Overtime laws in California differ from the federal laws. If you have employees in California, you need to know your overtime obligations. In a CER webinar titled “Exemption Audits in California: Practical Strategies for Conducting a Successful Self-Audit of Your Job Classifications,” Allen M. Kato outlined some overtime basics for us to help employers understand overtime law in California.
Basics of Overtime Law in California
When is a worker entitled to overtime pay? Kato explained during the webinar that to qualify for overtime, an individual must “be an employee – not an independent contractor – and the individual must be nonexempt.” Beyond that, overtime must be paid. If you have a nonexempt employee who works beyond a specified number of hours per week or per day, overtime is due. Under federal law, this comes into play after 40 hours of work in a week. Under California law, it comes into play after 8 hours worked in a day or any work on the seventh consecutive day in the workweek.
“In order to be properly classified as exempt in California, the individual or the position must qualify under both the federal FLSA and California law.” Kato told us. “In general, California law is more restrictive for employers.”
An important issue to remember is that overtime pay is owed, regardless of whether management approved the hours. Even if the overtime work was forbidden, it still must be paid. In practical terms, this means you must pay for the overtime regardless. That said, if overtime was forbidden but an employee worked anyway, you can discipline – or even terminate – the employee accordingly for violation of instructions.
Another question that often comes up is whether an employee can waive their right to overtime pay. In general, a waiver of overtime is void as it is against public policy. Overtime hours worked must be paid.
Overtime Law in California: What Salary Level is Required to be Exempt?
All of the overtime basics are applicable for nonexempt employees. However, if an employee is classified as exempt, then the overtime laws will not apply. While there are many specifics that you need to understand regarding the proper classification of exempt or nonexempt employees, the very first hurdle is the salary basis test – it is required for all of the major exemption classifications.
“In order to be exempt, the individual has to be paid a minimum of at least $33,280 on an annual salary basis.” Kato noted. “If the salary is less than that, then they are nonexempt and they are entitled to overtime because they’ve not met the salary basis test.” None of the other exemption qualifications will matter if this is not met. This figure comes from the state requirement that an exempt individual must be paid a salary equivalent to no less than twice the state’s minimum wage rate, which is currently $8/hour. While being paid at least this amount is not the only requirement for exempt status, it is the first requirement that must be met before an employee could be considered exempt.
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Allen Kato is an attorney in the Employment Practices Group of Fenwick & West LLP in San Francisco. His practice concentrates exclusively on representing management in equal employment opportunity, wage and hour, wrongful termination, privacy, unfair competition, and trade secret matters, and litigating individual and class action lawsuits before courts and agencies.