When you hire employees for your business, you must follow state labor laws when paying them. Because California is a very employee-friendly state when it comes to labor law, the Golden State has unique overtime rules. Businesses that fail to follow them could face wage lawsuits down the road, so owners and managers need to understand how and when California employees qualify for overtime.
Any employee in the United States who works more than 40 hours a week should receive overtime pay. Overtime pay is 1 ½ times an employee’s regular hourly wage. In California, however, employees also can receive overtime if they work more than 8 hours in a day. California employees also can receive double pay if they work more than 12 hours in a row and if they work more than eight hours on a seventh consecutive day of the week. For example, if an employee works Monday-Saturday 8 hours each day, and then works 10 hours on Sunday, that employee will receive 2 hours of double pay and time and a half for their other overtime hours.
However, some employees may work on alternative workweek schedules – maybe four 10-hour days or three 12-hour days. The overtime rules wouldn’t apply in those cases unless the employee works more than 40 hours in a workweek.
How to calculate overtime for employees who work on commission
Calculating overtime for employees who earn commissions as part of their pay is sometimes tricky. Employees earn 1 ½ times their commission rate for overtime. Or you can add all the commission they earned during the week, including overtime, and divide that by the total hours worked. Then the employee should be paid 1 ½ times that figure (commission amount divided by hours worked) for their overtime hours.
Employers can require employees to work overtime and even fire employees who refuse to work mandatory overtime hours. Also, if an employee works unauthorized overtime you must pay them. You can discipline them in other ways (perhaps a suspension), but you have to compensate them for the hours they work.
You will need to ensure your managers understand these overtime rules and employees record their hours correctly. That way you won’t fail to pay overtime when necessary and can avoid future unpaid wage claims.