California Overtime Laws: Complete Guide for Employers in 2025

California’s overtime laws are some of the most complex and protective in the United States. Employers must meet strict requirements that go far beyond federal guidelines, including daily and consecutive-day rules, to ensure workers are properly compensated. Failing to follow these regulations can lead to significant financial penalties and damaged employee trust.

The rules governing overtime in California are designed to protect nonexempt employees from overwork without fair pay. Employers are required to calculate overtime based on specific thresholds that account for both hours worked in a day and total hours in a workweek. These laws reflect California's commitment to worker rights and fair labor standards.

This guide explains California's overtime laws in clear terms, breaking down exactly what qualifies as overtime, the daily and weekly thresholds, and how consecutive-day work impacts pay. Employers need to understand these distinctions to stay compliant and avoid costly mistakes.

California Overtime Definition

California law defines overtime as any hours worked beyond 8 in a single workday or 40 in a single workweek for nonexempt employees. Employers must pay one-and-a-half times the employee's regular rate of pay for these additional hours. This applies to hourly workers, piece-rate workers, and salaried employees who do not meet exemption criteria.

Daily overtime kicks in after 8 hours in a workday and continues up to 12 hours. Anything beyond 12 hours in a single day must be paid as double-time, or twice the employee's regular rate of pay. This creates unique situations where an employee could qualify for overtime even if their total weekly hours are under 40.

California also requires overtime pay for employees working seven consecutive days in a single workweek. For the first 8 hours on the seventh day, employers must pay time-and-a-half. After 8 hours, the pay rate increases to double-time for the additional hours worked. These rules ensure employees are compensated fairly for extended work periods without adequate rest.

Nonexempt and Exempt Employees

California employers need to classify employees correctly to comply with overtime laws. Misclassification can lead to unpaid wages, penalties, and legal disputes. Understanding the differences between nonexempt and exempt employees is key to accurate payroll and compliance.

Nonexempt Employees

Nonexempt employees qualify for overtime pay under California’s labor codes. This includes most hourly workers and some salaried employees who don't meet exemption requirements. Employers must pay nonexempt employees:

Overtime for hours worked beyond 8 in a workday: Time-and-a-half applies up to 12 hours, while hours beyond 12 are paid at double-time.
Overtime for hours worked beyond 40 in a workweek: All hours over 40 must be compensated at time-and-a-half.
Additional pay for the seventh consecutive workday: The first 8 hours are paid at time-and-a-half, and any hours beyond 8 are paid at double-time.

Nonexempt employees are protected by strict overtime rules, and employers must track hours meticulously. Failure to pay overtime accurately can lead to compliance violations.

Exempt Employees

Exempt employees are not eligible for overtime pay but must meet specific criteria under California law. Classifications include executive, administrative, and professional roles. To qualify as exempt, employees must satisfy both a salary requirement and a job duties test.

Salary Requirement: The employee must earn a fixed salary that meets California's minimum for exempt employees. This amount is adjusted annually and is higher than federal thresholds.
Job Duties Test: The role must primarily involve intellectual or managerial tasks that require discretion and independent judgment. Routine or manual tasks do not qualify.

Common exempt roles include:

Executive Employees: Must oversee a department or business unit, manage at least two employees, and have authority over personnel decisions like hiring or terminations.
Administrative Employees: Must perform non-manual work directly tied to business operations and exercise independent judgment on significant matters.
Professional Employees: Must work in specialized fields such as law, medicine, or engineering that require advanced education and decision-making.

Employers should regularly review job descriptions, salaries, and responsibilities to ensure proper classification. Misclassifications can result in back pay for overtime, fines, and potential lawsuits. Accurate classification protects both the business and its payroll and compliance.

Exceptions to the General Rule

California's overtime laws include specific exceptions for certain work arrangements and industries. These adjustments change how overtime is calculated and paid, depending on the job or schedule. Employers must understand these distinctions to avoid errors and stay compliant.

Alternative Workweek Schedules

An alternative workweek schedule allows longer shifts without triggering daily overtime. Employees can work up to 10 hours in a single day without earning time-and-a-half, as long as the total weekly hours do not exceed 40. This structure must be approved by employees through a formal vote and documented agreement.

Overtime for hours beyond 10: Time-and-a-half applies for hours between 10 and 12, and double-time applies for any hours over 12.
Weekly overtime: Any hours over 40 in a workweek must still be paid at time-and-a-half.

Employers who implement these schedules incorrectly could face legal and financial consequences. The alternative workweek must align with California's labor codes, or the standard overtime rules will apply.

Special Industries

Certain industries follow unique overtime structures tailored to their work conditions. These include healthcare, agriculture, and live-in employees.

