Understanding California Overtime Laws: A Complete Guide for Employers and Employees

california overtime law

California’s labor laws are among the most employee-protective in the United States, and its overtime regulations are no exception. While federal laws provide a baseline for overtime pay, California’s statutes go beyond them, offering additional compensation structures and more nuanced rules. The Nakase Law Firm has helped numerous California employers and employees navigate these complex overtime regulations with clarity and legal precision.

Overtime in California is calculated by multiplying the employee’s regular rate of pay by 1.5 for eligible extra hours or by 2.0 for double-time hours, depending on the situation. Employers operating in California must understand and adhere to these overtime laws to ensure compliance and avoid costly penalties. This guide explores every facet of California overtime laws, from calculating pay to exemptions, double-time rules, and handling bonuses.

General Overview of California Overtime Law

In California, non-exempt employees are entitled to receive overtime pay when they exceed certain working hour thresholds. The general rules are:

Employees must be paid 1.5 times their regular rate of pay when they work more than 8 hours in a day or more than 40 hours in a workweek.
Employees working more than 6 consecutive days in a workweek are also entitled to overtime.
Employees who work over 12 hours in a single workday or beyond 8 hours on the seventh consecutive workday are entitled to double-time pay.

These rules apply to employees aged 18 or older and, under certain conditions, those aged 16 or 17 who are legally permitted to work instead of attending school.

Defining the Regular Rate of Pay

The regular rate of pay is the foundation for calculating overtime. It includes all compensation the employee receives, such as:

Hourly wages
Salaries
Piece-rate earnings
Commissions
Certain bonuses

Importantly, the regular rate must not be less than California’s minimum wage, which varies depending on employer size and sector. For hourly workers, the rate is straightforward. For salaried employees, it is calculated by dividing the annual salary by 52 (weeks) and then by 40 (hours per week).

Minimum Wage Standards in California

As of January 1, 2024, California’s general minimum wage is $16.00 per hour. However, some sectors have higher minimums:

Fast-food workers: $20.00/hour effective April 1, 2024
Healthcare facility workers: $25.00/hour starting June 1, 2024

Some cities also set higher local minimum wages:

West Hollywood: $19.08
San Francisco: $18.07
San Diego: $16.85
Los Angeles (city): $16.78
Oakland: $16.50
Mountain View: $18.75
San Jose: $17.55

Unlike other states, California does not allow tips to count toward the minimum wage.

Calculating Overtime for Hourly Employees

The process is fairly straightforward for hourly workers:

Time worked beyond 8 hours up to 12 hours in a day is paid at 1.5 times the regular rate.
Time worked beyond 12 hours in a day is paid at 2 times the regular rate.
On the seventh consecutive workday, the first 8 hours are paid at 1.5 times the regular rate; any additional hours are paid at double-time.

Calculating Overtime for Salaried Employees

For salaried employees who are not exempt, the regular hourly rate is determined by dividing the annual salary by 52 (weeks) and then by 40 (hours). Overtime pay is then calculated in the same way as for hourly workers—1.5 times for eligible overtime hours and 2 times for double-time.

Example:

A $30,000 annual salary would translate to a regular hourly rate of: $30,000 / 52 / 40 = $14.42/hour
Overtime pay would be: 1.5 x $14.42 = $21.63/hour Double-time pay = 2 x $14.42 = $28.84/hour

Calculating Overtime for Commission-Based and Piece-Rate Employees

For commission-based employees, the regular rate of pay is determined by adding commissions to base earnings and dividing the total by the number of hours worked in a week. The result becomes the basis for calculating overtime.

For piece-rate employees, the same principle applies: divide total weekly earnings by total hours worked to determine the regular hourly rate.

Overtime for Employees with Multiple Pay Rates

Employees working at different pay rates during the same workweek are entitled to a weighted average pay rate for calculating overtime.

Example:

30 hours at $20/hour = $600
20 hours at $25/hour = $500
Total earnings = $1,100
Total hours = 50
Weighted average = $1,100 / 50 = $22/hour
Overtime (10 hours) = 10 x 1.5 x $22 = $330
Total weekly pay = $880 (40 x $22) + $330 = $1,210

The Impact of Bonuses on Overtime Pay

Bonuses influence the regular rate of pay and therefore affect overtime calculations. California law, consistent with the federal Fair Labor Standards Act (FLSA), distinguishes between:

Discretionary Bonuses: Given at the employer’s sole discretion, usually unexpected (e.g., holiday bonuses). These are excluded from overtime calculations.
Non-Discretionary Bonuses: Promised for specific performance metrics (e.g., sales targets or attendance). These must be included in calculating the regular rate of pay.

