labor Code Section 510.

There are limited exceptions to mandatory overtime requirements. Healthcare workers have specific protections under Health and Safety Code Section 1276.4, which generally prohibits hospitals from requiring nurses to work beyond their scheduled shifts except in emergencies. Employees who have valid reasons based on disability accommodations or religious observances may be protected from mandatory overtime requirements under the Fair Employment and Housing Act.

Employers cannot require employees to work off the clock or fail to record overtime hours as a way around paying overtime premiums. If you are required to work overtime, you must be fully compensated at the appropriate rate. Some collective bargaining agreements negotiated by unions may also restrict mandatory overtime. While employers have broad authority to set schedules including mandatory overtime, they cannot retaliate against employees who report overtime violations or file wage claims.

An Alternative Workweek Schedule (AWS) is a special arrangement under California Labor Code Section 511 that allows employers to create work schedules with shifts longer than eight hours per day without paying daily overtime, provided specific requirements are met. The most common example is the four 10-hour day workweek, where employees work ten hours daily for four days instead of eight hours for five days.

To implement a valid AWS, employers must follow strict procedural requirements. First, the employer must propose the schedule in writing and disclose its effects on wages, hours, and benefits. Then, at least two-thirds of the affected employees in the work unit must approve the schedule in a secret ballot election. The employer must report the election results to the Division of Labor Standards Enforcement within 30 days.

Under a valid AWS, employees do not receive overtime for working up to 10 hours in a scheduled shift (or up to 12 hours for certain healthcare workers). However, overtime is still required for hours worked beyond the regularly scheduled shift, all hours over 40 in a week, and any work on days not part of the alternative schedule. Employees cannot be required to work an AWS; those who do not wish to participate must be accommodated with a regular schedule.

Calculating overtime for piece-rate workers in California involves special rules that ensure fair compensation for time spent working beyond regular hours. Piece-rate employees are paid based on the number of units produced or tasks completed rather than hours worked. Under Labor Code Section 226.2 and established case law, the overtime rate for piece-rate workers is based on the regular rate of pay, which is determined by dividing total piece-rate earnings by total hours worked during the pay period.

Once the regular rate is established, overtime hours must be compensated at 1.5 times (or 2 times for double time) that rate. California law also requires that piece-rate workers be separately compensated for rest and recovery periods and other nonproductive time at a rate no less than the applicable minimum wage.

This means employers cannot simply pay piece-rate and assume it covers all hours; they must track and separately compensate rest breaks and nonproductive time. If piece-rate earnings averaged over all hours worked fall below minimum wage, the employer must make up the difference. Employers must maintain accurate records of hours worked, pieces completed, and compensation paid. Many piece-rate compensation plans are found to violate California law because they fail to properly compensate nonproductive time or miscalculate overtime rates.

If your employer refuses to pay legally required overtime, you have multiple options for recovering the wages owed plus substantial penalties. First, document all hours worked, keeping your own records separate from employer time records. Under California law, employees who are denied overtime can recover unpaid overtime wages, liquidated damages equal to the unpaid wages under Labor Code Section 1194.2, interest at 10% per year, and reasonable attorney's fees and costs.

You can file a wage claim with the California Labor Commissioner (DLSE), which is free and does not require an attorney. The Labor Commissioner will investigate your claim, attempt to facilitate a settlement, and hold a hearing if necessary. Alternatively, you can file a civil lawsuit in court, either individually or as part of a class action if the violation affected multiple employees.

Private Attorney General Act (PAGA) claims allow employees to recover civil penalties on behalf of themselves and other aggrieved employees, with penalties of $100 per employee per pay period for initial violations and $200 for subsequent violations. The statute of limitations is three years for most overtime claims, allowing recovery of unpaid overtime for the three years preceding your claim filing. Your employer cannot legally retaliate against you for asserting your overtime rights, and retaliation claims carry additional penalties.

Being paid a salary does not automatically exempt an employee from overtime requirements in California. Many salaried employees are incorrectly classified as exempt and are entitled to overtime pay for hours worked beyond eight per day or 40 per week. To be properly classified as exempt from overtime, a salaried employee must meet both the salary test and the duties test under California law.

The salary test requires earning at least twice the state minimum wage for full-time employment, which for 2024 means a minimum annual salary of $66,560. However, meeting the salary threshold alone is not sufficient. The employee must also meet the duties test, which requires that their primary duty involves exempt work such as executive, administrative, or professional functions requiring discretion and independent judgment.

Simply having a title like manager or being called salaried does not make an employee exempt. Many employers misclassify employees as exempt to avoid paying overtime, particularly in industries like retail, restaurants, and healthcare. If you are paid a salary but spend most of your time performing non-exempt duties such as production work, customer service, or routine tasks, you may be misclassified and entitled to overtime. Misclassified employees can recover unpaid overtime, liquidated damages, interest, and penalties going back three years.

California Labor Code Section 510 provides special overtime protections for employees who work seven consecutive days in a single workweek. On the seventh consecutive day of work in a workweek, non-exempt employees are entitled to overtime pay at 1.5 times their regular rate for the first eight hours worked and double time (two times the regular rate) for all hours worked beyond eight.

The key to understanding this rule is the definition of workweek, which is a fixed, recurring period of 168 consecutive hours (seven 24-hour periods). The employer designates when the workweek begins, and it does not have to align with the calendar week. Importantly, the seventh-day rule applies only when an employee works all seven days within a single designated workweek.

If an employee works six days at the end of one workweek and one day at the beginning of the next, the seventh-day rule does not apply because the seven days span two separate workweeks. Some employees may request to work on the seventh day voluntarily. Under Labor Code Section 556, employees with total weekly hours not exceeding 30 and daily hours not exceeding six can work on the seventh day without triggering seventh-day overtime, but only if they make a knowing and voluntary choice. Employers cannot require employees to request seventh-day work or coerce them to avoid overtime liability.

True independent contractors are not entitled to overtime pay under California Labor Code because overtime protections apply only to employees. However, many workers classified as independent contractors are actually employees under California law and are entitled to full employment protections including overtime pay.

California uses the ABC test under Labor Code Section 2775 (codified by AB 5) to determine worker classification. Under this test, a worker is presumed to be an employee unless the hiring entity proves all three factors: (A) the worker is free from control and direction in performing the work; (B) the worker performs work outside the usual course of the hiring entity's business; and (C) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

If any factor is not satisfied, the worker is an employee entitled to overtime. Misclassification is rampant in industries like trucking, construction, gig economy, healthcare, and entertainment. Workers who have been misclassified as independent contractors can file claims to recover unpaid overtime, minimum wage, meal and rest break premiums, business expense reimbursements, and other protections they were denied. The California Labor Commissioner actively investigates misclassification, and workers can file wage claims or lawsuits. Recovery can include unpaid wages, liquidated damages, penalties, interest, and attorney's fees for the three years preceding the claim.