Understanding and Calculating California Overtime Pay
California overtime rules and exceptions are more beneficial to employees than corresponding federal regulations.
Not paying required overtime premiums.
Basic California Overtime Pay Requirements
For almost all nonexempt private sector California employees who are not
covered by collective bargaining agreements, California overtime pay is
based primarily on the number of hours worked in a day. However, you
must also account for weekly totals when calculating California
Calculating California Overtime
The trickiest part of payroll administration is the calculation of
overtime. You should use a step-by-step approach. First, identify those
hours that must be paid on an overtime basis, then decide whether you
need to pay time-and-one-half or double-time for those hours, then
determine the "regular rate" you must use to calculate the overtime pay.
Regular Rate of Pay
When calculating overtime pay in California, you must use the employee's
"regular rate" of pay, not the normal hourly amount. The regular rate
is not simply an employee's normal hourly amount. The regular rate is a
term used to mean the employee's actual rate of pay once all hourly
earnings plus many other types of compensation are considered. The
regular rate must include nearly all forms of pay received by that
Only hours worked at straight-time apply to the weekly 40-hour limit.
This prevents "pyramiding" of overtime, where an employee earns overtime
on top of overtime already paid.
Salaried Nonexempt Employees
Paying a nonexempt employee a salary does not relieve you of your
obligation to pay overtime. Nonexempt employees must be paid for all
hours worked, including any daily or weekly overtime.
California Overtime Example
Calculating daily and weekly overtime in California can be quite
confusing. Below is an example that shows the proper overtime
calculations for one common situation.
Sample: Sarah S. Swingshift - Sarah works
the swing shift, usually starting work at 8:00 p.m. each evening and
working into the morning of the next calendar day. Thus, each shift is
partially in one workday and partially in another, as her employer uses
12:01 a.m. to 12 midnight as its "workday." Sarah's shift begins on
Sunday night, the first day of the 7-day workweek used by her employer.
Even though Sarah works a nine-hour shift (with a 30-minute meal break),
the first four hours are on Sunday, and the remaining five hours (12:00
a.m. to 5:30 a.m.) are on the second workday - Monday. When Sarah
returns to work Monday night, the first four hours are included in her
time for Monday, and the next five hours on Tuesday. For any day in
which Sarah works more than 8 hours, she will be entitled to overtime
for hours worked in excess of eight. In order to avoid the confusion
caused by working on two workdays each shift, her employer might change
the definition of the workday and workweek for employees on the swing
shift, perhaps making their workday run from 8:00 p.m. to 7:59 p.m. each
day, with a workweek starting at 8:00 p.m. on Sunday.
Overtime Exceptions for Specific Industries in California
The Wage Orders for specific industries contain certain exceptions to
the general rules for calculating overtime and premium pay. If you are
in one of those industries, familiarizing yourself with the exceptions
can help you avoid penalties and may even save you money.
Mandatory Overtime Restrictions for Specific Wage Orders
Employees have no legal basis on which to refuse to work overtime in
California, with the exception of limitations under certain specific
Wage Orders or a company policy or union contract addressing the
subject. However, there are limitations on the actual amount of overtime
you may require employees to work.
HRCalifornia members have access to several tools and services that
help those who manage human resources to work through California
overtime pay-related issues, including:
Use this form to calculate pay for your nonexempt employees.