Are Salaried Employees Entitled to Overtime "Premium" Pay?

Many employees mistakenly believe that because they are salaried they are not entitled to overtime premium pay. Under both California and Federal law, however, an employee's entitlement to overtime premium pay is in no way determined by whether the employee is paid hourly or on a salary. (For more information and topics on other states, see our section on Overtime Laws or our State by State Overtime Laws.)

Employees in California are Entitled to Overtime by Default

The default status for all employees in California is that they are entitled to overtime pay (non-exempt is the legalese term). It is the obligation of all California employers to pay overtime premium pay of time and half or double time depending on the number of hours worked, when their non-exempt employees work more than 8 hours per day and/or more than 40 hours per week. It is also the obligation of all California employers to properly classify their employees as either non-exempt (entitled to overtime premium pay) or exempt (not entitled to overtime).

What is Overtime?

Overtime premium pay is owed even if an employee works less than 40 hours per week, if an employee works more than 8 hours in a single day. For example, if a non-exempt employee worked 10 hours per day, 3 days in a week, that employee is owed 6 hours of overtime premium pay, even though that employee only worked 30 hours that week.

Penalties for Employers

California employers are grossly underpaying large numbers of employees who do not know they are entitled to overtime premium pay. Under both the California Labor Code (“Labor Code”) and the Federal Fair Labor Standards Act ("FLSA") employers are subject to very large penalties. These penalties are paid to the underpaid employees, for misclassifying their employees as exempt (not entitled to overtime premium pay) when their employees should be classified as non-exempt (entitled to overtime premium pay).

Many employees mistakenly believe that if they are paid a "salary" they are not entitled to overtime premium pay. The Labor Code and FLSA make it clear however that whether an employee is salaried or not is not even a factor when determining whether an employee should be paid overtime premium pay or not.

Which Employees are Exempt?

An employee's title, contracts signed by an employee, whether an employer considers the worker an independent contractor, whether the employer considers the employee exempt and a job description are not determinative of whether an employee in California is entitled to overtime premium pay or not.

The analysis of whether an employee is non-exempt (entitled to OT) is almost exclusively based on the duties the employee performs. If you have any questions about whether you may be a salaried employee, talk to an attorney focusing on employment law for a consultation about whether you are owed significant overtime wages by your current or former employer. The statue of limitations for unpaid wages is four years (when coupled with an unfair business practices claim) so employees and former employees can recover unpaid wages that were due up to four years prior to filing a claim.

For more detail, see our article on Exempt vs. Non-Exempt Employment.