California Overtime & Minimum Wage Regulations | Overtime FLSA

California Overtime & Minimum Wage Regulations

California Overtime & Minimum Wage Regulations

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California’s labor laws are enforced by the Division of Labor Standards Enforcement (DLSE) in the California Department of Industrial Relations.

Minimum Wage   

California’s minimum wage is scheduled for annual increases starting in 2017 which will bring the California state minimum wage up to $15 per hour for all employers as of January 1, 2023. Employers will 25 or fewer employees will pay a lower minimum wage than larger employers until 2023. Please see the chart below.

California’s minimum wage was $10.00 per hour as of January 1, 2016 and $9 per hour from July 1, 2014 through December 31, 2015.

California Minimum Wage rates for 2017 through 2023

Date
Employers with 25 Employees or Less
Employers with 26 Employees or More
January 1, 2017
10.00/hour
10.50/hour
January 1, 2018
10.50/hour
11.00/hour
January 1, 2019
11.00/hour
12.00/hour
January 1, 2020
12.00/hour
13.00/hour
January 1, 2021
13.00/hour
14.00/hour
January 1, 2022
14.00/hour
15.00/hour
January 1, 2023
15.00/hour

The current Federal minimum wage rate is $7.25 per hour, effective July 24, 2009.

Overtime Regulations  

California Labor Laws require overtime pay to be paid to non-exempt employees under the following circumstances:

  • Any hours worked over 8 per day at 1 ½ times regular pay rate
  • Any hours worked over 40 per week at 1 ½ times regular pay rate
  • First 8 hours on the 7th consecutive day worked at 1 ½ times regular pay rate
  • Any work in excess of 12 hours per day at 2 times regular rate
  • Any work in excess of 8 hours on the 7th consecutive day at 2 times regular rate

Statute of Limitations

The statute of limitation for claims alleging the non-payment of wages is two (2), three (3) or four (4) years from the date of the alleged non-payment, depending on the underlying employment agreement or the type of claim.

  • If the claim is based on an oral agreement, it must be filed within 2 years from the date the claim arose.
  • If the claim is based on a written agreement, it must be filed within 4 years from the date the claim arose.
  • If the claim is for minimum wage, unpaid overtime or other statutory claims, the claim must be filed within 3 years from the date the claim arose, but in many instances employees will be able to go back a total of 4 years under California’s unfair competition statutes.

Holidays   

Holidays are treated as regular work days. California does not require additional pay for work done on holidays nor does it require paid holidays, business closings on any holiday, or days off for any particular holiday.

Vacation

California state law does not require that employers provide either paid or unpaid vacation time. However, if paid vacation time is provided, California law considers earned vacation time as wages. Vacation time is earned as labor is performed and cannot be forfeited even upon termination of employment. An employer may place a reasonable limit on how many hours of vacation an employee may earn. Upon termination, all earned and unused vacation pay must be paid at the final rate of pay.

Meal Breaks

Employers are required to give employees the following rest and break periods:

  • 30 minute meal break if the employee works more than 5 hours per day
    • (can be waived by mutual consent if total hours worked is no more than 6 per day)
  • 2nd 30 minute meal break if the employee works more than 10 hours per day
    • (can be waived by mutual consent if total hours worked is no more than 12 per day and 1st meal period was not waived)
If the employee is not relieved of all duties, meal periods count as hours worked.

Rest Periods

  • 10 minute rest period for any 4-hour work period or major fraction thereof.
    • (Not required if total time worked is less than 3 ½ hours)
  • To be taken as close to the middle of the period as possible.
  • Counts as time worked
  • Employer can require employee to stay on the premises
The remedy for meal & rest period violations is 1 additional hour of pay. Protection against retaliation for bringing these claims is also provided.

Reporting Time Pay

California Labor Law requires reporting pay for employees who report to work expecting to work a certain number of hours but do not get to work their full schedule due to inadequate scheduling or lack of notice by the employer. The requirements are as follows:

  • If an employee works less than half of their usual or scheduled time, they must be paid for half of the scheduled time, but no less than 2 hours nor more than 4 hours.
  • If an employee reports to work a second time in 1 workday and are given less than 2 hours of work, they must be paid for 2 hours at regular rate of pay.
Reporting time pay is not counted toward hours worked in computing overtime.

Pay Periods

Per California labor laws, in general, wages must be paid at least twice a month on a payday designated by the employer. Overtime wages must be paid by the next regular payroll period following the payroll period in which the overtime wages were earned.

State Law Penalties/Remedies

Employees can recover overtime wages; meal & rest period penalties; and waiting time penalties under California labor laws. Liquidated damages of double the unpaid overtime wages is provided by Federal law, but not California law. The Private Attorney General Act of 2004 (PAGAA) allows private citizens to pursue fines for violations of the state labor law that normally only the State of California could enforce. Any fines recovered by the citizen are split with 75% going to the state and 25% going to the employee. The employee can recover these fines in addition to any other recovery to which they may be entitled. Some of the most common violations covered by PAGA include:

  • Overtime payment violations
  • Minimum Wage payment violations
  • Failure to give required meal breaks
  • Failure to pay tips & gratuities
  • Failure to reimburse for business expenses
  • Failure to include proper payroll information on paychecks.

