Overtime Pay
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Just as California and federal law differ in the minimum wage, they also differ in their treatment of overtime. Further, employees covered by a collective bargaining agreement may be subject to the overtime rules set forth by the contract. Whether or not an employee is entitled to overtime depends upon whether that employee is classified as "exempt" or "non-exempt". The terms "exempt" and "non-exempt" simply refer to whether or not an employee is exempt from overtime and other laws regulating certain working conditions for employees. An exempt employee is not entitled to overtime under the applicable laws; a non-exempt is entitled to overtime under applicable statutes or regulations. People commonly say that they are salaried when what they really mean is that they are exempt.
When An Employee Goes Into "Overtime"
The federal law is basically that an eligible employee does not earn overtime until after she or he has worked forty hours in a week. These laws are contained in the FLSA, the Fair Labor Standards Act.
Generally speaking, in California, non-exempt employees are entitled to overtime for any hours over eight in one day, over forty in one week, and for the first eight hours on the seventh consecutive day of work in a workweek (which is defined by your payroll workweek). Further, double-time must be paid for hours worked in excess of twelve in a single day or in excess of eight on the seventh consecutive day in a workweek. The California overtime rules are contained in Wage Orders issued by the Industrial Welfare Commission, part of the Department of Industrial Relations. Employers are required to post the minimum wage and overtime regulations in a conspicuous place frequented by employees.
"Comp Time"
A common misconception is that an employee can work more hours on one day and take comp time, or compensatory time off, on another day. While an employer has the ability to be flexible with its employees with regard to their time, state law still requires overtime to be paid if the number of hours on the day the employee works longer goes over eight.
Employers can require overtime
Employees often ask, "can my employer require me to work overtime?" The answer is usually yes. If an employee refuses to work overtime, and that refusal is not otherwise protected by the law, the employer can fire the employee. However, if you are an employee and you believe you have been unlawfully discharged, you should speak with a lawyer immediately.
Misclassification as Exempt
While most people have some familiarity with the basic overtime rules, employers often get into trouble when they have misclassified an employee as exempt when that person's job duties do not qualify the person as exempt from the applicable IWC wage order. For example, in 2004 the California Supreme Court ruled that a class action would be certified against a well-known drug store that had classified its assistant store managers as exempt and failed to pay them overtime.
Consequences of Failure to Pay Overtime
An employer's failure to pay minimum wage or overtime and/or double-time wages may subject an employer not only to liability for the unpaid wages but also for waiting time wage continuation, interest, attorneys fees, and costs of suit. The statute of limitations is up to four years for such claims. Employers can reduce the risk of finding themselves on the wrong side of a class action lawsuit by consulting with an attorney to ensure that they have properly classified their employees and that their pay practices are in compliance with the appropriate law.