5 Questions

Don't Be Deceived! Does your employer pay you all you are owed?

Some employers illegally claim that a salaried employee with a management title is not entitled to overtime pay. In fact, your title and method of compensation have nothing to do with your right to overtime pay in California.

What is the required overtime pay rate in California?

The minimum overtime pay rate is 1.5 times the normal hourly pay rate for every hour worked in excess of forty hours in a week. Under certain circumstances the overtime pay rate is increaded to double the normal hourly rate.

How is overtime calculated if an employee is paid a salary?

The employee's hourly rate is calculated by dividing the employees annual salary, including bonus, by the number of hours worked in a normal work year (i.e., 2,080 hours). For example, an employee paid an annual salary of $25,000 (including bonus) has an equivalent hourly rate of:

$25,000/2,080 hours = $12.02/hour

Some employers illegally claim that a salaried employee with a management title is not entitled to overtime pay. In fact, your title and method of compensation have nothing to do with your right to overtime pay in California.

Try our hourly wage calculator.

Can my employer terminate my employment if I exercise my legal rights?

NO! It is against the law for an employer to take any retaliatory action against an employee in response to an employee exercising a legal right such as seeking overtime pay, or other legally required employment benefits. Such conduct by an employer exposes the employer to further legal action for all damages caused by the retaliation -- including claims for punitive damages.

How does an employee prove work time if no time records were kept?

Employers have a legal obligation to keep accurate time records for all employees entitled to overtime pay. An employer's failure to maintain such records does not impact an employee's right to claim overtime. The employee's hours can be based upon employee testimony which approximates the number of hours worked. Employees are allowed to testify from memory based upon the approximate or average number of hours worked in a day/week/month. That approximation is controlling unless the employer can respond with more credible evidence to contradict the employee's testimony.

Can my employer request that I waive overtime?

NO! It is illegal for an employer to enter into an agreement with an employee whereby an employee waives overtime compensation. Any such agreements are void.

Do your case justice. Contact Righetti Law Firm, P.C. for either a free private and confidential case evalution, or to better understand your legal rights.

Employment Litigation

Employment Cases

Do you know your rights as an employee in California?

Does your employer pay you all you are owed? Some employers illegally claim that salaried employees, employees with a management title, or employees with management and/or administrative duties, are not entitled to overtime pay. In fact, your title and method of compensation have nothing to do with your right to overtime pay in California. And, under California law, the fact that you have managerial duties and/or perform administrative tasks does not necessarily mean you are exempt from overtime entitlement.

Are you paid on an hourly basis?

More information about hourly wages

How to determine if you are being paid properly

Begin with the notion that every employee in California is presumed to be entitled to overtime.

  1. Any time that you work in excess of 8 hours in a day or 40 hours in a week you are required to be compensated at a rate of 1.5 times your normal rate. To determine your normal rate if you are paid a salary view our hourly wage calculator.
  2. Any time that you work in excess of 12 hours in a day you are required to be compensated at a rate of 2 times your normal rate.

Some positions are exempt from overtime payment requirements

Exempt means that there are exceptions to the above-referenced rule, and for some positions, overtime pay is not required. There are seven total categories of exemptions according to the Industrial Welfare Commission. Exemption claims are narrowly construed against the employer and the employer bears the burden of showing all the criteria for exempt status. Some exemption categories affect employees in the following professional sectors:

Retail/Restaurant and Hotel

The California labor code requires that in order for retail employees to be exempt from overtime all of the following must apply:

  1. You must be primarily (over 50% of your time) engaged in duties which meet the test of the exemption. Examples of exempt work include:
    • interviewing, selecting, and training employees,
    • recommending pay rates and hours,
    • directing work, keeping production records of subordinates for use in supervision, evaluating the efficiency and productivity of employees,
    • handling employee complaints,
    • disciplining employees,
    • planning and/or distributing work,
    • providing for the safety of employees and property,
    • recommending changes in status, and
    • controlling revenues and expenses.
    In contrast, examples of non-exempt work include:
    • Performing the same kind of work as subordinate employees,
    • Performing any production or service work, even though not like that performed by subordinates, which is not part of supervisory function.
    • Making sales, replenishing stock, returning stock to shelves, except for supervisory training or demonstration purposes.
    • Performing routine clerical duties, such as bookkeeping, cashiering, billing, filing, or operating office machines.
    • Checking and inspecting goods as a production operation, rather than as a supervisory function.
    • Performing maintenance work.
  2. You must regularly direct and supervise the work of two or more other employees;
  3. You must have the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring or firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight;
  4. You must customarily and regularly exercises discretion and independent judgment;
  5. Your responsibilities must include the management of the enterprise in which you are employed or of a customarily recognized department or subdivision thereof;
  6. You must also earn a monthly salary equivalent to no less than two (2) times the state minimum wage for full-time employment.

Take our overtime entitlement test for retail employees.

