Unravel The Complex Payroll Code And Remain In Compliance
Navigating California overtime pay rules is like taking a trip through a labyrinth of complex labor law. The state is one of only four that requires daily overtime— and it also requires employees to be paid double time on a daily and weekly basis. So processing payroll in California is not for the ill-informed, confirms payroll specialist Vicki M. Lambert.
Not Your Standard Overtime Pay Rules
Most hourly wage earners in the United States are accustomed to earning overtime pay—of at least one and one-half times their regular pay rate—for the hours they work beyond the standard 40 hour work week. California, on the other hand, beats to a different drum.
Let’s take a look at the different variants of paid time you need to contend with when processing California payroll:
- Daily overtime. Employers must pay one and one-half times the employee’s regular rate of pay for all hours worked in excess of eight hours up to and including 12 hours in any workday.
- Weekly overtime. Employers must pay one and one-half times the employee’s regular rate of pay for all hours worked in excess of forty hours in any work week.
- Daily double time. Employers must pay double the employee’s regular rate of pay for all hours worked in excess of 12 hours in any workday.
- Seventh day rules. On the seventh consecutive day of work in a workweek, employers must pay one and one-half times the employee’s regular rate of pay for the first eight hours worked, and double the employee’s regular rate of pay for additional hours beyond the first eight.
That’s a glimpse at the rules that apply to hourly employees wages. But what about salaried employees—are they permitted overtime pay? According to California’s Department of Industrial Relations, the answer is: “It depends.”
“A salaried employee must be paid overtime unless they meet the test for exempt status as defined by federal and state laws, or unless they are specifically exempted from overtime by the provisions of one of the Industrial Welfare Commission Wage Orders regulating wages, hours and working conditions,” the agency reports.
Bottom line: You need to learn to determine whether paid time is straight time, overtime, or double time—as well as how to calculate it and identify who is eligible for what type of pay. That’s a hefty load!
Know Applicable Federal Laws, Too!
And then there’s the task of balancing California overtime rules with sometimes-conflicting federal overtime pay rules! For example California doesn’t have its own definition of “regular rate of pay” or “workweek”—it follows federal definitions. But the state does have its own somewhat different definition of “workday.” And these definitions will affect your overtime calculations.
Workweek definition: The U.S. Department of Labor (DOL) defines a workweek as “a fixed and regularly recurring period of 168 hours — seven consecutive 24-hour periods. It need not coincide with the calendar week, but may begin on any day and at any hour of the day. Different workweeks may be established for different employees or groups of employees.”
Workday definition: DOL merely refers to a workday as the “period between the time on any particular day when such employee commences his/her ‘principal activity’ and the time on that day at which he/she ceases such principal activity or activities.” By contrast, California’s definition is much more specific. For the purpose of determining when daily overtime is due, a California workday is any consecutive 24-hour period beginning at the same time each calendar day, but it may begin at any time of day.
Here’s the challenge: To compliantly calculate California payroll, you must know when to follow the federal standard, how it differs from state, and how to determine which has priority. Plus there’s more lingo to learn: regular rate of pay, fluctuating workweek, alternative workweek. You can’t process payroll without a sound knowledge of wage and hour law terminology.
Learn The Requirements To Ensure Compliance
Understanding California payroll goes beyond just knowing how much an employee earns per hour. For starters, do you understand overtime for piece workers and commissioned employees? Are you clear on the proper way to handle make-up time? How about what to do when an employee is paid two or more rates in a work week?
(This post first appeared in a ProfEd blog)
By Amy P on 6th April 2018
