LEGAL GUIDE: OVERTIME REQUIREMENTS FOR CALIFORNIA EMPLOYERS

Generally, a nonexempt employee must receive premium (or overtime) pay for all hours worked over eight (8) in any day or forty (40) in any week.  (Labor Code §510.)  These requirements apply to every employer in California.

Time and a Half

Over 8 hours in one day. Employees that work over eight hours in one day must be paid 1.5 times his regular rate of pay for the first four hours worked in excess of eight.  For example, if employee works an 11 hour work day, he will be paid his regular rate for hours 1-8 and then 1.5 times his regular rate for 3 additional hours, representing hours 8-11.

Seventh consecutive day of work. If an employee works seven consecutive days, then the employee must be paid 1.5 times his regular rate of pay for the first eight hours worked on the seventh consecutive day of work.  For example, if employee has worked Monday-Saturday and has to work on Sunday for four (4) hours, those four (4) hours must be paid at 1.5 times his regular rate (even if the rest of his work week was less than eight hours a day and forty hours for the week).

Over 40 hours in one week. Employees that work over forty (40) hours in one week (regardless of whether that employee has worked less than eight in each day worked), must be paid 1.5 times his regular rate of pay for all hours worked in excess of forty (40) in that work week.

Double Time

Over 12 hours in one day. An employee must be paid double the regular rate of pay for all hours worked in excess of twelve (12) in one day.

Over 8 hours on the seventh consecutive day of work. The employee must also be paid double the regular rate of pay for all hours worked in excess of eight (8) on the seventh consecutive workday of the week.  For example, employee works Monday through Saturday at four hours per day and then works Sunday for ten hours.  On Sunday, the employee should be paid 1.5 times his regular rate for 8 hours and double his regular rate of pay for 2 hours.

Regular Rate of Pay

Regular rate of pay is all remuneration for employment paid to the employee.  (Huntington Memorial Hosp. v. Sup. Ct. (2005) 131 Cal.App.4th 893, 902-905.)  This would include hourly wages, piecework earnings, commissions, on-call pay, nondiscretionary bonuses and shift differentials.  The regular rate of pay would not include expense reimbursement, vacation, holiday or sick pay, discretionary bonuses, payments made under a profit-sharing plan that is not tied to hours worked and other overtime paid for that week.  Where the employee is paid different rates for pay during a workweek, the employer should use a weighted-average calculation to determine the regular rate of pay for that week.  The rate will be calculated by adding all hours worked in the week and dividing that number into the total compensation for the week.

Piecework. If an employee is solely paid by piecework, then the Department of Labor Standards Enforcement allows two different methods to be used to determine the regular rate of pay for purposes of calculating overtime compensation.

  1. Compute the regular rate by dividing the total earnings for the week, including earnings during overtime hours, by the total hours worked during the week, including the overtime hours. For each overtime hour worked, the employee is entitled to an additional one-half the regular rate for hours requiring time and one-half and to an additional full rate for hours requiring double time. This is the most commonly used method of calculation.  (DLSE Enforcement Manual §49.2.1.2.) An example of this calculation:

    Hours Worked:     M-10 T-9 W-7 R-6 F-10      Total: 42
    Total piecework earning for the 42 hours:       $420.00
    Regular rate = $420 divided by 42:                     $ 10.00
    Hours for which time and one-half is due = 5
    Premium for overtime hours = $10.00 divided by 2 = $5.00 x 5 $ 25.00
    Total earnings due:
    Straight time:        $420.00
    Overtime:  $ 25.00
    Total:         $445.00

  2. Using the piece or commission rate as the regular rate and paying one and one-half times this rate for production during overtime hours. This method is rarely used.  (DLSE Enforcement Manual §49.2.1.2.)  An example of this calculation:

    Piece work at $10.00 per piece
    Number of pieces during straight time hours        200
    Number of pieces during 8-12 hours                         50
    Number of pieces over 12 hours                                  20
    200 x $10.00=$2,000
    50 x $15.00 =$750
    20 x $20.00=$ 400
    Total earnings due: $3,150

Workday/Workweek

A workday is any consecutive 24-hour period that begins at the same time each day.  It may begin at any time of the day and may be different than the beginning of an employee’s shift.  An employer may establish different workdays for different employees.  (Labor Code §500, 510 and 511.)  Similarly, a workweek is any period of seven consecutive days starting with the same calendar day each week.  (Labor Code §500.)  Like the workday, an employer may set up different workweeks for different employees, but once an employee’s workweek is set, it remains fixed regardless of the employees work schedule.

Travel time

California requires wages to be paid for all hours worked, even if the employee is engaged in travel.  The state law definition of "hours worked" does not distinguish between working hours worked during normal working hours and hours worked outside of normal working hours.  Likewise, it does not distinguish between hours worked in connection with an overnight out-of-town assignment.  (DLSE Enforcement Manual §46.3.)

When traveling out-of-town, the employer must pay for the employee’s time in getting to and from the location of the event.  This would include time spent driving or as a passenger on an airplane, train, bus, taxi or car and time spent waiting to purchase the ticket, check baggage or get on board the vehicle.  (DLSE Enforcement Manual §46.3.)  If the employee’s travel from his home to the airport is the same or substantially the same as the distance and time between his home and usual place of reporting for work, then travel time would not begin until the employee reached the airport.  The employee must be paid for all hours spent between the time he arrives at the airport and the time he arrives at his hotel.  No further paid hours are incurred after the employee reach his hotel and is then free to choose what to do.  (DLSE Enforcement Manual §46.3.1.)

On the other hand, time spent taking a break from travel in order to eat a meal, sleep or engage in purely personal pursuits not connected with traveling is not compensable (for example, spending an extra day in a city following the conclusion of a conference in order to sightsee).  (DLSE Enforcement Manual §46.3.1.)

The employer may establish a different pay scale for travel time as long as it is not less than the minimum wage.  The employee must be informed of the different pay rate for travel before the travel begins.  (DLSE Enforcement Manual §46.3.2.)

However, if you provide for a different pay scale for travel and the overtime laws are invoked because the employee has worked in excess of 40 hours for the week, you will have to do the weighted average calculation.  Thus, the employer will be paying overtime based on the average of the employees earnings for the week (not just the lower travel time compensation), but it would be lower than if the employer paid the employee their normal rate for travel.