San Diego Wage and Hour Attorneys
When is overtime to be paid in California, and when are employers not required to pay employees for overtime work? The general rule for hourly employees in California establishes overtime pay based on 40 hours per work week, or 8 hours in a given day. California law leans toward the side of the employee. It falls on the employer to show that the employee was fairly paid for the hours they work.
Overtime is not a matter of “salaried” versus “hourly” according to California law. There are times where a salaried employee must be paid for overtime. It is the work that is performed, not the job title or classification, that determines whether overtime must be paid or not. California laws look at what an employee actually does over half of the time spent on the job. In California, an employer cannot give a job title that is untrue based upon the work being performed, and escape the responsibility to pay overtime wages.
Under California law, an “exempt” employee is not paid overtime. California law defines five types of exemptions:
- Executive – 50+% of Time Managing a Business or a Division of the Company
- Administrative- 50+% of Time Assisting the Business Owner or “Servicing” the Business
- Professional – Licensed Professionals or Those Who have Learned or Artistic or Professions
- Computer Software Professional – Highly Sophisticated Software Development; $41.00/Hour
- Outside Sales Person – Spends Most Time Out of Office Taking and Filling Orders
Employees who are paid hourly, piece-rate, or on commission cannot be exempt from overtime pay under the “executive,” “administrative,” or “professional” exemptions. There are a variety of other exemptions as well. The experienced employment and business attorneys at the Watkins Firm can provide the advice needed for you and your company to comply with all wage and hour laws and employment regulations.
Salaried Employees Cannot Have Deductions in Their Pay
Federal and California State law states that if employees are not salaried, they are non-exempt and must receive overtime pay. Salaried employees are paid the same amount each pay period, regardless of the quality of work, attendance, disciplinary issues, etc. If no work is performed, the salaried employee must still be paid the full amount of their salary (less standard deductions). If the employer deducts from a salaried employee’s check for quality of work or amount of time worked, then they are no longer exempt from overtime requirements
There are extensive regulations regarding the types of deductions that are applicable to salaried positions, but they must exceed a single day’s pay, and are usually related to illness or unexcused absence, so long as those deductions are part of an actual employment policy that provides “sick” and “vacation” allowances.
How Is Overtime Calculated and Paid in California?
Overtime is established by law to be “one and a half times” their regular pay. If they earn $10.50 per hour, the overtime rate will be $15.75 per hour. California law establishes that a “salary” equals 40 hours of work. Therefore, a salaried employee who does not meet one of the above exemptions is still due overtime in the amount of one and a half times their pay. If the salaried employee earns $1,000 per week, this would be divided by 40 hours which equals $25.00 per hour. Their overtime rate would be $25.00 x 1.5 or $37.50 per hour for each hour above 40 hours they worked.
In California, you cannot claim that overtime pay is included in salary unless the employee is “exempt,” and it is not acceptable to pay a “bonus” or a lump sum regardless of overtime worked.
Employers With Overtime Pay, Wage, Salary or Exempt Employment Questions Should Contact the Watkins Firm
Employees are able to go back four years to collect unpaid overtime pay. If you are a San Diego area employer and have questions about the structure of employment in your company, the classification of employees or the payment of overtime wages, we invite you to contact us, or call 858-535-1511 for a complimentary and substantive consultation.