Business owners and managers may be tempted to circumvent overtime rules on occasion, but the results can be far more costly than the additional wages saved.
In California, overtime pay for almost all nonexempt private sector employees who are not covered by collective bargaining agreements, is based primarily on the number of hours worked in a day. Also, all California employers must account for weekly totals when calculating overtime.
Most California hourly employees are entitled to an overtime pay rate for any hours worked over a total of 40 in a single work week. This is defined by the Fair Labor Standards Act (FLSA) as any seven consecutive work days.
Unfortunately, this is an area of compliance that many employers tend to have some confusion over, but the burden of maintaining accurate overtime payment falls on the employer in most cases.
A California labor law requires any employee who works for more than 15 hours in a single day to be paid at least one and a half times their normal rate for all hours worked over the overtime limit.
Overtime and Regular Rate of Pay
When calculating overtime pay in California, you must use the employee's "regular rate" of pay, not the normal hourly amount. The regular rate is not simply an employee's normal hourly amount. The regular rate is a term used to mean the employee's actual rate of pay once all hourly earnings plus many other types of compensation are considered.
The regular rate must include nearly all forms of pay received by that employee.
Only hours worked at straight-time apply to the weekly 40-hour limit. This prevents "pyramiding" of overtime, where an employee earns overtime on top of overtime already paid.
Recent Overtime Compliance Cases
SAN FRANCISCO, CA – The owners of Nobis Care Homes were ordered to pay $194,275 in back wages to 13 caregivers and cooks to resolve Fair Labor Standards Act (FLSA) violations following a U.S. Department of Labor (DOL) investigation.
The Department’s Wage and Hour Division investigators found that the employer failed to pay employees for hours they worked beyond 40 in a work week. The investigation revealed that the employees regularly worked 60 hours per week on average, but payroll records showed that employees were only paid for 40 hours.
In addition, the San Mateo County District Attorney’s Office conducted a separate criminal investigation of Nobis Care Homes to look into allegations of worker’s compensation fraud. This was a consequence of the company’s failure to accurately report the number of employees working. That case has resulted in Nobis Care Homes paying additional penalties to the California Employment Development Department and other state agencies.
OAKLAND, CA - A U.S. Department of Labor investigation showed that Nino Salvaggio Fruit and Vegetable Markets failed to pay its employees for time they spent on rest breaks shorter than 20 minutes, as required by the FLSA. The grocer has agreed to pay 212 employees $135,657 in back overtime wages and interest.
A spokesperson for the DOL said in a release,
“Failing to pay for this time resulted in overtime violations when employees worked more than 40 hours in a work week, as well as in recordkeeping violations when the excluded hours were not recorded.”
SANTA ROSA, CA - The Department of Labor’s Wage and Hour Division Investigators in San Francisco found that El Charro Casita, Inc., willfully violated FLSA minimum wage, overtime, and record-keeping provisions at its three restaurants in Santa Rosa, Rohnert Park, Guerneville.
The Santa Rosa area restaurants reached an agreement with the DOL to pay 28 employees $147,954 in back wages and an equal amount in liquidated damages. The employer will also pay $15,115 in penalties as it resolves federal wage violations.
According to investigators, the employer paid employees regular-time pay rates in cash for overtime hours worked. This is in violation of the FLSA's required time-and-one-half of their regular rates for hours worked beyond 40 in a workweek. In addition, the employer created and kept a set of false time cards and paychecks to try and conceal the nonpayment of overtime wages.
Information to Help You Stay Compliant
Payroll processing and payroll compliance is often a labor-intensive requirement for employers, and there are scores of resources available for the employer who chooses to manage their own payroll processes.
One option to consider is outsourcing to a managed payroll service. By outsourcing these functions you can also outsource all of the requirements that are currently on your HR staff to maintain compliance.
If your company would like to learn more about its obligations, or acquire resources to deal with payroll requirements, Accuchex recently partnered with HR Solutions Partners to offer its customers the most up-to-date and professional human resources management solutions available.
To learn more about the different levels of Human Resource Management services available, click this link. To learn more about the other payroll services Accuchex provides, click on the button below to get our free consultation.