California overtime laws go beyond federal requirements. Way beyond, actually. Understanding these rules—including daily thresholds, double-time provisions, and complex calculation methods—helps you structure schedules correctly, pay employees accurately, and avoid costly violations.
This guide breaks down what California employers need to know about overtime pay. We’ll cover basic requirements, calculation methods, and practical implementation strategies. Whether you’re hiring your first employee or managing a growing team, these rules apply to your business.
Key Takeaways
- California requires overtime after 8 hours daily and 40 hours weekly—more protective than the Fair Labor Standards Act, which only counts weekly hours.
- Double-time pay kicks in after 12 hours in a workday or after 8 hours on the seventh consecutive workday in a single work week.
- Exempt status requires both salary minimums and strict duties tests—title alone doesn’t determine exemption.
- The regular rate includes bonuses and commissions—not just base pay—when calculating overtime compensation.
- You must pay unauthorized overtime even when disciplining employees for policy violations, as payment and discipline are separate issues.
- Alternative workweek schedules need formal approval—informal arrangements with employees don’t protect you from overtime requirements.
California Overtime Basics: When Overtime Pay Kicks In
California overtime rules differ significantly from federal law and most other states. The Fair Labor Standards Act only requires overtime pay after 40 hours in a workweek. California triggers overtime pay in three different ways, making compliance more complex.
First, there’s daily overtime. Employees earn time and a half for hours worked beyond 8 in a single workday, up to 12 hours. Hours beyond 12 require double-time pay—twice the regular rate.
Second, weekly overtime applies to any hours over 40 in a workweek. These must be paid at 1.5 times the regular rate, regardless of daily hours.
Third, seventh-day overtime kicks in when someone works seven consecutive days in a single workweek. The first 8 hours on that seventh day require time and a half pay. Hours beyond 8 on the seventh day require double time.
Here’s what this means in practice. California employees can earn overtime hours without reaching 40 hours per week. An employee working four 10-hour days (40 total hours) still accrues 8 overtime hours. That’s 2 hours per day at time-and-a-half, simply because they exceeded 8 hours each workday.
California overtime pay laws are among the most worker-protective in the nation. They’re also among the most complex for employers to navigate.
Who’s Covered: Exempt Employees vs. Nonexempt Employees
Not all workers are eligible for overtime pay under California law. Employee classification determines overtime eligibility, and getting this wrong creates serious problems.
Nonexempt employees must receive overtime pay. This category includes most hourly employees paid on an hourly basis and some salaried employees who don’t meet exemption criteria. Many employees in retail, hospitality, manufacturing, and service industries fall into this category.
Exempt employees aren’t entitled to overtime wages. However, exemption requires meeting strict tests set by California employment law.
The first test is salary. In 2025, exempt employees must have earned at least $66,560 annually. This amount is tied to California’s minimum wage, which—again—is higher than federal standards. The salary must be guaranteed in the employment contract, regardless of hours worked.
The second test is duties. Work must primarily involve executive, administrative, professional, or computer professional responsibilities. These roles must require independent judgment and decision-making authority.
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Here’s a common mistake many California employers make. Giving someone a manager title doesn’t automatically make them exempt from overtime. Consider a “supervisor” who spends most of their time doing the same work as their team—stocking shelves, serving customers, or processing orders. They’re likely nonexempt regardless of title or salary.
It’s worth noting that independent contractors aren’t employees at all, so overtime laws don’t apply to them. However, misclassifying employees as independent contractors creates even bigger problems than overtime violations.
Why does this classification matter? Misclassifying nonexempt workers as exempt creates significant liability. Employees can file a wage claim with the labor commissioner seeking back pay for unpaid overtime, penalties, and attorney fees. An employment lawyer representing the worker can recover substantial damages. That’s why California employers should audit classifications annually as roles evolve.
Calculating the Regular Rate of Pay for Overtime
The regular rate forms the foundation for overtime pay calculation. Unfortunately, it’s not always the same as base hourly wage. This is where many employers make costly mistakes.
California labor law requires including various compensation types when determining the regular rate. You can’t just multiply someone’s base hourly rate by 1.5 and call it done. The California Labor Code specifies exactly what must be included.
Include in regular rate:
- Base hourly earnings
- Nondiscretionary bonuses (performance-based, attendance incentives)
- Commissions
- Shift differentials
- Piece-rate earnings
Exclude from regular rate:
- Discretionary bonuses (true gifts unrelated to performance)
- Expense reimbursements
- Premium pay that’s truly extra compensation
Let’s look at an example for hourly employees. An employee earning $20/hour works 45 hours and receives a $100 production bonus. The regular rate is ($20 × 45 + $100) ÷ 45 = $22.22/hour. The overtime rate becomes $22.22 × 1.5 = $33.33/hour for those 5 overtime hours.
Now consider salaried employees. A nonexempt salaried employee earns $800 weekly for 40 regular hours. Their regular rate is $800 ÷ 40 = $20/hour. Overtime pay is $20 × 1.5 = $30/hour for extra hours worked beyond 8 in a day or 40 hours in a week.