Specific Exemptions

Some jobs are considered exempt from the overtime and labor law requirements. If the job falls within an exempt classification, the employee can lose rights to the following:

  • Overtime premium
  • Minimum Wage
  • Reporting Time Pay
  • Meal Period Requirement
  • Rest Period Requirement
  • Meal and Lodging Credit Limits
  • Uniform & Equipment Provisions
Some specific exemptions from the overtime and labor law requirements are as follows:

Executive: To be exempt as an Executive, you must be paid a weekly salary equal to at least 2 times the state minimum wage x 40 hours and:

  • Manage the business or a recognized department or division of the business
  • Direct the work of 2 or more employees or the equivalent of 80 hours per week of subordinate time
  • Have the authority to hire or fire employees or significant influence in the hiring or firing of employees
  • Exercise discretion and independent judgment
  • Engage in these activities more than 50% of the time
Administrative: A person is considered to be employed in an administrative capacity if:
  • They perform office or non-manual work related to management policies or general business operations.
  • They regularly and directly assist a proprietor or administrative employee or perform special assignments or work requiring specializing training or knowledge, under only general supervision.
  • They perform the above more than 50% of the time
  • They are paid a weekly salary equal to at least 2 times the state minimum wage x 40 hours.
Professional: An employee is considered to be an exempt professional if:
  • They are licensed by the State of California and working as a lawyer, doctor, engineer, dentist, accountant, etc.
  • They work at an occupation commonly recognized as a learned or artistic profession. Learned or artistic profession means a field requiring an advanced degree (Masters or higher) or work that is creative in nature. Such work should be predominately intellectual and varied in character. Routine mental, manual, mechanical or physical work does not qualify.
  • They must exercise discretion and independent judgment
  • Must be paid a weekly salary oequal to at least 2 times the state minimum wage x 40 hours.
Computer Professional: An employee is considered to be an exempt Computer Professional if:
  • The application of systems analysis techniques and procedures (including consulting with users) to determine hardware, software or system functional specifications; or
  • 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; or
  • The design, documentation, testing, creation or modification of computer programs related to the design of software or hardware for computer operating systems.
  • Over 50% of their time is spent in one or more of the following duties:
In addition, they must be:
  • Primarily engaged in intellectual or creative work that requires the exercise of discretion and independent judgment.
  • Highly skilled and proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming and software engineering.
  • Paid at least $42.35 per hour or an annual salary of at least $88,231.36, and paid not less than $7,352.62 per month  as of 1/1/2017 (an amount which may be adjusted each year).
The following employees do not meet the requirements for this exemption:
  • Trainees;
  • Entry-level employees and employees who lack the skill to work independently and without close supervision;
  • Employees who merely operate computers; such as engineers, drafters, machinists who use software such as CAD/CAM;
  • Employees who manufacture, repair, or maintain of computer hardware and related equipment;
  • Employees who write content for, among other things, the World Wide Web or CD-ROMs;
  • Employees who create imagery for effects used in the motion picture, television, or theatrical industry.
Prior to 2008 (between January 1, 2006 and January 1, 2008), exempt computer professional employees could be paid a salary; however, if their wage rate (based on the total hours worked) ever dropped below the minimum wage threshold, the exemption was removed. The minimum wage threshold was $47.81 for 2006 and $49.77 for 2007. As of January 1, 2008, the minimum hourly rate required to meet the Computer Professional exemption was reduced from the adjusted rate of $49.77 to $36.00 which resulted in many computer programmers being classified as exempt and no longer entitled to overtime. In September of 2008, the Computer Professional Exemption was further modified to allow either an hourly rate of not less than $36 per hour or a salary of $75,000 per year with pay of at least $6,250 per month.

Outside Salespersons: To be classified exempt as an Outside Salesperson, you must:

  • Be 18 years of age or older,
  • Regularly work more than 50% of the time away from your employer’s place of business, and
  • Sell tangible or intangible items or obtain orders or contracts for products, services, or use of facilities.

Truck Drivers: California law exempt many truck drivers from the overtime pay requirements. The regulations are specific and complex. Please contact us for an evaluation of your situation.

National Service Program Participants: National Service Programs, such as AmeriCorps, are exempt from California labor laws.

Commissioned Employees: If more than half of an employee’s pay comes from commissions and their earnings exceed 1 ½ times the minimum wage, they are exempt from California’s overtime provisions. This provision does not apply to minors.

Movie picture projectionists: Movie picture projectionists are exempt from California’s overtime pay requirements.

Radio and Television Employees: Announcers, chief engineers and news editors for radio or television stations in cities of 25,000 people or less are exempt from California’s overtime pay requirements.

Class Actions

Overtime and wage claims may be brought as a class action under California state law. The employees who bring the class action lawsuit as class representatives are usually awarded extra compensation in addition to their individual recovery as a form of “incentive pay.”

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