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California Overtime Law 2023

Employees working in California are eligible for overtime wages

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california Overtime Law 2022
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What Is Overtime Law in California?

California overtime law is the law that governs wages and hours of all the non-exempt employees working in the state of California. California is well known for its employee-friendly stance, and this law dictates when an employee must be paid wages for overtime.

Under California’s Overtime Law, employers are required to pay all the eligible employees aged 18 years or more working in the state of California additional pay for the work done in excess of the standard 8 hours per workday or the standard 40 hours per workweek. A standard working day constitutes 8 hours of working time. Any additional hour of work beyond 8 hours shall be compensated with additional premium pay in accordance with the California Overtime Law.

All the non-exempt employees who are qualified for overtime are paid 1.5 times the regular rate-

  • for all hours worked in excess of 8 hours in a workday (but only upto 12 hours in a workday), and in excess of 40 hours in a workweek,
  • and for the first eight hours worked on the 7th consecutive day in any workweek.

This overtime pay is termed as being paid ‘time and a half’.

Whereas, an employee is entitled to double the regular pay rate for –

  • hours worked more than 12 hours on any workday
  • and hours worked in excess of 8 hours on the 7th consecutive day of the workweek.

This is often described as “double time”.

Overtime is not required for a regular schedule, which is not more than 10 hours/workday.

Compensatory Rest in Lieu of Overtime Pay

Employees can ask the employer for compensatory time instead of overtime premium if all of the following conditions are met:

  • The employee works 40-hour (has full-time employment);
  • The employee asked the employer in writing for comp time instead of overtime;
  • The employee has not yet accumulated more than 240 hours of comp time; and
  • There was already a written agreement between the employer and employee regarding comp time;

The compensating time off is provided pursuant to applicable provisions of a collective bargaining agreement, memorandum of understanding, or other written agreement between the employer and the duly authorized representative of the employer’s employees.

Managing labor compliance at large organizations in California may lead to legal issues. Learn how organizations are leveraging Replicon’s solutions with built-in compliance modules to solve California’s labor compliance needs.

Employers must follow both federal and state overtime rules. Federal overtime requirements are explained in the Fair Labor Standards Act (FLSA). In some cases, if differences exist between California and federal state overtime rules, then an employer must follow the rule that gives the most benefit to the employee. Ideally, California laws provide the most benefits to its employees, as it is well known for its employee-friendly stance.

Defining “Workday”

As defined in the industrial welfare commission orders, a workday is typically 24 hours long. A workday can start at any time during the day or night, but the subsequent workday should start at the same time. The workday doesn’t necessarily start at 12 and end 24 hours later. For example: if an employee starts a workday at 8 AM, then the second subsequent workday wouldn’t start until 8 AM the next day. Once the workday is established by the employer, it can only be modified if the change is permanent but not made to avoid overtime pay.

California overtime law 2023

Defining “Workweek”

Similarly, a workweek in California is defined as a 7 consecutive 24 hours period or 168 consecutive hours. A workweek can start at any time of any day as long as the time and day is fixed and recurring, but once 168 consecutive hours are up, so is the workweek. Similar to the workday, a workweek can only be changed or modified if it is permanent and not to avoid overtime pay.

Which Employees Are Eligible for Overtime Wages in 2023?

Employees working in the state of California are required to meet certain qualifications to be eligible for overtime rates. They are as follows:

  1. Employees must be equal to or older than 18 years of age or 16-17 if they are legally permitted to leave school for work
  2. Employees must be working in a non-executive role. In California, an executive role is defined as someone who directs the work of 2+ employees, who exercises discretion and judgment, who can hire or fire other employees. To know detailed information on executive roles as defined by the state of California, click here.
  3. Employees must be in a non-professional role. Visit the department of industrial relations website, which defines a professional role in detail.
  4. Employees must also not fall in any other exemptions as mentioned here.

How Is Overtime Calculated in California?

Under California’s overtime law, employers should calculate overtime pay based on the regular rate of pay and not the hourly wage. The regular rate of pay includes hourly pay as well as other types of compensation, including commissions, production bonuses, piecework earnings, and the value of meals and lodging. However, the regular pay rate must not be less than the applicable minimum wage. The minimum wage applicable to all employees of California has been increased to $15.50 per hour effective from January 1, 2023.

In addition, certain types of payments can be excluded from the regular rate of pay, such as expense reimbursement, the sum paid as a gift for special occasions, and discretionary bonuses.

If you are paid a salary, to calculate the regular pay rate-

  • Multiply the monthly remuneration by 12 to find the annual salary
  • Divide the calculated annual salary by 52 to find the weekly salary
  • Now divide the weekly salary by 40(maximum regular hours) to get the regular hourly rate.

