CA Wage and Hour Law Basics with Overtime Exemptions Info
Subject to limited exceptions, all hourly employees in California must earn at least the minimum wage set forth in the applicable IWC Wage Order, as adjusted periodically by Minimum Wage Orders. The current minimum wage is $8.00 per hour, effective January 1, 2008. Lab C §1182.12; Wage Order No. MW-2007. On July 24, 2009, the federal minimum wage increased from $6.55 to $7.25 per hour. 29 USC §206(a)(1).
All California workers are entitled to overtime pay for work in excess of maximum standards, unless they fall into one of the narrowly defined overtime exemptions. Work in excess of 8 hours in one workday, or in excess of 40 hours in one workweek, and the first 8 hours worked on the seventh day of work in any one workweek, must be paid at a rate no less than one and one-half times the employee's regular rate of pay.
A minimum of twice the employee's regular rate of pay is owed for work in excess of 12 hours in one day and any work in excess of 8 hours on the seventh day of a workweek. The overtime rate paid to salaried nonexempt employees is based on a regular rate of 1/40th of the weekly salary. Lab C §515(d). Employers are not required to combine more than one rate of overtime compensation to calculate the amount to be paid to an employee for any hour of overtime work. Lab C §510(a). These rules do not apply to employees paid under an alternative workweek schedule. Lab C §510(a); see Lab C §§511, 514, 554; "workday" for purposes of calculating overtime is defined as any shift of more than 8 hours of consecutive work, including an off-duty meal period. A "workweek" is defined as any seven consecutive 24-hour periods, starting with the same calendar day each week, beginning at any hour on any day, as long as it is fixed and regularly recurring. Seventh-day overtime is calculated on the employer's defined workweek and is earned only when all workdays occur within the employer's designated workweek. Wage Order Nos. 1-2001-16-2001, §2(Q) (8 Cal Code Regs §§11010-11160, §2(Q)). An employer may not designate a workweek in a manner designed to evade overtime obligations.
Employees may not waive their right to overtime pay. Notwithstanding any agreement to work for a lesser wage, any employee receiving less than the applicable legal minimum wage or the legal overtime compensation is entitled to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation, plus interest, reasonable attorney fees, and costs of suit. Lab C §1194(a). Effective January 1, 2013, payment of a fixed salary to a nonexempt employee shall be deemed to provide compensation only for the employee's regular, nonovertime hours, notwithstanding any private agreement to the contrary. Lab C §515(d)(2).
An employer may not engage in a subterfuge or artifice designed to evade the overtime laws. "Shift differentials," increased hourly rates paid to employees to work less desirable shifts, are permissible when there is bona fide support for the differential and it is not merely a subterfuge to avoid payment of overtime premiums. Employers do not violate the federal Fair Labor Standards Act by paying employees who choose a 12-hour shift a higher amount per hour than those who choose an 8-hour shift.
California wage-and-hour laws contain complete and partial overtime pay exemptions for certain employees. Exemptions include:
- Salaried executive, administrative, and professional employees;
- Outside salespersons;
- Specified commissioned inside salespersons;
- High-level computer professionals; and
- Employees covered by a collective bargaining agreement under certain circumstances.
Employees falling within any of the above classifications are completely exempt from the overtime pay requirements established by the wage orders; otherwise, employees are presumed to qualify for premium overtime pay. Because overtime laws arise out of recognition that the workplace puts employees in a weaker bargaining position than employers, exemptions from statutory mandatory overtime provisions are narrowly construed in favor of employees. The assertion of an exemption from the overtime laws is considered an affirmative defense, and the burden of proof in cases brought by employees seeking to recover unpaid overtime premiums shifts to the employer.
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