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California’s Overtime Laws: What Employers Need to Know

California is recognized for its stringent and comprehensive overtime laws. Failure to adhere to these laws can lead to significant financial repercussions, including expensive lawsuits, back pay, and hefty fines imposed by state labor authorities. For business owners in California, it is crucial to thoroughly understand the intricacies of overtime regulations and to remain informed about any changes in the law. This knowledge not only ensures compliance but also promotes a fair workplace that values employee contributions. 

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California Overtime Laws

In California, labor laws stipulate that non-exempt employees must receive overtime pay at a rate of time-and-a-half the regular rate of pay for any hours worked beyond eight hours in a single day and for all hours exceeding 40 in a standard workweek. Business owners should have a firm understanding of the term “regular rate of pay” as it may differ from the hourly wage, and all employers should have a well established and documented work week.

Exempt vs. Non-Exempt 

California employers must accurately classify employees to comply with state overtime laws:

  • Nonexempt Employees: A nonexempt employee refers to someone who is entitled to overtime pay, meal periods, and rest breaks. Nonexempt positions typically include hourly roles that do not meet specific criteria established by law regarding duties and salary thresholds. 
  • Exempt Employees: Exempt employees are not entitled to overtime pay. This classification generally includes positions that pay a minimum salary of two times the minimum wage and meet certain criteria related to the executive, administrative, or professional duties of the role, as defined by California labor law. 

Understanding the differences among these classifications is important for ensuring compliance with California labor requirements. Many employers mistakenly classify nonexempt employees as exempt, and proper classification safeguards employees’ rights and helps employers prevent potential legal issues and penalties.

Difference Between Federal and State Laws

Under the federal Fair Labor Standards Act (FLSA), non-exempt employees are entitled to overtime compensation when they work over 40 hours in a single workweek. This overtime pay is calculated at a minimum of one and a half times their standard hourly wage, commonly referred to as “time and a half” pay. While this provision may appear straightforward, the landscape changes significantly in California, which has more complex overtime regulations. 

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In California, the rules governing overtime are outlined by the California Labor Code, which stipulates that overtime pay is applicable not only when an employee exceeds 40 hours in a workweek but also when they work more than eight hours in a single workday. While this differs from federal law, the California Division of Labor Standards Enforcement (DLSE) and California Courts will apply the more strict, California rule. Moreover, California law provides for double-time pay for employees who work over 12 hours in a single workday or more than eight hours on the seventh consecutive day of work within a workweek. This provision significantly exceeds the minimum requirements set forth by federal law, highlighting California’s commitment to protecting worker rights. 

When there is a discrepancy between federal and state labor laws, the rule that most benefits the employee is applied.

The Consequences of Noncompliance with Overtime Laws in California

Misunderstanding overtime laws, even unintentionally, can lead to serious financial consequences and the risk of wage claims against employers. Unfortunately, these laws can be complex and difficult to navigate, as they require employers to accurately calculate regular pay rates, bonuses, and overtime pay. 

Failure to properly calculate overtime wages can lead to costly errors, including wage disputes, penalties, and liabilities. That is why employers must remain informed and adhere to all applicable wage and hour laws to avoid unintended consequences.

Contact an Experienced Labor Law Lawyer Today To Learn More

For additional information on employer responsibilities under California labor laws, reach out to Gould, Hahn, & Reinhardt today. Our knowledgeable legal team is here to review your questions and provide the answers you need.