Review of Overtime Obligations In California

Employers must review their payroll process from time-to-time to ensure that all overtime is being paid properly. Also, it is important for employers to conduct this analysis themselves – and not simply assume that their payroll company is doing it correctly.

When is overtime owed in California?

One and one-half times the employee's regular rate or pay is owed for all hours worked in excess of eight hours up to and including 12 hours in any workday, and for the first eight hours worked on the seventh consecutive day of work in a workweek. Double the employee's regular rate or pay is owed for all hours worked in excess of 12 hours in any workday and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.

Employers must remember that the regular rate of pay includes a number of different kinds of payments made to employees, such as hourly earnings, salary, piecework earnings, and commissions. Bonuses can also be considered in calculating an employee’s regular rate of pay if the bonus is a nondiscretionary bonus, which means when the bonus it is based upon hours worked, production or proficiency and not subject to the employer’s subjective determination. The DLSE provides a great question and answer section on overtime discussing some of the issues that an employer must take into account when calculating the employee’s regular rate of pay.

Can an employee agree not to be paid overtime by way of working an alternative work week?

An employee cannot simply agree to work over eight hours a day or more than 40 hours in a week without being paid overtime.  The employer must follow a complex set of rules to establish an alternative work week, for example, permitting an employee to work 9 hours a day four days a week, and have either a half day or a full day off every other Friday, without having to pay overtime for the 1 hour of work over 8 hours worked in a day.  In order to establish a legal alternative workweek the employer, among other items, must define a “work unit”, propose the alternative work schedule to the work group, distribute a written disclosure, have a meeting on the issue, hold a secret election, and file the election results with the Division of Labor Statistics and Research.  Furthermore, employers who have established an alternative workweek have greater record keeping requirements.
 

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