Getting the regular rate wrong means underpaying overtime wages. This creates compliance exposure and opens you up to potential wage and hour laws violations.
California Labor Law: Special Rules and Exceptions
California law includes several exceptions to standard overtime rules. These allow employers to structure work schedules differently. However, you can’t just decide to implement them on your own.
Alternative Workweek Schedules
An alternative workweek allows employees to work up to 10 hours per day without triggering daily overtime. Weekly hours still can’t exceed 40, though. This arrangement suits businesses offering 4/10 schedules—four 10-hour days.
That said, employers can’t simply implement these schedules. California requires a formal process. Employees must vote to approve the alternative workweek schedule through a secret ballot election. The employer must file proper documentation with the Division of Labor Standards Enforcement. Informal arrangements don’t provide overtime exemption protection.
Many employers try to skip these steps. They end up owing back pay for all the “overtime” hours they thought they’d avoided.
Seventh-Day Work Rules and Consecutive Work
When employees work seven consecutive days within the same 7-day work week, the seventh day triggers overtime. They receive one and a half times the regular pay for the first 8 hours. Hours beyond 8 require double-time—twice their regular hourly rate.
The consecutive work count resets when employees receive a day off. So if someone works six days, takes a day off, then works another six days, they don’t hit seventh-day overtime.
Industry-Specific Exceptions Under California Labor Code
Certain industries follow modified overtime laws under California’s Industrial Welfare Commission Wage Orders.
Healthcare workers can use the “8 and 80” rule. This lets hospitals use a 14-day work period instead of the standard 40-hour workweek.
Agricultural workers have phased overtime requirements. These vary by employer size and are being gradually aligned with standard overtime rules.
Employees covered by collective bargaining agreements may have different overtime thresholds if the union contract specifically addresses overtime pay and provides adequate alternative compensation.
Personal attendants and camp counselors have different thresholds that apply to their work.
If you’re in one of these sectors, review the specific Wage Orders for your industry. The general rules we’re discussing don’t apply to you.
Compensatory Time: Generally Not Allowed
Unlike public sector employers, most private California employers cannot offer compensatory time off instead of overtime pay. Compensatory time—or “comp time”—means giving employees paid time off instead of overtime wages. This practice violates California overtime pay laws for private sector businesses, even if employees request it.
Mandatory Overtime and Unauthorized Overtime
California employers can generally require mandatory overtime. Refusing could result in disciplinary action. However, you must still pay overtime wages for all hours of overtime work performed—including unauthorized overtime.
Here’s what this means in practice. An employee works extra hours without approval. You’re legally required to compensate them at the appropriate overtime rate. You can discipline the policy violation separately. But withholding overtime pay violates California employment law.
This is a critical point many employers miss. They think refusing to pay unauthorized overtime will discourage employees from working extra hours. It doesn’t work that way under California law. You pay first, discipline second.
This makes clear policies and accurate time tracking essential. Your employees need to understand when overtime is approved. But they also need to know they’ll be paid for all hours worked, even if those hours weren’t authorized.
Staying Compliant: Practical Steps for California Employers
Implementing California overtime rules requires systematic approaches. You need good systems for timekeeping, payroll, and workforce management. Here’s how to set them up.
Define Your Workday and Workweek
- Start by establishing a fixed 24-hour workday. For example, 12:01 AM to midnight. Then set a consistent 7-day work week, such as Sunday through Saturday.
- Document these definitions in your employee handbook. These parameters determine when overtime triggers. They also prevent confusion about which day work hours count toward.
This matters more than you might think. Employees working overnight shifts can have hours that span two calendar days. Without clear workday definitions, you might miss daily overtime requirements. And, as a quick aside, Mosey can automate your handbook updates so you’ll always be compliant with new labor laws and regulations—federal, state, and local.
Download the Handbook Update Checklist
HR leaders are in handbook busy season. This is what you need to keep your employee handbook fresh, compliant, and culture-aligned all year.
Implement Accurate Time Tracking
- Use reliable systems. Digital time clocks or time-tracking software work well because they capture actual start and end times.
- Don’t rely on scheduled hours or excessive rounding. Instead, track all compensable time. This includes meetings, training, and short breaks under 20 minutes. California considers these paid work time.
- Track meal breaks separately. Employees are entitled to a 30-minute meal break for shifts over 5 hours. This unpaid 30-minute meal break shouldn’t count toward hours worked, but only if the employee is completely relieved of duties.
- Managers should review and approve timecards before processing payroll. This catches errors before they become wage violations.
Audit Employee Classifications
- Review exempt employees’ actual duties annually. Look at what they actually do, not just their titles.
- Verify salaries meet current minimum wage-based thresholds. The exemption salary increases with California’s minimum wage. What worked last year might not meet this year’s requirements.
- Adjust classifications when roles change substantially. An employee promoted to manager might meet exemption criteria. Someone whose duties shifted toward more hands-on work might no longer qualify.
- Document your classification decisions. If you ever face a wage claim, you’ll need to show why you classified someone as exempt.
