Calculating Overtime Step by Step – California Guide

 

KNOW THE CALIFORNIA STATE MINIMUM WAGE   An employee’s overtime pay rate is based on their hourly wage, which is often the minimum wage for many.
  California’s minimum hourly wage is $9.00  
  California’s minimum wage will rise to $10 an hour in January 2016.  
KNOW WHICH EMPLOYEES ARE ELIGIBLE FOR OVERTIME   The burden of showing that an employee qualifies under the executive exemption (or any other overtime exemption) is on the employer. [See below.]
    Classify workers as exempt or non-exempt by applying state guidelines.
    Don’t use embellished or misleading titles to avoid overtime pay obligations
CALCULATING OVERTIME PAY    
 

Calculate overtime hours.

 

Determine the overtime pay rate by multiplying the regular rate of pay by 1.5
  Count the double time hours if worked. For any double time hours, figure the double time rate and multiply the regular rate of pay by two.
OTHER CALIFORNIA RULES California also grants an employee who works over 12 hours a day double their regular rate of pay for time worked in excess of 12 hours. For example, an employee who works 13 hours a day is to receive his or her regular rate of pay for the first eight hours, 1.5 times premium pay for the next four hours, and then double their regular rate of pay for the final hour.
  California also awards overtime pay to employees who work seven consecutive days. On the seventh day, the employee receives 1.5 times his or her regular rate of pay for the first eight hours worked on this day.
    If the employee works more than eight hours on the seventh day, the employee receives double their regular rate of pay.
LOCAL MINIMUM WAGES If the local minimum wage is higher, an employee’s regular rate cannot be less than the local minimum wage.  
  Berkeley $10.00 since October 1, 2014; will increase to $11.00 effective October 1, 2015 and to $12.53 effective October 1, 2016.
  Emeryville $14.44 for businesses with 56 or more employees; $12.75 for businesses with 55 employees or less, effective July, 2015.
  Jackson Rancheria $10.60 since January 1, 2014 on the Tribe’s sovereign 1,500-acre reservation in Amador County.
  City and County of Los Angeles Will increase to $15.00 by 2020. Unions are exempt from Los Angeles’s minimum wage law.
  Mountain View Beginning 7/1/15 minimum wage is $10.30 per hour
  Oakland $12.25 since March 2, 2014. Unions are exempt from Oakland’s minimum wage law.
  Richmond Beginning 1/1/15 through 12/31/15 minimum wage is $9.60 per hour…1/1/16 through 12/31/16 minimum wage is $11.52 per hour…1/1/17 through 12/31/17 minimum wage is $12.30 per hour…1/1/18 minimum wage is $13.00 per hour
  San Francisco $12.25 since May 1, 2015 and will increase to $15.00 by 2018. Unions are exempt from San Francisco’s minimum wage law.
  San Jose $10.30 since January 1, 2015. Unions are exempt from San Jose’s minimum wage law.
  City of San Diego Not Effective Pending Referendum. Beginning 1/1/17 minimum wage is $11.50 per hour
ALTERNATIVE WORKWEEK SCHEDULE An employer is permitted to implement an alternative workweek schedule without having to pay overtime. An alternative workweek schedule is defined by the Industrial Welfare Commission of the State of California as a schedule wherein an employee works no more than 10 hours a day or 40 hours a workweek.
    For instance, an employer could let employees work four 10-hour workdays instead of five 8-hour days.
  Remember that alternative workweek schedules are not designed for merely a few employees who want flexibility.  
  With some exceptions, everyone in the work unit must work the alternative workweek. The Labor Code defines a “work unit” as a division, department, job classification, shift, separate physical location, or recognized subdivision of any work unit.
  Under an alternative workweek schedule, an employer would only be required to pay overtime if an employee worked over the permissible hours in a day or week. If an employee who typically works 10 hours per day for four days on an alternative workweek schedule works 11 hours in one workday, he or she would be entitled to 1.50 times his or her regular rate of pay for the 11th hour.
    If an employee on an alternative workweek schedule works 12 or more hours in a workday, or more than 40 hours in a workweek, he or she would be entitled to twice his or her regular rate of pay.
  No day in an alternative work schedule can be less than four hours.  
EXEMPT EMPLOYEES An employer may be not have to pay overtime to an employee if the employee fits within one of the several employee exemptions.

For an employee to qualify under the executive exemption, that position must require the employee to do the following:

·   Customarily and regularly supervise at least two other employees;

·   Manage the enterprise in which he or she is employed or one of its customarily recognized departments;

·   Have the authority to hire and fire employees or to make recommendations for such action;

·   Customarily and regularly exercise discretion and independent judgment;

·   Earn a monthly salary of at least twice the minimum wage (currently $3,120 per month ); and

·   Be primarily engaged in exempt duties.

  This only needs to be 51% o of the time he or she works. Note that if an employee is performing an exempt and a non-exempt duty at the same time while supervising an employee, the non-exempt duty is counted.
TYPES OF PAY The formula for calculating the regular rate of pay depends on the type of pay. Any of the common kinds of pay count as regular pay. Hourly pay, salary, commissions, and piece rate.
Hourly Pay

Regular Rate of Pay

= Hourly Pay.

Bonuses paid for work during productive work hours count as regular pay if the bonuses are paid for the worked hours, the productivity, or proficiency.
Salary

Regular Rate of Pay

= Weekly salary of 40 hours

Weekly salary

= annual salary of 52 weeks

 

Annual salary

= monthly salary x 12 months

    Other bonuses rewarding the employee for something other than hours worked, productivity, or proficiency do not count in regular pay, such as gifts and rewards for good service
Piece Rate or Commission

Regular Rate of Pay = Piece Rate or Regular Rate of Pay = Commission;

or

Regular Rate of Pay = total earned during work week / total hours worked during work week.

Total earnings include money earned during overtime hours.

Total hours include hours worked during overtime hours.

Group Rate A group rate can also be used for piece rate workers.  
 

Regular Rate of Pay

= Pay received by a worker/total hours worked by a worker.

 
 

Pay

= Total number of pieces produced/number of productive workers in group.

 
Employee with Different Pay Rates An employee who works two or more shifts at different pay rates A weighted average is used to calculate the regular rate.
 

Regular Rate of Pay

= [(hours 1 x rate 1) + (hours 2 x rate 2)]/(total hours).

 

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