Healthcare Workers: Employees under a valid alternative workweek schedule can work up to 12 hours in a day without overtime. Work beyond 12 hours requires double-time pay.
Agricultural Workers: By 2025, small employers must pay time-and-a-half after 8 hours in a day or 40 hours in a week.
Live-In Employees: Workers in household occupations may not qualify for daily overtime unless they exceed 6 hours in a day or 30 in a week.

Employers in these sectors must follow wage orders specific to their industries to ensure compliance.

Specific Employee Roles

Several job roles also have exceptions to the general overtime rules. These roles often depend on job duties or the nature of the work environment.

Camp Counselors: Daily overtime does not apply. Weekly overtime begins after 54 hours or six workdays.
Personal Attendants: Overtime is required after 40 hours in a week or six days, but daily overtime is not applicable.
Resident Managers in Small Care Homes: Weekly overtime applies after 40 hours or six workdays, without daily thresholds.

Each exemption has detailed requirements. Employers must carefully assess eligibility and document any exceptions to avoid compliance issues.

Daily and Weekly Overtime Calculation

Understanding how to calculate overtime hours is a fundamental responsibility for California employers. The process involves tracking work hours, applying the correct pay rates, and ensuring compliance with both daily and weekly thresholds. Each step requires precision to avoid errors that could lead to underpayment or legal issues.

Counting Hours Per Workday and Workweek

The first step is defining and adhering to consistent work periods. A workday is a consecutive 24-hour period that begins at the same time each day. A workweek spans seven consecutive 24-hour periods, starting on the same day and time each week. These periods must remain fixed.

Daily Hours: Record every hour the employee works within the 24-hour workday, excluding unpaid meal breaks but including paid rest periods.
Weekly Hours: Tally the hours worked across all seven days of the workweek. Include any hours that qualify as daily overtime to ensure the weekly total reflects all compensable time.

Accurate, consistent timekeeping practices are necessary. Employees should log exact start and stop times, including breaks.

Time-and-a-Half vs. Double-Time Thresholds

California overtime laws require specific pay rates based on the number of hours worked. Employers must apply these rates correctly to stay compliant.

Time-and-a-Half:
Hours worked over 8 and up to 12 in a single workday.
Hours worked beyond 40 in a workweek.
The first 8 hours on the seventh consecutive day in a workweek.
Double-Time:
Hours worked over 12 in a single workday.
Hours worked beyond 8 on the seventh consecutive day in a workweek.

Each threshold is distinct, and exceeding one does not negate the other. Double-time only applies after reaching the higher-hour limits, but time-and-a-half must still be applied first when appropriate.

Comparing Daily vs. Weekly Overtime

Employers must evaluate both daily and weekly overtime calculations for every pay period. The law requires employers to pay the greater total of the two.

Daily Overtime: For each workday, calculate hours worked beyond 8 and apply time-and-a-half. Add hours over 12 at double-time.
Weekly Overtime: Add all hours worked in the workweek. Subtract 40 from the total. Pay time-and-a-half for all remaining hours.
Comparison: Compare the total overtime owed for daily hours versus weekly hours. The employee receives the higher total.

For instance, an employee working 10 hours per day, five days a week, accrues 10 hours of daily overtime (2 hours per day at time-and-a-half). Weekly overtime also totals 10 hours (50 hours worked minus 40). Since the totals are equal, the employee is paid for 10 hours at time-and-a-half.

Regular payroll reviews ensure compliance with California's overtime laws and prevent costly mistakes.

Regular Rate of Pay

Understanding how to calculate the regular rate of pay is a foundational part of complying with California's overtime laws. Employers must account for more than just the base hourly wage to ensure accurate overtime calculations. The regular rate includes multiple forms of compensation and excludes specific types of payments, making clarity and precision essential in payroll processes.

What Must Be Included in the Regular Rate of Pay

The regular rate of pay goes beyond an employee's standard hourly or base salary. Employers are required to include certain types of earnings that contribute to overall compensation:

Nondiscretionary Bonuses: Any bonuses tied directly to measurable performance benchmarks or agreed-upon criteria are part of the regular rate. For example, a $150 bonus for meeting a monthly attendance goal must be included when calculating overtime.
Commissions: Earnings based on sales or performance, whether calculated weekly, monthly, or quarterly, must be factored into the regular rate. A salesperson's commission on top of their hourly pay directly affects overtime calculations.
Shift Differentials or Incentive Pay: Additional compensation for working night shifts, weekends, or specific tasks must also be included. For instance, if employees earn an extra $3 per hour for overnight shifts, that amount raises their regular rate.