Calculating Overtime with Non-Discretionary Bonuses

Example:

Base rate = $20/hour
Hours worked = 45
Bonus = $200 (non-discretionary)
Base pay = (40 x $20) + (5 x $30) = $800 + $150 = $950
Total pay including bonus = $950 + $200 = $1,150
Regular rate = $1,150 / 45 = $25.56
Overtime pay = 5 x ($25.56 x 1.5) = $191.70
Total weekly pay = $1,150 + $191.70 = $1,341.70

Special Case: Flat Bonus and the Alvarado v. Dart Case

California’s Supreme Court ruled in Alvarado v. Dart Container Corp. that flat bonuses must be allocated across only the non-overtime hours worked when calculating overtime.

Federal method: Bonus divided over total hours (including overtime). California method: Bonus divided only over non-overtime hours.

Example:

Bonus = $200
Hours worked = 50
Regular pay = 40 x $25 = $1,000
Federal: ($1,000 + $200)/50 = $24/hour
California: ($1,000 + $200)/40 = $30/hour

California’s method results in higher regular and overtime pay.

Double-Time Pay in California

Double-time pay applies under two conditions:

When an employee works more than 12 hours in a single workday.
When an employee works more than 8 hours on the seventh consecutive day of work.

Example:

Regular rate = $30/hour
13-hour shift = 8 x $30 + 4 x $45 + 1 x $60 = $240 + $180 + $60 = $480

Alternative Workweek Schedules (4/10 Rule)

California Labor Code Section 511 allows employees to adopt an “alternative workweek schedule” such as four 10-hour shifts per week. If adopted through a formal process including employee voting, no overtime is required for 10-hour workdays—as long as the total weekly hours do not exceed 40.

If employees under this schedule work more than 12 hours a day, the excess must be paid at double-time. Any hours beyond the regular 10 per day but under 12 are compensated at time-and-a-half.

Who Is Eligible for Overtime?

Most employees in California are entitled to overtime unless specifically classified as exempt. General eligibility includes:

Working more than 8 hours/day
Working more than 40 hours/week
Working more than 6 consecutive days/week
Working over 12 hours in one day (for double time)
Working more than 8 hours on the 7th consecutive workday (for double time)

Who Is Exempt from Overtime?

Several categories of employees are exempt based on their roles and compensation structure. These include:

Executive, administrative, and professional employees
Outside salespeople
Computer professionals earning at least $27.63/hour
Commissioned employees under certain conditions
Certain unionized workers covered by collective bargaining
Employees related to the employer (parent, child, spouse)
Taxicab drivers, actors, broadcasters in small towns
Employees on fishing boats, carnival workers
Personal assistants and babysitters under 18

To qualify as exempt, employees must also earn at least twice the minimum wage for full-time work, which equates to $66,560 per year as of 2024.

Unionized Employees and Overtime

Union employees may be governed by collective bargaining agreements that override California’s general overtime laws. These agreements must meet three conditions:

Define work hours, wages, and conditions
Offer wages 30% above the state minimum wage
Provide a separate provision for overtime rates

If these are met, the union contract terms prevail.

Handling Unauthorized Overtime

California law requires employers to pay for all hours worked—even if the overtime was not authorized. However, employers may take disciplinary action for violating workplace policies. Still, they cannot withhold wages.

Employer Responsibilities and Employee Rights

California employers have specific legal obligations regarding overtime:

Tracking Time: Accurate records of hours worked must be maintained.
Notice: Though not legally required, providing notice for scheduled overtime is recommended.
Consent: Employees generally can refuse overtime unless required by law or emergency.
Payment: Employers must compensate all overtime accurately. Failure to do so can result in penalties, back pay, and even lawsuits.

Employees cannot waive their right to overtime pay, and any agreement attempting to do so is void under California law.

Penalties for Retaliation

Employers who retaliate against employees for asserting their overtime rights—such as through termination, demotion, or reduced hours—can face severe consequences. These include:

Reinstatement
Back pay
Civil fines
Additional damages

Other Important Considerations

Employees cannot be required to work more than 72 hours/week.
Time spent commuting does not count as work time.
Travel for business purposes may count as overtime.
On-call time may also qualify as overtime if it causes the total hours to exceed daily or weekly thresholds.
Paid breaks (10 minutes per 4 hours, 30 minutes per 5 hours) count toward total hours worked.

Tools for Overtime Tracking

Given the complexity of California’s overtime rules, employers are encouraged to use time-tracking software like Clockify or Truein. These tools simplify compliance by:

Automating pay calculations
Separating regular, overtime, and double-time entries
Generating detailed reports for audits
Supporting GPS geofencing and shift scheduling

Conclusion

California’s overtime laws are intricate and uniquely protective of employee rights. While they demand more from employers in terms of compliance and compensation, they also provide a framework for fair labor practices. Whether you’re an employee verifying your pay or an employer managing a team, understanding California overtime laws is essential to avoiding legal pitfalls and fostering a healthy workplace.