Overtime

An employee is generally entitled to receive overtime pay when they have worked over 40 hours per week or 8 hours per hay. The type of work performed by the employee is one of the main factors used to determine whether s/he is entitled to overtime compensation. Under Federal and California law, the burden of proof is on the employer (not the employee) to show that they paid the employee correctly. It does not matter whether an employee is hourly or paid based on salary. It is the activities performed and the time spent on the job that will determine whether an employee is entitled to overtime pay. An employee will be entitled to overtime pay unless the employer proves that the employee is “exempt”.  Common exemptions are described below.

How to Calculate Overtime Pay

Employees are generally entitled to overtime pay for each hour worked over 40 hours per week or 8 hours per day. An employee must be paid 1½ times their regular rate of pay. The way to calculate overtime pay for a salaried employee is to take the hourly rate of non-overtime compensation (based on 40 hours per week), and then multiply it by 1½ times for each overtime hour worked.

For example, if the employee worked 6 hours of overtime (46 hours in a week), and has a base salary of $500/week, s/he would be entitled to $112.50 of overtime pay. His/her hourly wage would be $12.50 ($500/40 hours). The hourly wage would then be multiplied by 1½ times ($12.50 X 1.5) in order to determine the wage rate per overtime hour ($18.75). The overtime hourly wage would then be multiplied by the number of overtime hours worked (6) in order to determined how much overtime should be paid ($112.50).

Employers are prohibited from including overtime pay in bonuses or lump payments. This holds true regardless of the amount of overtime an employee has worked.

Can You Recover Overtime Earned Years Ago?

Yes. Employees in California are able to recover overtime pay that was earned (but not paid) as far back as 4 years ago.

Exemptions

Typical exemptions from overtime pay include Executive Exemption, Outside Salesperson Exemption, Administrative Exemption, Professional Exemption, and the Computer Software Professional Exemption.

An Executive Exemption will generally apply if the employee has dedicated over half of their work time to the management of a business, or a department of the business.

The Outside Salesperson Exemption may apply if the employee works outside the office and generally concludes most of their business away from the workplace.

Administrative Exemption can apply to employees who play a role in “servicing” specific business matters. Those who assist someone else who is “exempt” may also be classified as “exempt” under the Administrative Exemption.

A Professional Exemption can apply if the employee works in a "learned or artistic" field, or works under a license to practice in their profession.

Computer Software Professional Exemption can apply if the employee earns over $41.00/hour, or works in highly theoretical areas of computer software.