In general, California overtime provisions require that all nonexempt employees (including domestic workers) receive overtime pay at a rate of 1.5 times their regular rate of pay for all hours worked in excess of 8 per day and 40 per week. These overtime rules apply to all nonexempt employees. Most nonexempt employees are commonly paid on an hourly basis, but California overtime law includes nonexempt employees who are paid on a piece rate, daily rate or salary basis. For more on overtime rate calculations for rates other than hourly, see the explanations at the end of this document.
The California overtime law has a number of exemptions. An "exemption" means that the overtime law does not apply to a particular classification of employees. Any employee who does not meet the requirements of a specific exemption is regarded to be nonexempt. The overtime law also has several exceptions. An "exception" means that overtime is paid to a certain classification of employees on a basis that differs from that stated above.
Alternative workweek schedules are not addressed in this how-to guide. If your organization has an alternative workweek schedule, the daily overtime rules will differ. See How to Implement Alternative Workweek Schedules in California.
This how-to guide addresses only the steps necessary to comply with California's general overtime provisions. It is not meant to be nor should it be construed as legal advice, and employers should seek the guidance of independent legal counsel for further advice.
Step 1: Determine Your Workdays and Workweeks
Workday
Because nonexempt employees are entitled to overtime pay if they work more than 8 hours in a workday, California employers should establish the start time of the workday to calculate overtime pay accurately.
Under California law, a workday is defined as any consecutive 24-hour period starting at the same time each calendar day. The workday may begin at any time of day. Different workdays may be established for different classes of employees. If an employer does not establish a workday starting time, the workday is considered to last from 12:01 a.m. to midnight.
Daily overtime is due based on the hours worked in any given workday, and averaging hours over two or more workdays is not allowed. After a workday is established by the employer, it must remain consistent and unchanged unless there is a legitimate business reason for changing it.
Workweek
Given that nonexempt employees are entitled to overtime pay if they work more than 40 hours in a workweek, employers should establish which workday begins the workweek to calculate overtime pay accurately.
Under California law, a workweek is defined as any seven consecutive days, starting with the same calendar day each week, beginning at any hour on any day, so long as it is fixed and regularly occurring. An employer may establish different workweeks for different employees, but after an employee's workweek is established, it remains fixed regardless of his or her working schedule. An employee's workweek may be changed only if the change is intended to be permanent and is not designed to evade the employer's overtime obligation.
Step 2: Count the Number of Hours the Employee Worked During Each Workday and Workweek
California law requires employees to track the start and stop times for the beginning of the shift, meal break start and stop, and end of the shift. From these time records, the employer will count the hours worked each workday and workweek (as defined above).
Note: To simplify the examples in the following steps, we will be using whole number hours without any minutes or partial hours. We will also assume the workweek follows the calendar week of Sunday to Saturday.
Step 3: Determine Amount of Daily Overtime Owed
Under California law, nonexempt employees must be paid daily overtime as follows:
- One and one-half times the employee's regular rate of pay for all hours worked in excess of 8 hours, up to and including 12 hours in any workday, and for the first 8 hours worked on the seventh consecutive day of work in a workweek.
- Double the employee's regular rate of pay for all hours worked in excess of 12 hours in any workday and for all hours worked in excess of 8 on the seventh consecutive day of work in a workweek.
Example #1
The employee worked five days, was absent a few hours on Wednesday and worked longer on Friday. Notice that on Friday the employee worked more than 8 hours in a day and is due 2 hours of overtime at 1.5 times the regular rate of pay.
| | Sun | Mon | Tues | Wed | Thurs | Fri | Sat |
| Hours Worked | 0 | 8 | 8 | 4 | 8 | 10 | 0 |
| OT paid at 1.5x | | | | | 2 | | |
| OT paid at 2x | | | | | | |
Example #2
The employee worked six days and worked more than 8 hours on two of those days. Under the daily overtime rules, the hours worked over 8 on Tuesday and Thursday must be paid at 1.5 times the employee's regular rate of pay. The hours worked over 12 on Thursday are paid at double time (2x).
| | Sun | Mon | Tues | Wed | Thurs | Fri | Sat |
| Hours Worked | 0 | 8 | 10 | 8 | 14 | 8 | 6 |
| OT paid at 1.5x | | | 2 | | 4 | | |
| OT paid at 2x | | | | | 2 | | |
Example #3
This is an example of an employee who worked all seven days of the workweek. Because the employee worked 10 hours on the seventh day, the first 8 hours of that day are paid at 1.5 times the regular rate of pay and the remaining 2 hours are paid at double time.
| | Sun | Mon | Tues | Wed | Thurs | Fri | Sat |
| Hours Worked | 5 | 5 | 5 | 5 | 5 | 5 | 10 |
| OT paid at 1.5x | | | | | | 8 | |
| OT paid at 2x | | | | | | | 2 |
Step 4: Determine Amount of Weekly Overtime Owed
Under the weekly overtime law, overtime must be paid for any hours worked over 40 in the workweek at the rate of one and one half times the regular rate of pay.
