California overtime law requires that all non-exempt employees (including domestic workers) receive 1.5 times their regular rate of pay for working overtime. Non-exempt employees earn hourly, but California overtime law does have non-exempt employees who earn on a contract basis, daily rate, or salary basis. All non-exempt employees are subject to specific overtime rules.
So let’s discuss how to calculate overtime in California. But first, know when the employer should pay 1.5 times the regular wage:
- When the employee works more than eight hours per day,
- A worker who works over 40 hours per week,
- And when the employee works six or more days per week.
An employer who fails to pay employee overtime wages appropriately may be liable for millions of dollars in a lawsuit. This article contains a step-by-step guide on how to calculate daily and weekly overtime in California.
- Step 1: Establish Your Work Days and Weeks
- Step 2: Determine the overtime hours worked by the employee during Work Days and weeks.
- Step 3: Calculate the amount of daily and weekly overtime owed.
- Step 4: Determine Regular Rate of Pay
- Step 5: Pay an Employee’s Overtime Wages
Table of Contents
Step 1: Establish Your Work Days and Weeks
Workday: Non-exempt employees have the right to overtime pay if they work more than 8 hours in a workday, so California employers should define the start time of the workday to calculate overtime pay accurately.
According to California law, a workday is any consecutive 24-hour period beginning at the same time each calendar day. A typical day’s work is considered eight hours of labor, so working more than that in one day, or working more than six days in any workweek, entitles the employee to overtime pay.
Workweek: A workweek is defined by California law as any seven consecutive days beginning with the same calendar day each week, starting at any hour on any day, as long as it is regularly occurring. An employer may set different work weeks for other employees.
Step 2: Determine the overtime hours worked.
As per California law, employees must track the shift’s start and end times. The employer will calculate the number of hours worked each workday and workweek based on these time records.
Step 3: Calculate the amount of daily and weekly overtime owed
As mentioned earlier, if employees work more than 8 hours per day and 40 hours per week, they are entitled to overtime wages, i,e, 1.5 times the regular pay rate. For instance, per week, overtime hours are calculated as total hours minus 40 if the individual works more than 40 hours in the workweek. Forty-four total hours minus 40 equals 4 hours of weekly overtime pay.
Step 4: Determine Regular Pay Rate
The regular Pay Rate is the basis for any paid overtime. It is also known as the “regular rate of pay.” The regular rate of pay formula is your hourly rate, including any shift difference and whatever rate you earn per hour.
The Pay Rate consists of the following:
- Daily Working Hours
The pay rate cannot be less than the state of California’s minimum wage.
Furthermore, if you are salaried, your monthly salary can be multiplied by 12 to calculate your annual salary, divided by 52 to calculate your weekly total, or even by the number of hours worked to calculate your hourly wage.
If you work on commission, your commission rate is the same as your regular pay level, and you receive 1.5 times your rate for the first four overtime hours logged and two times your rate for hours over 12 in one day.
Step 5: Pay an Employee’s Overtime Wages
Overtime wages must be during the regularly scheduled payday, per California law. However, employees who work typical hours a week are not entitled to overtime wages.
If you work over 40 hours weekly, reach out to your employer and request overtime pay. However, it is essential to note that, as stated in the Industrial Welfare Commission Wage Orders, it all comes down to 40 hours per week. Employees who work less than 40 hours per week will not receive overtime wages.