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California Overtime Law

Definition of Overtime
Common Overtime Myths
Paid on a Salary
The Professional Myth
Supervise two people
Comp time given
Only clocking 40 hours
Not clocking in and out
Not paying for travel time
Why Employers Don’t Pay Overtime
Overtime Calculations for Salaried Employees
glasses

Facts About California Overtime

This page will cover the facts about overtime by discussing some common myths and misunderstandings about overtime law in California.  If you would like more detailed information, please read the page on the Law after you have finished this one. 

Nothing in the foregoing discussion is meant to be legal advice and does not serve to establish an attorney-client relationship.  If you do have a claim, the results of your case will depend on your particular circumstances. In addition, any samples that are given are for illustration purposes only and would not necessarily represent your claim.  Any statements, on this page or elsewhere, are not guarantees of any outcome.

Definition of Overtime

In California, overtime is any hours worked over 8 hours in a day or 40 hours in a week.  There is an exception if your company has instituted a bona fide alternate work week in which you normally work 10 hour days, 4 days a week – in which case the overtime is after 10 hours rather than 8, but still after 40 in the week.  This alternate work week must meet certain formalities and can not be done on a person by person basis.

Unless you meet an Exemption, California requires that all hours over 8 in a day or 40 in a week or worked on the 7th consecutive day of a work week be paid at 1.5 times an employee’s regular rate of pay.  In addition, hours worked over 12 in a day or hours over 8 worked on the 7th consecutive day in a week are paid at 2 times an employee’s regular rate of pay.    

Common Overtime Myths

The Myth of Salary

One of the biggest myths about overtime is the idea that people who are paid a salary are not entitled to overtime.  This myth comes from the requirement of certain overtime exemptions that the employee be paid a salary.  That requirement is just one of many -- and it is the easiest to meet. The fact remains that there are many people who are paid a salary who are entitled to overtime, and there are many people who are paid hourly who don’t get any overtime. Suffice it to say that if someone told you that you are not entitled to overtime just because you are paid a salary, that is just plain wrong.

If you are paid a salary, you are still entitled to overtime unless you meet all of the requirements for one of the exemptions.  These additional requirements are difficult to meet and many people in simply do not meet them. If you have questions about whether your particular job would be entitled to overtime, you can email me a brief description of the type of work that you do and I can easily take a look at it and get back to you.

The Professional Myth

Another myth about overtime in California is that you are not entitled to overtime if you work in any type of "professional" job. This myth is based on the "Professional Exemption" which applies to people like doctors, lawyers, certified public accountants, and architects. However, many "professional" employees do not qualify for this exemption. People entitled to overtime can include Information Technology professionals, Field Service Engineers, computer programmers,  insurance agents, and stock brokers. Just because you wear a suit and tie to work every day does not mean that you don't get overtime.

The “Supervise Two People” Myth

A big overtime myth is that if you supervise two people, you are exempt.  This one has a little more factual basis than the ones above, but is still far from accurate.  One of the requirements for the Executive Exemption is that you must supervise at least 2 people.  However, this requirement is only one of many.  In addition, the law has regularly been interpreted to find that supervising only 2 people would rarely require sufficient supervisory time to satisfy the exemption.  As you can read in the Executive Exemption section, the exemption is very hard to meet, and only true executives of the company will qualify for it.

If you are a “team lead”, “project manager”, or “development manager,” you can still be entitled to overtime.  Of course, job titles are not useful in determining whether or not you are entitled to overtime, and your actual right to overtime will depend on what actually do for your job.

California also has history of requiring overtime for managers who spend more than 50% of their time doing the same work as their subordinates.

Comp Time Given For Overtime Hours Worked

A common practice at for some employers is to give “comp time” in exchange for overtime hours worked.  That is, if you work 48 hours one week, you can take a day off the next week.  There are many problems with such a policy.  The largest one is that if you worked 48 hours in on week, then 8 hours would be paid at the overtime rate of 1.5x. Thus, you really have 12 hours of pay at the regular rate and giving you 8 hours as “comp time” shorts you 4 hours.  In any case, California employers are not allowed to use any “comp time” programs that take overtime from one week and give time off in another week.

Only Clocking 40 hours or Not Clocking at All

Some employers only record 40 hours worked each week no matter how much you work.  Others don’t record how much time you work at all.   It is the employer’s obligation to keep track of all hours worked.  If you don’t have records of your time, your testimony of approximately how many hours you worked (i.e. “I worked on average 50 hours a week.”) can be sufficient.  The burden is then on the employer to prove that you did not work those hours.  The reason for this is that the law places the burden of keeping track of hours on the employer and an employer will not be rewarded for failing to do so. Unless you are an exempt employee, the employer must pay you for all hours worked, even if they don't keep track of them.

Not Paying For Travel Time

You are not entitled to pay for your daily commute to and from your place of business. However, any travel from your initial place of business to another work place is considered work time. In addition, any out of town travel, including time driving to the airport, sitting on the airplane, or riding in a taxi is considered work time. This is work time even if it is done at night or on a weekend. Unless you are exempt from the wage and hour laws, you are entitled to pay for these hours and overtime pay, if applicable.

 
Why Employers Don’t Pay Overtime

The question you are probably asking now is that if so many people are entitled to overtime, why don’t more companies pay it?  The answer is that, unfortunately, it is frequently economically in the employer’s best interest to improperly classify people as exempt from overtime. 