Computer Software/Systems Administrator

The California labor code requires that in order for computer software employees to be exempt from overtime all of the following must apply:

  1. Your hourly rate must be no less than $45.84. This hourly rate extends to all hours worked, not just for an average 40-hour week. For example, if an employee works only 40 hours a week, their minimum salary based on the required hourly rate must be $95,347.20. However, if an employee works more than 40 hours per week then the employer must provide extra pay at the rate of no less than $45.84 for every overtime hour worked. Thus, if an employee typically works 50 hours a week then his/her minimum salary would need to be $119,184.00. If an employer fails to pay at least $45.84 for every hour worked then the employer will lose the exemption defense and will need to pay extra wages for every overtime hour worked calculated using the overtime premium of 1.5 times the normal rate.
  2. You are primarily engaged in creative or intellectual work in which you must regularly exercise discretion and independent judgment.
  3. You must be "highly skilled and proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, and software engineering."
  4. Your primary duties must include:
    • The application of systems analysis techniques and procedures including consulting with users to determine hardware software or system functional specifications.
    • The design, development, documentation, analysis, creation, testing, or modification of computer systems or programs, including prototypes, based on and related to, user or system design specifications.
    • The documentation, testing, creation, or modification of computer programs related to the design of software or hardware for computer operating systems.

Administrative Exemption

The administrative exemption is designed for employees who perform office or non-manual work that directly relates to the management or the general business operations of the employer or employer's customers. Importantly, the phrase "directly related to management policies or general business operations of his employer or his employer's customers" describes those types of activities relating to the administrative operations of a business, as distinguished from "production" or, in a retail or service establishment, "sales" work. Thus, white-collar employees who do not "administer" but who "produce" an employer's goods or services have been held non-exempt. As explained by the 5th Circuit court in Dalheim, "[t]he distinction... is between those employees whose primary duty is administering the business affairs of the enterprise from those whose primary duty is producing the commodity or commodities, whether goods or services, that the enterprise exists to produce and market." 918 F.2d at 1230.

To summarize, employees who are "production workers" are not exempt from overtime. Every business, whether it is a car dealership, a widget manufacturer, or a court system has an "administration" which is typically comprised of executives, budget and accounting, marketing, human resources, planning, payroll and similar functions. The administrative exemption applies only to those who directly support these functions.

Outside Sales Exemption

The outside sales exemption is designed for employees who are primarily engaged (over 50% of their time) in making sales, or selling contracts or orders for specific services or facility use for which payment will be made by the client. Outside salespeople, as defined by the Industrial Welfare Commission (IWC) means any person who customarily and regularly works more than half his working time away from the employer's place of business selling products or services. Generally, this means the employee makes his sales at his customer's place of business.

If an employee spends his/her time engaged in outside activities other than sales (such as, for example, delivering product) then that time must be distinguished from "sales" time because the exemption only applies to those who are primarily engaged in outside sales activities.

Commission Sales Exemption

The commission sales exemption is designed for employees covered by Wage Orders 4 and 7 (workers in retail, technical, clerical, mechanical and similarly employed industries). The commission sales exemption requires that the employee be principally engaged in selling (i.e., over 50% of the working hours) and receive more than 50% of his or her compensation from commissions on goods or services. In order to constitute commissions, the compensation received must be based on a percentage of the sale price of the product or service.

Further, under the Fair Labor Standards Act the commission sales exemption is not available unless the business has a retail concept. Many financial service businesses such as banks, stock brokers and other financial service brokers by definition lack a retail concept and cannot claim the commission sales exemption under the FLSA.

Other statutory benefits under california law

Meal Periods Under California law no employer shall employ any person for a work period of more than five (5) hours without an off duty meal period of not less than 30 minutes, except that when a work period of not more than six (6) hours will complete the day's work the meal period may be waived by mutual consent of the employer and the employee. Unless the employee is relieved of all duty during a 30 minute meal period, the meal period shall be considered an "on duty" meal period and counted as time worked. An "on duty" meal period shall be permitted only when the nature of the work prevents an employee from being relieved of all duty and when by written agreement between the parties an on-the-job paid meal period is agreed to. Further employers must keep time records showing whether meal periods are taken. Failure to comply with the meal period laws subjects the employer to liability for one hour of pay for each violation.

More information about meal periods

Rest Breaks Under California law every employer shall authorize and permit all employees to take off duty rest periods, which insofar as practicable shall be in the middle of each work period. The authorized rest period time shall be based on the total hours worked daily at the rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof. However, a rest period need not be authorized for employees whose total daily work time is less than three and one-half (3 1/2) hours. Authorized rest period time shall be counted as hours worked for which there shall be no deduction from wages. Failure to comply with the rest break laws subjects the employer to liability for one hour of pay for each violation.