Train Managers on Overtime Laws
- Supervisors need to understand daily and weekly thresholds. This helps them spot potential overtime issues before they occur. They can adjust schedules or redistribute work to manage overtime costs.
- Clarify your policies on approving extra hours. Some companies require pre-approval for any overtime. Others give managers discretion up to a certain number of hours.
- Make clear that managers cannot discourage employees from recording all time worked. Some supervisors pressure employees to work “off the clock” or not report all their hours. This creates massive liability for your business.
Maintain Accurate Records
- California requires keeping time records for at least three years. Document all compensation: regular pay, overtime premium, double-time, and any other wages.
- Preserve records of meal and rest breaks. These tie into other California labor requirements beyond just overtime.
- Store records securely. The labor commissioner can audit your payroll practices. Complete, accurate records protect you during these reviews.
Avoiding Wage Claims: Common California Overtime Violations
Even well-intentioned employers make mistakes. These create compliance issues that can cost thousands in back pay and penalties. Understanding common violations helps you avoid them.
- Misclassifying workers as exempt based solely on title or salary is the biggest problem. You must verify duties meet exemption criteria. An “assistant manager” spending 80% of their time on the sales floor isn’t exempt.
- Forgetting to include bonuses and commissions when calculating the regular rate is another common error. This leads to underpaid overtime compensation. Every time you pay a bonus, you need to recalculate the regular rate for that pay period.
- Requiring off-the-clock work creates liability. This includes pre-shift preparation or post-shift cleanup that goes unrecorded. If employees need to arrive 15 minutes early to set up their workspace, those 15 minutes count as work time.
- Not paying for short breaks under 20 minutes violates California law. These breaks are compensable. Only unpaid meal breaks of 30 minutes or more can be excluded from hours worked.
- Confusing workday definitions for employees working overnight shifts often leads to missed daily overtime. Be especially careful with shifts that cross midnight. Your workday definition determines which calendar day those hours count toward.
- Assuming all salaried employees are exempt is wrong. Many salaried workers qualify as nonexempt employees. They need overtime just like hourly workers paid on an hourly basis.
- Failing to track remote work hours accurately creates problems. This especially affects hourly employees working from home. They need a way to clock in and out just like office workers.
Each violation exposes employers to wage claims, back pay obligations, penalties, and attorney fees. An employment lawyer can help workers recover damages that include waiting time penalties and interest. Prevention through proper systems beats addressing violations after they occur.
California Overtime Laws and Labor Rules: Stay Compliant With Mosey
California’s overtime requirements are detailed. However, compliance is completely manageable with proper systems in place.
Remember, accurate overtime payment isn’t just about avoiding penalties. It’s about fair compensation that builds workplace trust and reduces turnover. Employees who feel fairly paid stick around longer.
Start by reviewing your current practices against these requirements. Verify employee classifications align with actual duties. Ensure your timekeeping captures all hours worked. Train managers to understand when overtime triggers and how to manage schedules effectively.
As your business grows or expands to other states, maintaining compliant practices becomes more complex. Like it or not, every state has its own overtime thresholds, recordkeeping rules, and pay requirements. So, what’s compliant in California might not be in New York or Texas. For growing teams, tracking all those differences manually eats up hours and increases risk.
That’s where Mosey helps. We automate the messy, manual parts of multi-state compliance so HR and finance teams can stop chasing deadlines and start focusing on strategy. Mosey keeps you current on every state’s employment and business requirements—handling registrations, annual reports, and critical filing deadlines automatically. And that’s just for starters.
With Mosey, you’ll spend less time worrying about compliance gaps and more time leading your team forward.
Ready to simplify your compliance? Schedule a free demo with Mosey to see how our platform helps businesses stay compliant across all 50 states.
Frequently Asked Questions About California Overtime
Is overtime after 8 hours or 40 hours in California?
In California, overtime is required after both 8 hours in a single workday and after 40 hours in a workweek. Whichever threshold you hit first triggers overtime pay at time and a half times the regular rate.
How do I calculate overtime in California?
To calculate overtime in California, first determine the employee’s regular rate by dividing total weekly pay (including bonuses) by total hours worked, then multiply that rate by 1.5 for standard overtime or by 2 for double-time. You must track both daily and weekly hours separately since California requires overtime calculation for both.
What are the overtime exempt rules in California?
To be exempt from overtime in California, employees must earn at least $66,560 annually (in 2025) and spend more than half their time on executive, administrative, or professional duties requiring independent judgment. Both the salary test and the duties test must be met for exemption to apply.
Is the 7 minute rule legal in California?
The 7 minute rounding rule is legal in California if applied neutrally and doesn’t systematically favor the employer. However, many California employers now avoid rounding entirely and pay for exact minutes worked to eliminate compliance risk.
Is overtime taxed at a higher rate in CA?
No, overtime is not taxed at a higher rate in California—it’s taxed the same as regular wages. The confusion happens because overtime increases your total paycheck for that pay period, which may result in higher tax withholding, but your actual tax rate remains the same.
