The majority of states follow the federal overtime laws laid out by the Fair Labor Standards Act (FLSA), but some, like California, have gone beyond these requirements. The Golden State has the most robust and employee-friendly overtime laws in the country that sometimes get (often unsuspecting) businesses into hot water; around 40% of violations of the states’ wage and hours laws relate to unpaid overtime.

In this blog, we’ll run through everything you need to know about the overtime laws in California, and you’ll also find a handy overtime calculator template you can use to ensure you pay your staff correctly

How to calculate overtime in California
Who do California overtime laws cover?
Do employers have to pay for unauthorized overtime?
How to stay compliant
California overtime rules: FAQ

✅ HR Software to make managing overtime easy

How is overtime calculated in California?

Under the FLSA, employers must pay non-exempt employees (more on who they are later) 1.5 times their regular rate for all hours worked over forty hours in a single workweek.

This is also true in California, but there are additional requirements that employers must follow in addition to the FLSA to comply with overtime law California. The California Labor Code section 510 outlines that employers must pay the following rate of overtime:

Any work over eight hours in a workday: Time and a half (1.5x standard pay)
Any work over forty hours in a workweek: Time and a half
Any hours worked on the seventh consecutive day in a workweek: Time and a half
Any work over twelve hours in a workday: Double pay (2x standard pay)
Any work over eight hours on the seventh consecutive day in a workweek: Double pay

To put it in other terms: if a worker clocks in 10 hours of work on Monday, they would receive two hours of overtime pay at 1.5x their standard rate. If they worked 13 hours, they would receive four hours of overtime pay at 1.5x their standard rate and one hour of overtime pay at double their standard rate under overtime laws California.

While California Labor Codes 551 and 552 nudge employers to give their employees at least one day of rest during the workweek, this isn’t always possible. If a non-exempt employee works on the 7th consecutive day in a workweek, they will receive 1.5x their standard pay for the first eight hours of their shift. When an employee works more than eight hours on the seventh straight day of work, they receive 2x their standard rate.

For Example:

If a salaried employee is eligible for overtime pay, the hourly rate is calculated by dividing their annual salary by fifty-two (the number of weeks in a year) and then dividing that number by forty (the number of hours in a workweek). For example:

Janice receives an annual salary of $35,000.

35,000 / 52 = 673

673 / 40 = 16.80

Janice has an hourly rate of $16.80

Overtime laws in California: Which workers are covered?

California’s overtime laws protect the bulk of employees in the state. In fact, as a general rule of thumb, it’s best to assume that all your employees are non-exempt until you’re sure that they’re exempt. Overtime laws in California protect most employees.

California laws entitle virtually all hourly employees to overtime pay. A common misconception is that salaried employees are not protected, but that’s not automatically the case. There are many instances where a salaried employee is entitled to overtime pay under California overtime law. We’ll run through some of those scenarios below.

To classify an employee as exempt from overtime pay, that employee must meet the following criteria:

Receive a salary that is twice the minimum wage for full-time employment in California.
Must work primarily (more than 50% of the time) in an executive, administrative, or professional capacity.
Must exercise discretion and independent judgment as part of their work duties.

There are further caveats that determine whether an executive, administrative, or professional employee is exempt. The state’s definition of each of these job roles is pretty narrow, and the employee’s title is irrelevant (putting ‘executive’ in an employee’s job title does not necessarily make them an executive, in the eyes of the state).

To classify an executive employee as exempt, that employee must:

Be primarily involved in the management of the business
Regularly manage and direct the work of at least two full-time employees
Participate in the hiring/firing process
Regularly exercise discretion and independent judgment
Perform the above tasks for more than 50% of their work time.

To classify an administrative employee as exempt, that employee must:

Work in a non-manual capacity on tasks related to business operations or management policies (such as accounting, advertising, and human resources).
Regular exercise discretion and independent judgment
Work with minimal supervision on specialized or technical tasks, or perform special assignments.
Perform the above tasks for more than 50% of their work time.

To classify a professional employee as exempt, that employee must:

Hold a relevant license from the State of California and primarily work in a professional role (such as a lawyer, doctor, dentist, teacher, accountant).
Regularly exercise discretion and independent judgment
Perform the above tasks for more than 50% of their work time.

Shift workers that work on an alternative workweek schedule are exempt from certain overtime payments under CA overtime law. For example, an employee that works three shifts of twelve hours will only receive overtime pay on hours worked over twelve hours during a single shift or if they work more than forty hours in a week. There are additional overtime payment caveats for live-in employees, ski-resort workers, camp counselors, certain personal attendants, and care home managers, among others.

Overtime law California: do employers have to pay for unauthorized overtime?

CA overtime laws dictate that all employers must pay non-exempt employees for all overtime hours worked, regardless of whether or not they authorized the work. If you assign an eight-hour shift to an employee, but they end up working a ten-hour shift, they will receive two hours of overtime pay.

However, the rule is that the employer must be aware of the overtime hours. For example, they know that an employee is still on site after the end of their shift, or the employee told them they would continue working at home. If the employer has no reason to believe that the employee is working overtime hours, they do not have to pay. Many companies create policies that forbid employees from working unauthorized overtime.

CA overtime laws: staying compliant

Companies violate California overtime law by incorrectly labeling a non-exempt employee as exempt. As we saw above, the state has a narrow definition of which employees qualify for exempt status. It is best to assume that all your employees are non-exempt unless their exempt status is crystal clear. Overtime rules in California favor the worker, and any employee denied overtime pay could claim back pay for all unpaid overtime. The company may also be responsible for paying the employee’s legal costs. In other words: breaking the CA overtime rules can add up to a pretty penny!

It’s possible that an employee can receive paid time off (“comp time” or “time in lieu”) instead of overtime pay. However, overtime laws in California stipulate that the request must come from the employee, not the employer. A company cannot ask a member of their team to work fewer hours tomorrow because they worked more than eight hours today.

A company can compensate an employee with comp time under the following conditions:

The employee makes the request
A written agreement exists before the employee performs overtime work.
The employee does not have more than 240 hours of comp time.
The employee works fewer than forty hours in a workweek.

Factorial’s time off by hour function will help to keep track of and manage absences and comp time. Employers can easily track how many hours off employees have accumulated and how many they have used.

CA overtime rules: FAQ

Who is protected by California overtime law?

California overtime laws protect most workers in the state. Exempt employees include those in executive, administrative, or professional positions and some shift workers.

How is overtime calculated?

> Eight hours in a workday: 1.5x standard rate
> Forty hours in a workweek: 1.5x standard rate
Hours worked on seventh consecutive day in a workweek: 1.5x standard rate
> Twelve hours in a workday: 2x standard rate
> Eight hours on the seventh straight day in a workweek: 2x standard rate.

When is overtime paid?

You should pay the employee any overtime payments in their next paycheck.

How can a company stay compliant?

Understanding the overtime laws in California is the first step! From there, you’ll find that using an overtime calculator for California and having absence management software makes the sometimes complicated world of overtime all the more manageable.

What Are the Overtime Laws in California?