Simply count all hours worked for the entire workweek.
- If the employee worked 40 or fewer hours that week, he or she has zero weekly overtime hours that week. For example, 38 total hours = 0 weekly overtime hours.
- If the employee worked more than 40 hours in the workweek, weekly overtime hours are calculated as total hours minus 40. For example, 44 total hours - 40 = 4 hours of weekly overtime due.
Example #1
| | Sun | Mon | Tues | Wed | Thurs | Fri | Sat | TOTAL |
| Hours Worked | 0 | 8 | 8 | 4 | 8 | 10 | 0 | 38 |
OT paid at 1.5x | | | | | | | | 0 |
Example #2
| | Sun | Mon | Tues | Wed | Thurs | Fri | Sat | TOTAL |
| Hours Worked | 0 | 8 | 10 | 8 | 14 | 8 | 6 | 54 |
OT paid at 1.5x | | | | | | | | 14 |
Example #3
| | Sun | Mon | Tues | Wed | Thurs | Fri | Sat | TOTAL |
| Hours Worked | 5 | 5 | 5 | 5 | 5 | 5 | 10 | 40 |
OT paid at 1.5x | | | | | | | | 0 |
Step 5: Compare Daily to Weekly Overtime
In California employers must determine overtime for both daily and weekly overtime hours to ensure all overtime hours are paid each workweek. This does not mean that employers need to pay overtime twice on the same hours worked.
- When DAILY overtime hours (all hours paid at 1.5 and 2x regular rate) are EQUAL TO or MORE THAN the WEEKLY overtime hours, the employer must pay out according to the daily overtime rules for that employee that week. (All weekly overtime hours are already accounted for and paid.)
- If the number of WEEKLY overtime hours is MORE THAN the total DAILY overtime hours (all 1.5 and 2x regular rate) for that workweek, then the employer must ensure that all the weekly overtime hours are paid out in addition to the daily overtime. It is imperative that any double time hours required under daily overtime rules are identified and paid out at double time accordingly.
Employers should always look at the daily overtime rules specifically because some of the hours may be required to be paid at double time where weekly overtime only requires hours to be paid at one and one half times regular rate, no matter how many hours are worked beyond 40.
Another way to determine whether weekly overtime will increase what has been determined from daily overtime is to look at the total of straight time hours after determining daily overtime. If after following the daily overtime rules, the employer determines that the employee should be paid for 40 hours or less of straight time, then no adjustments are necessary to meet weekly overtime rules. If daily overtime results in more than 40 hours of straight time, then these hours over 40 should also be paid at 1.5x regular rate in addition to the daily overtime already determined.
Example #1
| | Sun | Mon | Tues | Wed | Thurs | Fri | Sat | TOTAL |
| Hours Worked | 0 | 8 | 8 | 4 | 8 | 10 | 0 | 38 |
| Straight time pay | | 8 | 8 | 4 | 8 | 8 | | 36 |
| OT Paid at 1.5x | | | | | 2 | | 2 | |
| OT Paid at 2x | | | | | | | 0 |
Example #2
| | Sun | Mon | Tues | Wed | Thurs | Fri | Sat | TOTAL |
| Hours Worked | 0 | 8 | 10 | 8 | 14 | 8 | 6 | 54 |
| Straight time pay | | 8 | 8 | 8 | 8 | 8 | | 40 |
| OT Paid at 1.5x | | | 2 | | 4 | | 6 | 12 |
| OT Paid at 2x | | | | | 2 | | | 2 |
In example #2 (commonly referred to as overtime pyramiding), the employee worked six days within a Sunday-to-Saturday workweek by working three 8-hour days, one 10-hour day, one 14-hour day and 6 hours on Saturday for a total of 54 hours in the workweek. Under weekly overtime, it was determined the employee must receive at least 14 hours of overtime (54-40 =14). According to the daily overtime rules, the employee is paid overtime at one and one half times the regular rate for hours worked over 8 but fewer than 12 in a single workday. On Thursday, the employee worked more than 12 hours in a single workday, and those last two hours are paid at double time. Note that the employee exceeds a 40-hour workweek on Friday. However, the employee has already been paid overtime for Tuesday and Thursday, totaling 8 hours of overtime already paid. Because weekly overtime rules require the employee to receive at least 14 hours of overtime pay, another 6 hours must be paid at one and one half times the regular rate to meet both daily and weekly overtime rules (14 weekly overtime hours required – 8 daily overtime hours already paid = 6 more overtime hours required). After an employee is paid overtime for hours over 8 in a workday, those overtime hours are also applied to any weekly overtime requirement.
| | Sun | Mon | Tues | Wed | Thurs | Fri | Sat | TOTAL |
| Hours Worked | 5 | 5 | 5 | 5 | 5 | 5 | 10 | 40 |
| Straight time pay | 5 | 5 | 5 | 5 | 5 | 5 | | 30 |
| OT Paid at 1.5x | | | | | | 8 | 8 | |
| OT Paid at 2x | | | | | | 2 | 2 |
In example #3, the employee worked seven days within a Sunday-to-Saturday workweek by working six 5-hour days and one 10-hour day. The employee did not exceed 40 hours in the established workweek, therefore, no weekly overtime is required. However, under daily overtime rules, the employee did work seven consecutive days within the workweek. Therefore, the employee is entitled to overtime at one and one-half times his or her regular rate of pay for the first 8 hours worked on Saturday. The hours worked beyond 8 on the seventh consecutive workday in a workweek must be paid at double the regular rate. Therefore, the last two hours on Saturday must be paid at double time.
