Posted on March 19th, 2020
Want to find out how to calculate overtime in California in 2020? Here’s the 2020 guide filled with everything you need to know!
Many workers experience the struggle to get up on Monday morning and start the work week all over again—but some spend extra time at their jobs, and naturally, we should reward such dedication.
Compensating your employees correctly for their overtime can assure their willingness to put in the extra hours in the future.
In California, it’s easy to make sure your employees are correctly paid for the time. Overtime is regulated by California state laws and rewards employees generously.
Overtime in California might not be overly tricky, but the laws still have their own intricacies. In this article, we’ll take a look at how the state incentivizes workers to give their best for the business.
Let’s dive in!
Payments and Exempt Salary
California has had the luxury of obeying local state laws rather than federal ones.
This is subject to change. But, focusing on local regulations has been in California’s best interest. In fact, the minimum wage has increased for several years and is predicted to continue to rise for years to come.
For 2020, the state’s residents will have a $13/hour minimum wage. Working full-time, they’ll earn $4,500 per month. This salary threshold is set to grow to $5,000 by 2022.
Certain territories within California might have an even higher minimum wage, but these are the numbers on which we calculate the exempt salary.
Law in California lists all the employees as non-exempt by default. This means they are all covered by the Industrial Welfare Commission (IWC).
This includes regulations on wages, hours, and overtime pay. An employer, however, can classify the employee as exempt if the worker meets specific requirements.
Overtime in California
If your workers are residents of the state and classified as non-exempt employees, know that all their time above the standard work-day is paid with a 1.5 increase rate per hour.
Overtime in California comprises hours worked outside of the standard 8-hours per day, and instances when employees work over 40-hours per week.
If they work for the entire week (Monday to Sunday) without breaks or days off, it also entitles employees to have overtime payments for the 8-hours of the seventh day.
If an employee works over 12 hours per day or over 8 hours on the seventh day of the same week, they can demand their employer pay them double for the overtime hours.
However, if your employees work a lot of overtime that falls into different categories, you as the employer have the right to only pay for one of them.
Basically, if they work 9 hours each day for a week, they will have either 1 hour of overtime for a workday or 5 hours for a workweek.
This means the numbers aren’t counted towards two different amounts. And their overtime has only to be compensated once to avoid pyramiding.
How to Calculate Overtime
While few enjoy working more than required, California offers benefits for their workers.
There’s the aforementioned increased rate, but laws regarding overtime in California favorably leans towards the employee. They are paid based on the higher number.
For example, let’s say they work 10-hour shifts during a 6-day work-week, and then also have to work 8 hours on Sunday. This means their overtime is 12 hours for the workweek and 8 hours during the seventh day.
This means there’s a total of 20 overtime hours. But if we count the workweek’s hours, they get 28 overtime hours per week.
The payment for the total overtime can be for 20 direct overtime hours or the 28 overtime hours the employee accumulated during the week. They’re entitled to the fee based on the higher number, which in this case is 28.
Exceptional Cases
It should be noted, not all the working force in the state can aim for overtime payments.
They exclude certain professions from the laws related to overtime in California.
These include administrative or executive positions, employees of AmeriCorps, or even some commissioned workers.
The family of the employer also cannot benefit from the overtime. If the state or city employs you, you won’t get overtime rates either.
But keep in mind, some professions might be exempt from only certain forms of overtime payment, such as seventh-day payments.
Sometimes the lack of paid overtime in California doesn’t rely on the profession but the work. If an employee works under the Collective Bargaining Agreement, they will be an exception to overtime laws.
The overtime also isn’t valid if they work with alternating schedules, such as working 9-hour shifts for four days a week.
Residential caregivers are also an exception to the established overtime law. But keep in mind that these exceptions might be subjected to overtime pay in certain circumstances.
Overtime Violations
Despite your best efforts, specific calculation errors might still happen.
There are several reasons why overtime violations could occur.
Maybe employers treat their workers as exempt, or perhaps they don’t pay for the full hours the employees worked. Sometimes employees work off the clock, and it could confuse numbers for some.
It could also happen that workers are considered independent contractors, and thus, their overtime rules change.
Whatever the reason is, know that employees have the right to their full wages. They can recover payment for overtime in California as back pay.
According to laws, if you withhold pay from them, your employees have the right to damages and attorney’s fees. So to avoid legal disputes, take special care to pay your employees correctly for their overtime.
Ready to Calculate Overtime?
California laws aren’t the enemy of the hard-working residents.
With the increasing minimum wage comes higher pays for overtime.
The time your workers dedicate to their careers and your business is compensated by paying them favorably.
However, to make sure you compensate your employees fairly, stay informed—it’s not uncommon for miscalculation or negligence to happen.
By mindfully following the laws for overtime in California, you can encourage employees to invest more time in your business and consider this element of the job as a perk, keeping morale high.
If you need additional info or help, please contact us.
