Managing Overtime in California

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Fotolia_75565417_Subscription_Monthly_M-300x200If your business employs workers in California, you need to be aware of California laws that govern employer obligations and employee rights regarding overtime. Employer compliance is strictly enforced, and a failure to comply can result in a class action lawsuit against your business. California courts are known for being very employee-friendly, which can mean extensive liability for employers in overtime claims. At Structure Law Group, we can help your business understand the obligations regarding overtime and assist it with a plan to help manage those obligations.

Exempt vs. Non-Exempt Employees

California law requires overtime to be paid to all non-exempt employees. An employee is only exempt if they fit into a specific category codified by the State of California Department of Industrial Relations. The list includes many professions and occupations, but some of the more common business classifications for an exempt employee includes:

  • Professional: These are employees who practice in a profession (e.g., medicine, law, accountant) or work in a learned/artistic profession.
  • Executive: These employees spend more than half their job managing the business functions or a specific department.
  • Salesperson: These employees are usually an outside salesperson who spends significant time out of the office selling the company goods or services.
  • Administrative: These employees spend the majority of their time assisting another exempt individual in significant business matters.

Even if an employee is “salaried,” they may still be entitled to overtime pay. It is the type of work that governs the employee’s right to receive and the employer’s obligation to pay overtime. A mere title is not enough to warrant an exemption. Unless you can prove that an employee is truly exempt under California’s definitions, you may be required to pay overtime.

California Overtime Wages

If an employee is non-exempt and is paid an hourly wage, they are entitled to overtime if they:

  • Work more than 8 hours in any given workday
  • Work more than 40 hours in a workweek
  • Work a 7th consecutive day in a workweek

The amount of obligated overtime is as follows:

  • For each hour over 8 hours in a day or over 40 hours in a workweek, employees must be paid 1.5 times their regular pay.
  • Any hours over 12 hours in one workday or any work over 8 hours on a 7th consecutive workday must be paid at two times their regular pay.

Penalties for Violations

As mentioned, California courts tend to favor employees, and employers who are found to violate the overtime laws can face stiff penalties. You can be forced to pay all unpaid overtime and waiting time (up to 30 days), in addition to possible fines. You may be ordered to pay additional damages if the employee quit or was terminated and was not paid overtime at the time of separation, or if there were pay stub violations (the law specifies what must be on a CA pay stub), among other issues.

Contact SLG today for a Consultation Regarding Your Obligations to Pay California Overtime

Understanding and managing your requirements as a California employer for overtime can be critical to your business bottom line. For many businesses payroll makes up the vast majority of their expenses. You want to ensure you are in compliance with the law and that you pay your employees what they are entitled to under the law. Please contact us at 408-441-7555 or email through our online contact form for more information.