What Can Be Excluded from the Regular Rate of Pay

Not every payment to an employee counts toward the regular rate. California law excludes the following from overtime calculations:

True Gifts: Payments like holiday bonuses or anniversary awards that are not tied to performance or hours worked. These are considered goodwill gestures and do not impact overtime.
Discretionary Bonuses: Payments given at the employer's complete discretion, without prior agreement or expectation, can be excluded. For example, a surprise bonus for overall team morale does not affect overtime calculations.
Expense Reimbursements: Payments covering work-related costs, such as mileage, uniforms, or travel expenses, are not wages and do not factor into the regular rate.

How to Calculate the Regular Rate of Pay

The method for calculating the regular rate varies based on how the employee is paid. Employers must take into account all qualifying compensation to ensure accuracy.

Hourly Employees: Add together the hourly earnings and any eligible bonuses or incentives earned during the workweek. Divide the total by the number of hours worked to determine the regular rate.
Salaried Employees: For employees paid weekly, divide their salary by 40 hours to determine the hourly rate. Include additional compensation, such as commissions or nondiscretionary bonuses, in the calculation. For monthly salaries, convert the amount to a weekly equivalent before calculating.
Piece-Rate Employees: Total all earnings from completed units or tasks in the workweek, adding any applicable bonuses or incentives. Divide this sum by the total hours worked to find the regular rate.
Commission-Based Employees: Combine all commissions earned in the workweek with any other qualifying compensation. Divide the total by the hours worked to calculate the regular rate.

Employers cannot rely solely on an employee's base hourly rate or salary to calculate overtime. Payroll calculations must reflect all qualifying compensation to remain compliant with California's overtime laws. Missteps here can lead to significant legal and financial consequences.

Payment Obligations and Deadlines

California employers must pay earned overtime wages by the next regular payday for the pay period in which the overtime was worked. There are no exceptions to this deadline, even if the overtime was unauthorized or contested. Timely payment is non-negotiable under state law and ensures employees receive their earned compensation without delay.

Consequences of Late Overtime Payment

Missing the deadline for overtime payments can lead to significant penalties. Employers may face:

Waiting Time Penalties: If an employee's final paycheck, including overtime, is late, the employer could owe up to 30 days of the employee's daily wages.
Interest on Unpaid Wages: California law requires a 10% annual interest rate on unpaid overtime amounts, which accrues until the wages are paid in full.
Liquidated Damages: Employees may claim damages equal to the unpaid overtime amount in addition to recovering the overdue wages.

Late payments also increase the risk of employee complaints, wage claims, or lawsuits, which can result in further financial and reputational damage.

Recordkeeping Tips to Ensure Correct Payroll Processing

Accurate and thorough recordkeeping is the foundation of timely and compliant overtime payments. Employers should meticulously track employee work hours and regularly review records to prevent payroll errors.

Implement Accurate Time Tracking Systems: Use reliable timekeeping methods, such as digital time clocks or time-tracking software, to capture exact hours worked, including overtime.
Conduct Routine Payroll Audits: Regularly review payroll data to confirm that all recorded hours, including overtime, are calculated and paid correctly. This helps identify discrepancies before payroll is finalized.
Maintain Records for the Required Period: California law mandates retaining payroll records for at least three years. Keep documents organized and accessible for employee requests or potential audits.

By adhering to strict payment schedules and maintaining accurate records, employers can avoid compliance issues and ensure their payroll process runs smoothly.

Handling Unauthorized Overtime

Paying employees for unauthorized overtime isn't optional—it's a legal requirement under California labor laws. If a nonexempt employee works overtime, whether approved or not, you are obligated to compensate them for those hours. Ignoring this responsibility can lead to wage claims, penalties, and legal complications.

Employer Responsibility to Pay for All Hours Worked

Employers must track and pay for every hour an employee works, including unapproved overtime. Even if your internal policies prohibit working overtime without prior authorization, withholding pay for those hours violates California law.

Unauthorized overtime often happens when employees misunderstand policies, feel pressured to meet deadlines, or decide to work beyond assigned hours without approval. Regardless of the circumstances, employers are required to pay for the time worked.

Use Accurate Timekeeping Systems: Ensure employees record their exact start and end times. Reliable systems help capture both regular and overtime hours accurately.
Address Off-the-Clock Work: Prevent employees from working extra hours without recording them. All work, approved or not, must be documented and compensated.

After identifying unauthorized overtime, process the payment according to California's daily and weekly overtime rules. Delays or errors in paying these wages can result in fines and damage employee trust.

Navigating California's complex overtime laws requires diligence, accuracy, and a commitment to compliance. By understanding the nuances of daily, weekly, and consecutive-day rules, you can ensure your employees receive the compensation they deserve while protecting your business from costly penalties. If you're looking for a comprehensive solution to streamline your HR processes, including time tracking and payroll, we're here to help.