California Overtime Pay Laws | How To Recognize Unpaid Overtime
Does your employer owe you for unpaid overtime?
California labor laws address unpaid overtime, by requiring all employers to pay overtime, whether authorized or not. In California, the general overtime provisions are that a “nonexempt” employee 18 years of age or older, or any minor employee 16 or 17 years of age who is not required by law to attend school and is not otherwise prohibited by law from engaging in the subject work, shall not be employed more than eight hours in any workday or more than 40 hours in any workweek unless he or she receives one and one-half times his or her regular rate of pay for all hours worked over eight hours in any workday and over 40 hours in the workweek. Eight hours of labor constitutes a day’s work, and employment beyond eight hours in any workday or more than six days in any workweek is permissible provided the employee is compensated for the overtime at not less than:
- One and one-half times the employee’s regular rate of pay 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; and
- 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 eight on the seventh consecutive day of work in a workweek.
There are, however, a number of “exemptions” from the overtime law. An “exemption” means that the overtime law does not apply to a particular classification of employees. There are also a number of “exceptions” to the general overtime law stated above. An “exception” means that overtime is paid to a certain classification of employees on a basis that differs from that stated above.
Employees are entitled to receive overtime pay after working any hours above the maximum the law affords (usually more than 40 hours per week or over eight hours per day under California law).
A “salaried employee” must meet the test for exempt status, as defined by Federal and State Laws. Under California labor law, only “salaried employees” who fall under the “white-collar” overtime exemptions category, are excused from receiving overtime premiums. The purpose of these rules is to identify employees who execute professional, creative, design, and managerial tasks from those who are craftspeople, technicians, and others with partial real supervisory responsibilities.
Employers’ Attempts To Avoid Paying Overtime Wages
Many times, employers attempt to avoid paying overtime wages by intentionally misclassifying salaried employees as “exempt” from overtime pay. As stated in California’s Labor Laws, generally all “nonexempt” employees are entitled to premium pay for overtime hours. This time either amounts to: 1) time and a half for hours worked between 8 and 12 per day or 40 hours per week and for the first eight hours worked on the seventh consecutive day of work in a workweek; or 2) double time for hours exceeding 12 hour per day and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek.
Employee Classification Laws In California
Inside sales representatives, loan consultants, IT professionals pharmaceutical sales representatives, and others work long overtime hours but are often misclassified as salaried employees and not provided premium overtime pay. Misclassified workers are entitled to four (4) years restitution of back pay (unpaid overtime), under California law.
Before an employer can avoid paying overtime, they must first establish that workers fall under one of the following exemptions:
Executive Exemption: An executive exempt from receiving California overtime wages are those employees responsible for managing the business. This responsibility includes directing at least two employee’s workload and having the authority to hire or fire other employees or recommend hiring and firing. An executive exempt from overtime payments must regularly exercise decisions independently and predominantly engages in these duties during a workday. Lastly, an executive’s salary must not be less than two times the minimum wage (currently $9 per hour in California). Learn more about Executive Exemption
Administrative Exemption: An employee classified as administrative and exempt from receiving overtime wages is one who performs office or non-manual labor work directly connected to management policies or general business operations. These duties and responsibilities can also include work performed in the administration of a school system. An exempt administrative employee also customarily exercises discretion and independent judgment and regularly assists an executive, or performs only under general supervision. Lastly, the salary must not be less than twice the minimum wage to be classified as an exempt administrative employee. Learn more about Administrative Exemption.
Professional Exemption: An employee classified as a professional and exempt from overtime wages are those licensed and certified by the state in one of the acknowledged professions: law, medicine, dentistry, optometry, architecture, engineering, teaching, or accounting. A professional is one who primarily engages in a learned or artistic profession, independently exercises discretion and judgment, and receives a salary no less than twice the minimum wage; however, pharmacists and registered nurses are not exempt professional employees and entitled to receive overtime wage, unless they separately meet the rules for exempted executive or administrative employees. Learn more about Professional Exemption.
Inside Sales Exemption: If commissions account for less than half of a sales person’s paycheck, that person may be entitled to overtime compensation. In other words, if more than half of that employee’s compensation represents commissions, overtime can be recovered. In order to classify “commissions” as wages, an employee must principally be involved in sales activities (not manufacturing or providing a service); and the employee’s compensation must be a percentage of the product or service price sold.
Outside Sales Exemption: California law dictates that an employee classified as an outside salesperson is exempt from receiving overtime as that person “customarily and regularly works more than half their working hours away from the employer’s place of business, selling tangible or intangible items or obtaining orders or contracts for products, services or use of facilities.” Cal. Code Regs., tit. 8, § 11070, subd. 2(J). This classification is determined by how the employee actually devotes his or her time and if the employee’s practice deviates from the employer’s realistic expectations.
Computer Professional Exemption: Except as provided below in paragraph 5, under California labor laws, any employee in the computer software field who is paid on an hourly basis shall be exempt under the professional exemption, if all of the following apply:
- The employee is primarily engaged in work that is intellectual or creative and requires the exercise of discretion and independent judgment.
- The employee is primarily engaged in duties that consist of one or more of the following: (a) The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software, or system functional specifications. (b) The design, development, documentation, analysis, creation, testing, or modification of computer systems or programs, including prototypes, based on and related to, user or system design specifications. (c) The documentation, testing, creation, or modification of computer programs related to the design of software or hardware for computer operating systems.