To see why companies don’t pay overtime when they should, I will use an analogy to parking meters.  Chances are that if you park on a metered street, you put money in the meter.  You may even run back out every couple of hours to “feed the meter.”  The reason that you do this is that if you get a ticket, it will cost a lot of money, let’s say $100.  Now, imagine if instead of giving you a $100 ticket, the parking enforcer only fined you for how much you should have put in the meter – basically a buck or two.  You would probably not put money in the meter any more because the worst that would happen if you got caught is that you would have to pay the money.  On the other hand, if you don’t get caught, you don’t pay anything.  It is basically the same thing with overtime.   When an employer is sued by an employee for unpaid overtime or is taken to the labor board, the worst that happens is that the overtime for that one employee is paid, and possibly an additional amount as a penalty.  The problem is that unless the company is investigated as part of an enforcement action, the worst that will happen is that they have to pay one employee’s overtime.  In addition, the penalty award is difficult to win, and if you do win, it is limited to 30 days pay (Different penalties can apply to federal violations and violations of minimum wage, but these are less common in the computer industry). 

From the above, you can see that if a company has 50 employees and it improperly denies all of them overtime pay, it will still save a lot of money even if 10 or 20 employees sue. In fact, it is likely that over 40 of the 50 employees would have to sue and win the statutory 30 day penalty before the company would be worse off than if it complied with the law and paid the overtime.

There are such things as class action lawsuits and other methods to try to get a company to comply with the law.  However, because of the complexity and costs of these types of suits they are usually only pursued against large companies. In the case of a 50 person company, it is unlikely that a class action would be allowed.   

Fortunately, several laws have been enacted in California that will help you with your overtime claim. These laws include going after additional monies for penalties and forcing the employer to pay your attorney fees if you win. If you think that your job may be entitled to overtime, please email or call me.

Overtime Calculations for Salaried Employees

In the section Definition of Overtime you may have noticed use of the term “regular rate of pay.”  In general, this is a simple concept to understand, but it can be complicated by any additional payments that you receive.  The "regular rate of pay" is determined by dividing the total compensation received by the number of hours worked. In the case of salaried employees, the maximum hours to be divided by, for most cases, is 40 hours.

I will work a couple samples here to illustrate:

The Simple Case: Let us say that an employee makes $70,000 a year and works 50 hours a week. The calculation to determine the “regular rate of pay” will be based on 40 hours, not 50.  Thus, first determine the weekly rate, that is $70,000 / 52 = $1346.  Divide this by 40 no matter how many hours were actually worked.  This gives a regular rate of pay of $33.65.  Now, the employee will get 1.5 times this rate for all hours worked over 40 (we are assuming she didn’t have any 12+ hour days).  This gives 10 hours a week of OT @ 504.81 per week or $26,250 per year. A claim can usually go back for three (3) years for a total claim of $78,750.  Of course, this is just for illustration purposes and your actual claim, if you have a valid one, would likely be different. This illustration assumes that the employee does not meet any of the exemptions, that she worked exactly 50 hours a week for three years, and that she filed a claim in a timely fashion. If any of your actual circumstances are different, the amount of your claim would be different.

The Bonus:  The same as above, but each year the worker gets a $10,000 bonus each year.  This bonus will be used to calculate the “regular rate of pay.” For some reason, many people think that any bonus paid would be deducted from the overtime due.  In reality, it is the other way around.  In this case, the rate will be based on $80,000 a year.  The regular rate of pay is $38.46 per hour.  This gives $30,000 a year for a total claim of $90,000. This illustration assumes the same items as above with the addition of a $10,000 bonus each year. If any of your actual circumstances are different, the amount of your claim would be different.

Myth #2:  Let us use the example of an employer who pays $95,350 as a salary mistakenly thinking that this exempts the employee from overtime.  In addition, the employee regularly works 60 hour weeks.  The regular rate of pay will be $45.84 per hour.  This means that the overtime due (assuming no 12+ hour days) will be 20 hours x 1.5 x 45.84 = $1375.20 a week. Again, this is for illustration purposes only and your claim would not necessarily be anywhere close to this.  This illustration assumes that the employee is not exempt, that she makes $95,350 per year as a salary, that she worked 60 hours in one week, and that she filed her claim in a timely fashion. If your actual circumstances are different, your claim would also be different.

Long Week:  For this example, the employer pays $95,350 a year as a salary to a non-exempt employee. This time we will only look at one week in which the employee works 70 hours.  Let us say that there are 5 days worked for 14 hours each.  We compute a regular rate of pay of $45.84 ($95,350 / 52 weeks / 40 base hours per week).  In this week, all hours over 12 in a day are paid at 2 times the regular rate of pay. Thus, for the overtime hours, 20 will be paid at 1.5 times and 10 will be paid at 2 times. The total additional payment for the week would be $2,292.00. This illustration assumes that the employee worked 70 hours in a particular week (5 days, 14 hours each), that she was paid on a salary basis of $95,350 per year, that she was not exempt, and that she filed her claim in a timely fashion. If your actual circumstances are different, your claim would also be different.

Please see this page for examples of how the regular rate of pay is computed for piece rate employees and other more complicated applications.

 

©2013 Michael Tracy

This website only provides general information about the overtime laws in California and is not meant to be legal advice and does not serve to establish an attorney-client relationship. Any statements, on this page or elsewhere, are not guarantees of any outcome. Michael Tracy is a licensed attorney only in California.