Are Salaried Employees Entitled to Overtime "Premium" Pay?

Even if you are paid a salary rather than by the hour, you may be entitled to overtime.

Many employees mistakenly believe that they are not entitled to overtime pay because they are paid a set salary, rather than being paid by the hour. Under both California and Federal law, however, an employee's entitlement to overtime premium pay is determined by the employee's job duties, not how the employee is paid. Employees are entitled to earn overtime unless they are exempt from state or federal overtime laws. (For more information and topics on other states, see our section on Overtime Laws or our State by State Overtime Laws.)

Who Is Entitled to Overtime?

Not every employee can earn overtime: Some employees are exempt, which means they are not protected by the overtime laws. Employees in certain industries are exempt, such as commercial fishermen, professional actors, and taxicab drivers. Employees who perform outside sales, work in certain computer fields, or manage other employees are also exempt. (For more information, see our article on  Exempt vs. Non-Exempt Employment.  You can find a list of California's exemptions at the website of the  California Department of Industrial Relations.)

An employee's job title, employment contract, or employer's determination that the employee is exempt do not determine whether an employee in California is entitled to overtime pay. Many employees mistakenly believe that if they are paid a "salary" they are not entitled to overtime premium pay. Legally, however, whether an employee is salaried or paid by the hour has no bearing on the employee's exempt status.  Instead, the employee's exempt or non-exempt status depends  on the duties the employee actually performs.  

What is Overtime?

In California, non-exempt employees are entitled to overtime if they work more than 40 hours in a week or more than eight hours in a day. California is one of only a handful of states that provides for daily overtime. Even if you work only 30 hours a week, you would still be entitled to overtime pay if you work three ten-hour days.  

The overtime premium is half of the employee's regular hourly rate of pay. For every overtime hour worked, the employee is entitled to his regular hourly rate plus the overtime premium. This is why overtime is sometimes referred to as "time and a half."

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 and the Federal Fair Labor Standards Act, employers must pay damages when they misclassify workers as exempt in order to avoid paying overtime. Employees can recover the overtime wages they should have been paid, along with penalties in some cases.

If you have any questions about whether you may be entitled to overtime, talk to an experienced employment lawyer. The statue of limitations for unpaid wages is up to 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.

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