- The employee is highly skilled and is proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, and software engineering. A job title shall not be determinative of the applicability of the exemption.
- The employee’s hourly rate of pay is not less than $41.00 [the rate in effect on September 19, 2000]. The Division of Labor Statistics and Research shall adjust this pay rate on October 1 of each year to be effective on January 1 of the following year by an amount equal to the percentage increase in the California Consumer Price Index for Urban Wage Earners and Clerical Workers.
- The exemption described above does not apply to an employee if any of the following applies:
— The employee is a trainee or employee in an entry-level position who is learning to become proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, and software engineering.
— The employee is in a computer-related occupation but has not attained the level of skill and expertise necessary to work independently and without close supervision.
— The employee is engaged in the operation of computers or in the manufacture, repair, or maintenance of computer hardware and related equipment.
— The employee is an engineer, drafter, machinist, or other professional whose work is highly dependent upon or facilitated by the use of computers and computer software programs and who is skilled in computer-aided design software, including CAD/CAM, but who is not in a computer systems analysis or programming occupation.
— The employee is a writer engaged in writing material, including box labels, product descriptions, documentation, promotional material, setup and installation instructions, and other similar written information, either for print or for onscreen media or who writes or provides content material intended to be read by customers, subscribers, or visitors to computer-related media such as the World Wide Web or CD-ROMS.
— The employee is engaged in any of the activities set forth in nos. 1 through 4 above for the purpose of creating imagery for effect used in the motion picture, television, or theatrical industry.
How Bonuses Affect Overtime Pay
Is a bonus included in the regular rate of pay for purposes of calculating overtime?
Yes, if it is a “nondiscretionary” bonus. A “nondiscretionary” bonus is included in determining the regular rate of pay for computing overtime when it is based upon hours worked, production or proficiency.
“Discretionary” bonuses–sums paid as gifts at a holiday or other special occasions, such as a reward for good service, which are not measured by or dependent upon hours worked, production or efficiency, are not included for purposes of determining the regular rate of pay.
State Of California DLSE – Glossary Of Terms
Many of the terms in this article were taken directly from the California Division Of Labor Standards Enforcement (DLSE) Glossary Of Terms. Listed below are a few of the key terms used here to present the overall concept of Unpaid Overtime:
Money promised to an employee in addition to the monthly salary, hourly wage, commission or piece rate usually due as compensation. Bonuses are in addition to any other remuneration rate and may be predicated on performance over and above that which is paid for hours worked, pieces made, or sales completed. A bonus may be in the form of a gratuity where there is no promise for their payment, for example, a holiday bonus at the end of the year. Additionally, a bonus may be a contractually required payment where a promise is made that a bonus will be paid in return for a specific result, such as exceeding a minimum sales figure or piece quota, or as an inducement to remain in the employ of the employer for a certain period of time. Sums earned as bonuses are wages under the definition found in Labor Code Section 200.
Exempt status deprives an employee of certain protections of the Industrial Welfare Commission Orders.
The exemption has far-reaching ramifications since exempt status deprives the employee not only of the right to overtime compensation, but also to many of the other protections afforded to nonexempt employees by such orders. Some of the protections that do not apply to exempt employees are:
Section 3, overtime premium;
Section 4, minimum wage;
Section 5, reporting time pay;
Section 7, requirement of records under the IWC Orders (but not records required by the Labor Code);
Section 9, requirement that employer furnish uniforms and equipment (except, of course, that any expenditure by an employee is recoverable under Labor Code Section 2802).
Section 10, requirement that meals and lodging amounts be limited;
Section 11, meal period requirement; and
Section 12, rest period requirement.
Nonexempt status means that the provisions of the Industrial Welfare Commission Orders cover an employee.
All amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation. Labor Code Section 200(a) A “wage” is defined as money or other value that is received by an employee as compensation for labor or services performed. “Other value” could include room, board, clothes, and other benefits to which the employee is entitled as a part of his or her compensation.
“Workday” is defined in the Industrial Welfare Commission Orders and Labor Code § 500 for the purpose of determining when daily overtime is due. A workday is a consecutive 24-hour period beginning at the same time each calendar day, but it may begin at any time of day. The beginning of an employee’s workday need not coincide with the beginning of that employee’s shift, and an employer may establish different workdays for different shifts. However, once a workday is established it may be changed only if the change is intended to be permanent and the change is not designed to evade overtime obligations. Daily overtime is due based on the hours worked in any given workday; and the averaging of hours over two or more workdays is not allowed.
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. “Workweek” is a fixed and regularly recurring period of 168 hours, seven consecutive 24-hour periods. An employer may establish different workweeks for different employees, but once 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.
Are You Owed Unpaid Overtime Wages? Contact A San Bernardino Overtime Wage Collection Attorney
Contact the Employment Attorneys at SANFORD A. KASSEL, A Professional Law Corporation, if you feel you are due unpaid overtime wages in Orange County, San Bernardino County, or any other Southern California place of employment. Our office has over 30 years experience with Employment Law cases. We can answer your questions, and help you determine the best course of action to take. Call 909.884.6451, today. We offer free consultations to those facing unfair treatment in the California workplace.
In addition, if your employer fires you, or discriminates or retaliates against you, in any manner whatsoever, for filing or threatening to file a wage claim, you may have the grounds for filing a Discrimination or Wrongful Termination lawsuit against your employer. Please contact us to schedule an appointment for your FREE consultation with one of our experienced San Bernardino-based Employment Law Attorneys. Online Contact Form.