The amount of overtime depends on the number of days an employee has worked in the workweek and the length of his or her shift. For example: If the employee’s regular rate of pay is $10 an hour, then the standard overtime pay would be $15 an hour in the overtime period and if the employee reaches the qualifications for double overtime, the pay would be $20 an hour.

If the employee receives two different rates in a workweek and if he is entitled to overtime, then the overtime law requires that the employer takes the average of the two rates as the regular rate and pays 1.5 times of it.

Many employers and employees get to know about California Overtime Laws by word of mouth, due to which a lot of misconceptions have evolved. Some of the most common ones among them are:

  1. Salaried employees are not entitled to overtime: This is one of the biggest misconceptions and a huge myth about overtime law in California. Earning overtime is not dependent on how an employee is paid for his or her work. There may be some cases where certain employees may not be getting paid for overtime because they meet certain exceptions, but being paid salary in itself is not an exception.
  2. Professional employees are not entitled to overtime: This misconception is due to the term “professional” used in the Overtime law, which states that they are not qualified. It just means anyone who works as a doctor, lawyer, attorney, CPAs, architect, etc is not qualified. But, there are other professional jobs like insurance agents, computer programmers, and other office workers who qualify for overtime.
  3. Travel time doesn’t count towards overtime: Here, employees are not entitled to pay for their normal commute to and from work. However, if they are traveling from one workplace to other workplaces then they are entitled to overtime. Employees are also entitled to pay towards travel if the employer sent them on a company trip. All the time spent traveling out of town, be it driving to and from the airport or riding on a train is considered as work time. Here it doesn’t matter if the travel was done on weekends or at night.
  4. Agricultural Employees are not entitled to overtime: According to the revised law enacted in 2023, agricultural employees working for employers who employ less than or equal to 25 employees will be entitled to overtime pay for all work done in excess of 9 hours in a day or 50-hours in a week. The law came into effect on January 1, 2023.

There may be industry-specific overtime limits. Make sure to check the Industrial Welfare Commission Wage Orders, to understand if there are any overtime limits.

Frequently Asked Questions on California Overtime Laws 2023:

1. Can overtime laws be legally imposed?

California law does not allow employers to penalize their employees if they refuse to do overtime work. As long as overtime wage laws are adhered to, employers have the right to dictate the work schedule and the hours worked by their employees.

2. Can you terminate your employee for refusing to work overtime?

Yes, in case the employee refuses to work overtime, employers have the right to fire them as they are not prohibited from penalizing their employees. Terminating an employee because he or she doesn’t work overtime is not considered discrimination.

3. How many hours is full-time employment?

Full-time employment is usually considered between 30 to 40 hours of work done in a week or 130 hours of work done in a month. If you work for over 40 hours a week, both full-time and part-time employees are eligible for overtime pay.

4. Is extra pay required for weekend or night work?

According to the Department of Labor Law, extra pay for working on weekends or at night depends on the agreement between the employee and the employer. However, the FLSA does not require extra pay for nights or weekends.

5. Can an employee waive his or her right to overtime compensation?

No, an employee cannot waive his or her right to overtime compensation. Under California overtime law, an employer must pay its employee overtime compensation notwithstanding any agreement to work for lesser wages.

6. What to do if my employer doesn’t pay me my overtime wages?

Under such circumstances, you can file a wage claim with the Division of Labor Standard Enforcement office. Additionally, you can also file a lawsuit in court against your employer to recover your lost wages.

7. Does everyone get overtime wages for working extra hours?

Few common types of workers are not entitled to overtime pay.

  1. Exempt Employees who have a white-collar job or receive a fixed salary instead of an hourly wage.
  2. Outside Salespersons who work away from their employer’s place of business or sell items, services, etc.
  3. Independent contractors and employees with alternative workweek schedules.
Disclaimer: The material provided above is for informational purposes only and is subject to change. We endeavor to keep all material up-to-date and correct but make no representations about the information's completeness, accuracy, or reliability. Laws vary by jurisdiction and are subject to change and interpretation based on individual factors that may differ between organizations. The material is not meant to constitute legal advice and we suggest you seek the advice of legal counsel in connection with any of the information presented.
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Shreya Bhattacharya

ABOUT THE AUTHOR

Shreya Bhattacharya

A labor and employment lawyer at Replicon who specializes in global compliance. Deltek | Replicon provides award-winning products that make it easy to manage your workforce. Deltek | Replicon is an industry leader in global compliance and has a dedicated team which pro-actively monitors international labor regulations for ensuring proper adherence with specific country rule requirements.

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