Understanding Hourly Employees and Overtime

Hourly employees are non-exempt and must be paid overtime for hours worked beyond the standard thresholds. California law sets specific overtime rules that differ from federal law:

•Daily Overtime: Employees must receive 1.5× their regular rate for hours worked over 8 in a day, and 2× for hours over 12.

•Weekly Overtime: Hours worked over 40 in a workweek are paid at 1.5× the regular rate.

•Seventh Consecutive Day: For non-exempt employees, the first 8 hours on the seventh consecutive workday must be paid at 1.5×, and hours beyond 8 at 2×.

Hourly employees must have accurate timekeeping, as all hours worked, including short breaks and off-the-clock work, must be compensated.

Salaried Employees: Exempt vs. Non-Exempt

Salaried employees in California can be either exempt or non-exempt depending on their duties and salary level.

Exempt Employees

•Paid a fixed salary that meets or exceeds California’s minimum salary threshold.

•Primary duties fall into an exempt category: executive, administrative, professional, or certain computer-related roles.

•Not eligible for overtime.

Non-Exempt Salaried Employees

•Paid a fixed salary but must receive overtime for hours exceeding the standard thresholds.

•Employers must track hours accurately and calculate overtime based on the regular rate of pay.

Key Takeaway: Being salaried does not automatically make an employee exempt from overtime. Employers must meet the salary basis, salary level, and duties tests to classify someone as exempt.

Common Overtime Compliance Challenges

California employers often face challenges such as:

•Misclassifying salaried employees as exempt

•Failing to track hours for non-exempt employees accurately

•Not paying daily overtime or double-time as required by law

•Ignoring overtime rules for certain industries or roles

These errors can result in back pay claims, penalties, and legal action.

Best Practices for Employers

To ensure compliance with California overtime laws, employers should:

•Conduct regular audits of employee classifications.

•Maintain accurate timekeeping systems for all non-exempt employees.

•Update handbooks and payroll policies to reflect overtime rules.

•Train managers on overtime eligibility, exemptions, and proper time tracking.

•Consult HR professionals or legal experts for complex scenarios.

Why Compliance Matters

Non-compliance can result in significant financial and operational risks, including:

•Wage and hour lawsuits

•Penalties and interest on unpaid wages

•Government audits and investigations

•Employee dissatisfaction and turnover

By understanding and applying California overtime rules correctly, employers protect their business and support fair, transparent workplace practices.

Final Thoughts

Overtime compliance in California requires careful attention to detail, proper classification, and diligent time tracking. Whether dealing with hourly or salaried employees, employers must understand the nuances of daily, weekly, and seventh-day overtime rules to remain compliant and avoid legal exposure.