Written by Galen T. Shimoda and Justin P. Rodriguez
There are a variety of wages in which California employees can be paid and, as such, there are a variety of ways to calculate just how much is owed to an employee for overtime and minimum wages. Indeed, the California Wage Orders make clear that they apply whether an individual is paid on a time, piece rate, commission, or other basis, with only limited exceptions. There are two parts to determining overtime wages owed: First, determine the overtime or double time rate of pay; second, determine whether the time worked constitutes either overtime or double time.
For determining the regular rate of pay, the first, and simplest scenario is where an employee is paid by hour, e.g. $15.00 per hour. When calculating the overtime rate, simply multiply $15.00 times 1.5 and you will get your overtime rate ($22.50). The second scenario occurs when you are paid on a salary basis, e.g. a fixed amount per year or pay period. Generally, those who are paid a salary may not qualify for overtime assuming their salary is equivalent to at least twice the minimum wage and their job duties are of a sufficiently high level to qualify for an exemption to the state's overtime laws. But, where an individual is misclassified as exempt and, therefore, is owed overtime wages they will calculate their overtime rate by dividing their yearly salary by 52 (number of workweeks in a year) and then further divide that number by 40 (the number of hours in a standard workweek). The number arrived at will be the hourly wage equivalent of the annual salary, which can then be multiplied by 1.5 to determine the overtime rate. For example, a person with an annual salary of $40,000.00 will have an hourly wage equivalent of $19.23, which will result in an overtime rate of $28.85.
The third scenario occurs when someone is paid under a piece rate or commission based compensation system. An employee can determine their overtime rate under these compensation systems by dividing their total earnings within the week by their total hours within the week. For example, if an employee earned $1,000.00 when working 100 hours, then he would be earning the equivalent of $10.00 per hour. For those hours worked in addition to eight hours a day or forty hours a week, the employee would be entitled to an additional $5.00 per hour. Of course, because California has laws entitling workers to double time for hours worked in excess of twelve hours in a day, these calculations would be adjusted accordingly.
Minimum wage calculations are very straight forward; however, a common misperception is that an employer may average the total earnings over a pay period to meet their minimum wage obligations. Although this may be true under federal law, this is not the case for California law. Instead, in California, an employee must be paid separately for each hour worked. This means that if an employee is paid by piece rate, e.g. per yard of flooring installed, then he must be separately compensated for tasks he is required to complete that do not earn additional "pieces," e.g. attending mandatory work meetings.
An easy way to calculate total hours worked is through an employee's time records, such as timecards. However, in some situations, an employee may not have access to time records. This arises when the employer failed to keep accurate time records or time records were destroyed. If this is the case, the court will allow an employee to make a "reasonable estimate" of hours worked based on the employee's best recollection, testimony of others, and any other documents that help show hours worked. It is best to keep a record of hours you worked if you know that you will eventually make a claim for hours worked.
If you believe that you have claims for unpaid overtime and/or minimum wages, please contact our office to have you claims evaluated.