California Overtime Rules
California has the strictest overtime laws in the nation. Non-exempt employees must receive overtime pay for hours worked beyond 8/day and 40/week. Many employers misclassify employees as "exempt" when they're not—this is one of the most common wage claims.
Daily & Weekly OT
1.5x rate: Over 8 hours/day or 40 hours/week. 2x rate: Over 12 hours/day or over 8 hours on 7th consecutive day.
Exempt Classifications
Executive, administrative, professional, computer professional, and outside sales exemptions have specific duties and salary tests. Misclassification creates massive liability.
Salary Threshold (2024)
Exempt employees must earn at least 2x state minimum wage: $66,560/year (employers with 26+ employees) or higher in some cities. Failing this test = non-exempt.
⚠️ PAGA Exposure
Overtime claims can become PAGA representative actions on behalf of all similar employees. Penalties are $100/employee for first violation, $200 for subsequent violations, per pay period. A single complaint can expand to company-wide liability. Take every overtime demand seriously.
Evaluate the Claim
Review your records and the employee's classification before responding.
Time Records
Pull all time sheets, punch records, and schedules. California requires employers to maintain time records. If you can't produce them, the employee's estimates may be presumed accurate.
Classification Analysis
Review the employee's actual job duties (not just title). Did they truly perform exempt-level work more than 50% of the time? Was salary threshold met throughout?
Payment History
Review pay stubs. Was overtime paid when hours exceeded 8/day? Were any overtime payments made? Partial payments may reduce exposure.
Potential Defenses
Proper Exempt Classification
Primary DefenseThe employee was correctly classified as exempt under executive, administrative, professional, computer professional, or outside sales exemptions.
Exemption Requirements
- Salary at least 2x minimum wage (annually)
- Performs exempt duties >50% of time
- Exercises discretion and independent judgment
- Job description and actual duties align
Alternative Workweek Schedule
Complete DefenseA properly adopted alternative workweek schedule (e.g., 4x10) eliminates daily overtime requirements for scheduled hours.
Requirements
- Secret ballot election with 2/3 approval
- Proper notice and disclosure provided
- Results reported to DLSE within 30 days
- Schedule applied consistently
No Overtime Worked
Fact-BasedTime records show the employee did not actually work overtime hours. Off-the-clock work allegations require employee to prove hours worked.
Evidence
- Time clock records showing actual hours
- Badge/access records showing arrivals/departures
- Computer login/logout timestamps
- Manager schedules and observations
Good Faith Dispute
Limits PenaltiesA good faith belief in proper classification may reduce or eliminate waiting time penalties, liquidated damages, and willful violation findings.
Evidence of Good Faith
- Written job descriptions matching exemption
- Consultation with HR or counsel
- Industry-standard classification practices
- Reasonable interpretation of duties
Calculate Exposure
California overtime violations carry significant penalties beyond back wages.
Back Wages
Unpaid overtime at 1.5x or 2x rate. Can go back 3 years (4 years under UCL). Calculate all hours × proper premium rate.
Liquidated Damages
Equal to unpaid wages (doubling exposure) unless employer proves good faith and reasonable grounds for believing no violation.
Waiting Time Penalties
Up to 30 days' wages at daily rate if wages not paid promptly upon termination. LC § 203.
Attorney Fees
Prevailing employees recover attorney fees. Employers cannot recover fees even if they win.
Response Strategy
Audit Classification
Before responding, honestly audit the employee's classification. If misclassified, consider prompt settlement to limit liquidated damages and penalties.
Preserve Records
Implement litigation hold. Preserve all time records, payroll data, job descriptions, and communications about hours worked.
Consider Company-Wide Audit
If this employee was misclassified, others likely are too. Consider proactive reclassification and back-pay before PAGA claims expand exposure.
Evaluate Settlement
Wage claims in California are employee-friendly. If liability exists, early settlement often costs less than litigation—especially with PAGA risk.
Sample Responses
📄 Response Asserting Exempt Status
Dear [Employee/Attorney]:
We received your demand dated [date] alleging unpaid overtime.
[Employee] was properly classified as exempt under the [executive/administrative/professional] exemption throughout their employment. Specifically:
1. [Employee]'s salary of $[amount] exceeded the threshold of 2x California minimum wage at all relevant times;
2. [Employee] regularly performed exempt duties including [describe duties] which comprised more than 50% of work time;
3. [Employee] exercised discretion and independent judgment on matters of significance as evidenced by [examples].
We have reviewed job descriptions, performance evaluations, and daily work records, all of which support exempt classification. Accordingly, no overtime was owed.
We are confident in our position but remain open to discussing this matter further if you have additional information supporting your claim.
📄 Response Disputing Hours Claimed
Dear [Employee/Attorney]:
We have reviewed your overtime claim dated [date].
According to our time records, which [Employee] reviewed and approved each pay period, [Employee] did not work the overtime hours claimed:
1. Time clock records show [Employee] consistently clocked out at or before scheduled end times;
2. Building access records confirm departure times consistent with time clock;
3. [Employee] never reported unrecorded overtime to management as required by our timekeeping policy.
We maintain accurate time records as required by law. [Employee] had the opportunity to review and correct these records each pay period and never disputed them during employment.
If you have documentation supporting the claimed hours, please provide it for our review.