Employers Tips to Manage Overtime in California

When do you pay Overtime?

In California, a nonexempt employee is entitled to 1.5 times their regular rate of pay for all the hours worked over 8 in a day or 40 in a week. If they work more than 12 hours in a day, they must be paid two times their regular rate of pay for all time worked over 12 hours.

On the seventh consecutive day of work in the workweek, employees must be paid 1.5 times their regular rate of pay for the first eight hours worked and two times their regular rate of pay after eight hours of work.

Can you Require Prior Approval for Overtime?

Employers should draft a policy that requiring employees to obtain approval before working overtime or face disciplinary measures. Employers are always concerned that their bottom line can be impacted or employees may learn to “game” the system to earn a little extra money.

Employees who work overtime without prior approval must be paid the overtime worked. California law requires employers to pay employees for all the hours they worked. However, employers should follow their disciplinary policy consistently when this occurs. You may choose to use progressive discipline in this instance, a verbal warning at first and the move forward with more severe consequences from there.

If employees complain that they can’t get their work done without putting in overtime, examine workload issues and time management. Do quotas need to be adjusted? Is additional staffing needed?

Documenting Hours Worked

All employers should have a system in place to track and document hours worked by their non-exempt employees. For many this may be electronic and tied to their payroll system, for others, it may involve the employee completing paper timesheets. It doesn’t matter how the hours are documented, just ensure that they are. Documenting time worked not only ensures proper payment of overtime but also information to plan staffing and budgeting. This means the consistent review of employee time, so you know how much employees are working and ensures that you are aware if employees are working overtime without authorization.

Can You Require Mandatory Overtime?

If your organization needs to require employees to work overtime either intermittently or on an ongoing basis, ensure your policy is clear and your practice of implementing mandatory overtime is done so consistently.

As an at-will employer, you have the right to require mandatory overtime as needed; just be prepared to address reasonable accommodation or other employee availability issues in a legally compliant and consistent manner.

Consider making mandatory overtime part of the employees’ essential functions in job descriptions. This will assist in evaluating reasonable accommodation and performance issues. In addition, you are making it clear that the job for which the employee is hired requires overtime and that working overtime is expected of the employee.

Best Employer Practices - Overtime Rules

Dos:

• Always pay employees for all hours worked, regardless if they acquired pre-authorization
• Create a policy regarding overtime and the requirements for pre-authorization
• Discipline employees who violate the overtime policy in a timely and consistent manner
• Document all hours worked, including overtime
• Always follow all state and federal laws regarding overtime!

If you haven’t already, ensure that all your exempt employees are making at least the minimum annual salary requirement in California of $45,760

Don’ts:

• Don’t allow employees to work off the clock
• Don’t encourage employees to work without pay
• Don’t offer “comp” time in lieu of paying overtime

Tracking and paying overtime correctly is an important employer responsibility. As more employees potentially become eligible for overtime pay, employers must ensure they have correct and compliant overtime policies and procedures in place to protect them from potential problems.

Lauren Sims is the author and a Principal HR Consultant with eqHR Solutions.

Whenever you require Human Resources or Payroll advice or help to navigate the ever-changing landscape of California and Federal Employment Laws & Regulations, call us for a no obligation consultation.

eqHR Solutions is a leading human resources and payroll consulting firm, providing tactical and strategic human resources employment support and ADP payroll product training. Services are provided for all size businesses in Southern California and the San Francisco / Bay area.