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Managing Overtime in California

California's wage and hour laws are unlike any other state, which can make them a challenge to correctly interpret. Recently, two well-known northern California employers were named in separate class action lawsuits regarding failing to properly pay overtime. What does this mean for employers across California? A clear, well- defined and consistently followed policy is essential.

In California, an employee earns one-and-one-half times their regular rate of pay when they work over eight hours in a day and during the first eight hours of their seventh consecutive day in a defined work week. Employee's earn double their regular rate of pay when they work 12 hours or more in a day or more than eight hours on their seventh consecutive day in a defined work week. Employers should also consider any applicable federal overtime laws and industry specific requirements.

The employee's regular rate of pay is used when calculating overtime as opposed to their normal hourly rate of pay. An employee's regular rate of pay may include their base rate of pay plus commissions, bonus or piece work earnings.

Two critical components to a company's practice and policy should include language stating that "off the clock" work or not reporting direct time worked is a violation of company policy. An employee who shows up early for their shift or stays late after their shift should not be clocked in if they are not performing work on behalf of the company.

Employers can and should require employees to approve their time sheets at the end of each pay period. This ensures the employee has acknowledged they were given their meal and rest breaks as well as stating that any overtime worked was approved. This can help decrease future claims of unpaid overtime or missed breaks.

Some employers opt to make employees "salaried", in an effort to avoid being subject to timekeeping and overtime requirements. We will address this approach in a future post.

Now is the time to review your time tracking and overtime policy. A consultant is available to review your current policy or assist in the creation of a new policy.