Step 6: Determine the Regular Rate of Pay for the Employee
Under California law, overtime pay is based on the employee's regular rate of pay. After it is determined how many hours are overtime hours at either one and one-half times or two times an employee's regular rate of pay, the employer needs to determine the employee's regular rate of pay. With the exception of flat-rate bonus payments, the regular rate is the average hourly rate calculated by dividing the total pay for employment (except the statutory exclusions) in any workweek by the total number of hours actually worked. The California Supreme Court decision in Alvarado v. Dart Container Corporation of California provides that overtime pay attributable to an employer's "flat-sum" bonus (i.e., a bonus amount that is not dependent on the number of hours worked by an employee) should be calculated by dividing the amount of the bonus by only the total number of non-overtime hours rather than by all hours worked.
Below are examples of how to calculate the regular rate of pay.
Hourly nonexempt employees
For hourly workers, the regular rate of pay is the amount earned for each hour worked, plus any nondiscretionary bonuses and commissions, divided by the total number of actual hours worked.
Example 1. If the employee is paid solely on an hourly basis, that amount is the regular rate of pay. For example, if an employee earns $16.00 per hour, overtime pay would be $24 at time and one-half and $32 at double time.
Example 2. If the employee is paid two or more rates by the same employer during the workweek, the regular rate is the weighted average, which is determined by dividing the employee's total straight-time earnings for the workweek, including earnings during overtime hours, by the total hours worked during the workweek, including the overtime hours.
For example, if an employee works 32 hours at $18 per hour and 10 hours during the same workweek at $16 per hour, the weighted average (and thus the regular rate for that workweek) is $17.52 . This amount is calculated by adding the employee's $736 straight-time pay for the workweek ((32 hours x $18/hour) + (10 hours x $16/hour) = $736) and dividing it by the 42 hours the employee worked ($736 / 42 hours = $17.52 per hour regular rate). The overtime premium of $8.76 (half the regular rate) is added to the employee's wages for each one and one-half overtime hour worked, and an additional overtime premium of $17.52 is added to hourly wages for each hour of double time earned.
Example 3. If the employee is paid an hourly rate plus a flat-sum bonus for the workweek, the flat-sum bonus is divided by only the non-overtime hours worked and added to the hourly rate of pay to determine the regular rate of pay to compute overtime. For example, if an employee works 32 hours at $18 per hour and earns a $50 attendance bonus, the regular rate is calculated by dividing the bonus by the number of non-overtime hours ($50 / 32 hours) for a rate of $1.56. This is added to the base hourly rate of $18 for a regular pay rate of $19.56 per hour at which overtime hours must be paid.
Piece-rate or commission employees
If the employee is paid by the piece or commission, one of the following methods may be used to determine the regular rate of pay for purposes of computing overtime:
- The piece or commission rate is used as the regular rate, and the employee is paid one and one-half times this rate for production during the first 4 overtime hours in a workday and double time for all hours worked beyond 12 in a workday.
- Another option is to divide the employee's total earnings for the workweek by the total hours worked during the workweek. For each overtime hour worked, the employee is entitled to an additional one-half the regular rate for hours requiring time and one-half, and an additional full rate for hours requiring double time.
- A group rate for piece workers is an acceptable method for computing the regular rate of pay. In using this method, the total number of pieces produced by the group is divided by the number of people in the group, with each person being paid accordingly. The regular rate for each worker is determined by dividing the pay received by the number of hours worked.
Salaried nonexempt employees
The payment of a fixed salary to a nonexempt employee generally provides compensation only for the employee's regular, non-overtime hours. All the same daily and weekly overtime rules apply to a salaried, nonexempt employee.
For the purpose of computing the overtime rate of pay for a full-time (40-hour per week) salaried, nonexempt employee, the employee's regular hourly rate equals 1/40th of the employee's regular weekly salary.
To calculate the hourly rate for a nonexempt employee paid on a fixed weekly salary, take the following steps:
- Multiply the monthly remuneration by 12 (months) to obtain the annual salary.
- Divide the annual salary by 52 (weeks) to obtain the weekly salary.
- Divide the weekly salary by the number of regular work hours up to the legal maximum hours per week (40) to obtain the regular hourly rate.
Step 7: Pay the Employee Any Overtime Wages Due
California law requires that overtime wages be paid no later than the regularly scheduled payday of the payroll period following that in which overtime was earned. While the law permits the delay of overtime pay by one payroll cycle, any straight time hours worked must be paid on the regular payday of the payroll period in which they were earned.
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