More information about rest breaks

Vacation benefits In California, if an employer has an established policy, practice, or agreement to provide paid vacation, then certain restrictions are placed on the employer as to how it fulfills its obligation to provide vacation pay. Under California law, earned vacation time is considered wages, and vacation time is earned, or vests, as labor is performed. For example, if an employee is entitled to two weeks (10 work days) of vacation per year, after six months of work he or she will have earned five days of vacation. Vacation pay accrues (adds up) as it is earned, and cannot be forfeited, even upon termination of employment, regardless of the reason for the termination. The DLSE has held that an employer can place a reasonable cap on vacation benefits that prevents an employee from earning vacation over a certain amount of hours. Upon termination of employment all earned and unused vacation must be paid to the employee at his or her final rate of pay.

More information about vacation benefits

Deductions Under California law, it is illegal for an employer to make deductions from an employee's wages due to a mistake or accident resulting in cash shortages, property damage or breakage. According to California courts, mistakes are inevitable and businesses have to bear such losses as normal business expenses. Therefore, if an employee drops a tray of wine glasses or a customer walks out without paying a check, the employer cannot deduct the loss from an employee's paycheck. In addition, it is also illegal for an employer to deduct expenses such as workers compensation, insurance or claims from an employee's check. Some other illegal deductions are listed below:

Gratuity An employer cannot take gratuity that was left for an employee. However, tip sharing or tip pooling is allowed if it is pooled by the employees who directly support customers.

Uniforms If a uniform is required for employees, the employer must cover all costs of the uniform. So if the employer is a clothing retailer and it requires employees to purchase and wear the retailer's clothes at work then the employer must cover the cost of those clothes.

Business Expenses An employee is entitled to be compensated for any and all expenses incurred while serving the business.

Medical or Physical Examinations If a medical or physical examination is required for employees before they are hired, it is illegal for the employer to deduct the costs of the examination for the employee's wages. The employer must bear all costs associated with pre-employment medical or physical examinations.

More information about deductions

Independent Contractors It is common for employers to improperly classify employees as independent contractors. Some employers do this in an attempt to avoid certain wage and hour law requirements such as payroll taxes, minimum wage or overtime, meal periods or rest breaks, workers compensation insurance, and payments in relation to social security and unemployment or disability insurance.

California Law provides a "multi-factor" or "economic realities" test to determine whether an employee is properly classified as an independent contractor. The most important factor in the test is whether the person who is requiring the service (employer) has control or the right to control the employee as to what work they perform and how it is carried out. An employee/employer relationship will be found if the employer oversees the operation in its entirety, the work performed by the worker is an essential part of the operation, and if the nature of the work itself makes detail control unnecessary. Many other factors that may be considered are listed below:

  1. Whether the employee is engaged in an operation or a business that is distinct from that which he is contracted to do work.
  2. Whether the work contracted is part of the regular business operations of the employer.
  3. Whether the employer supplies the materials and the work-site for the employee.
  4. The employee's level of investment in the materials used during the contracted work.
  5. Whether a special skill is needed for the contracted work.
  6. Whether the employee's occupation is a specialization and the employee works without supervision.
  7. What opportunity the employee has for profit or loss depending on his or her own managerial skill.
  8. The length of time the employer is to be contracted.
  9. The level of permanence for the employee in the contracted work.
  10. Whether the employee is paid by the job performed or by hours worked.

The courts look beyond written agreements that purport to establish an independent contract relationship. The existence of such documents is not determinative of whether an employee is an independent contractor or not.

More information about independent contractors

Reporting Time Pay California law provides protection for nonexempt employees who report to work expecting to work a certain number of hours and are deprived of those hours due to the employer's improper notification or scheduling errors. Under such circumstances, employers are required to pay employees not just for the hours they work, but also regularly scheduled hours. This type of pay is considered "reporting time pay." Reporting time pay is not considered wages, and isn't taken into consideration while determining overtime owed. Reporting time pay specifics are listed below:

  1. If an employee reports to work expecting to work a certain number of hours, but is released without working any hours or working less than half the hours scheduled, the employer is required to pay the employee for half of the hours scheduled. This cannot exceed 4 hours of pay, but also must be at least 2 hours of pay at the employee's regular rate. For example, if an employee reports to work a scheduled 8 hour shift, but is sent home after working only 2 hours then that employee is required to be paid 4 hours of pay at their regular rate of pay, however only 2 of these hours count as actual hours worked.
  2. If an employee reports to work for the second time in any workday and works less than 2 hours on the second shift, the employer is required to pay that employee 2 hours of pay at their regular rate.

More information about reporting time pay

Waiting Time Penalty In California, under Labor Code Section 203, employers are required to promptly pay employees all wages owed at the conclusion of the employment relationship. Failure to do so results in penalties owed to the employee. Penalties are measured by taking the employees regularly daily rate and multiplying it to the number of days the employee was not paid, up to a maximum of 30 days.

For example, if an employee was not paid until the 8th day after the employee relationship concluded and the employee's daily rate equaled $75.00, then the employee may be entitled to $525.00 (7 days multiplied by $75.00) worth of penalties.

More information about waiting time penalty

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