California Overtime Refresher

Written by: Michele O'Donnell, M.S. Human Resources Management

A question we hear regularly from California employers is “Why do I have to pay overtime when an employee works 9 hours today, but only 25 hours total for the week?” This question is quickly followed by the statement “I have read the Fair Labor Standards Act (FLSA) and it only provides overtime when more than 40 hours in a week has been worked.” The answer is that California employs both daily and weekly overtime standards for employers. The standard that is most beneficial to the employee is what must be used to calculate wages.

It is important to note here that when federal and state employment laws differ, employers must generally follow the standard that is most beneficial to the employee. In the case of overtime, the federal standard is a weekly standard; however, California applies a daily standard which is more beneficial to California workers and must be observed by California employers.

The 5 Overtime Zones in California:

Time & One Half of an employee’s regular rate* of pay must be paid in the following circumstances:

• For all hours worked in excess of 8 hours up to and including 12 hours in any workday
• For all hours worked in excess of 40 hours in any workweek
• The first eight (8) hours worked on the 7th consecutive day of work in a workweek

Double the employee’s regular rate must be paid in the following circumstances:

• For all hours worked in excess of 12 hours in any workday
• For all hours in excess of 8 hours on the 7th consecutive day of work in a workweek

A workday is defined as any consecutive 24-hour period commencing at the same time each calendar day. A workweek is defined as a fixed and regularly recurring period of 168 hours, seven consecutive 24 hour periods. Employers have the ability to designate the period of the workday and workweek. However if an employer does not designate these items, it assumed by the Division of Labor Standards Enforcement (DLSE), that the workday starts at midnight and the workweek begins on Sunday. This makes the workweek from Sunday through Saturday, which is consistent with federal law.

Knowing your organization’s defined workday and workweek is crucial for the correct calculation of overtime.

*The regular rate of pay is generally determined by dividing the employee’s total remuneration (except statutory exclusions) in any workweek by the total number of hours actually worked in that workweek. There are some exclusions and this calculation can be somewhat tricky. For more information on calculating the regular rate of pay.

California is very strict in its application and enforcement of overtime rules, but does have a few areas of flexibility. One such area is that of “Make-Up Time”, which is in Labor Code Section 513. Employers may approve, at their option, an employee’s written request to make up lost work hours at straight time even if it occurs after 8 hours in the workday. Make-up work can be performed at straight time if all of the following six criteria are met;

1. Make-up work must occur in the same workweek in which the time was lost
2. The employee must submit a written request each time make-up time is requested
3. The work time that was missed must be because of the employee’s personal obligations
4. The make-up time must not cause the employee to exceed 11 hours of work in one workday or 40 hours of work in one workweek
5. The employer must approve the employee’s written request for make-up time; and
6. The employer must not encourage or solicit the employee to request its approval to take personal time off and make up the missed time

California Labor Code Section 511 allows for Alternative Workweek Schedules (AWS) for certain employers. The AWS provisions allow for alternatives outside of the conventional 5 day, 8 hour per day workweek. Some of the schedules allowed in an AWS are three day, four day, four and one half day and 9/80 schedules. These options allow greater freedom and flexibility for workers and they are considered worker and family friendly; however, they can only be utilized if the employer can meet the rigid standards required to implement an AWS. If you think an AWS would be beneficial in your organization, you should first determine if an AWS is permissible for your type of business. If you are permitted to have an AWS it is imperative that a thorough knowledge of all aspects of AWS is garnered to ensure compliance with its strict standards.

The Wage Orders published by the Industrial Welfare Commission (IWC) have a wealth of information regarding both overtime requirements and Alternative Workweek Schedules, in addition to many other useful areas. Learn more about the Wage Orders and determine which applies to your business.

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