Some states adhere to federal overtime laws, which the Fair Labor Standards Act sets and the U.S. Department of Labor oversees. Others adopt certain sections of the FLSA while adding their own provisions, and California is one of these states. The California Department of Industrial Relations administers the state's salary and overtime laws.
Salary Identification
An employee's salary is a predetermined amount of pay she receives each pay period, such as weekly, biweekly, semimonthly or monthly. Specifically, it is supposed to be a set amount that she can count on each pay period. A salaried employee can be nonexempt or exempt. California law provides an exemption to employees who meet the state's exempt criteria. Such employees are excluded from the state's overtime pay provisions -- employers do not have to pay them overtime. A salaried employee in California who does not meet exempt requirements is nonexempt, which makes her eligible for overtime under state law.
Exemptions
Similar to FLSA exempt requirements, California's exempt requirements are narrowly defined according to the employee's occupation. For example, certain drivers, airline employees, commercial fishing boat crew members, sheepherders, some employees covered by a collective bargaining agreement and most executive, administrative and professional are exempt from California's overtime provisions.
To obtain the exemption, the employee must meet the job duties, and in most cases, minimum salary requirement, specific to her position, as defined by California law. For example, an executive employee must earn at least a monthly salary of no less than twice the state minimum wage ($8 per hour as of 2011) for a 40 hour workweek, and his main duty must include managing the firm in which he works or a recognized department within it, frequently directing the work of at least two or more employees, having the power to hire and fire other workers, and regularly using discretion and independent judgment.
Some exempt employees, such as an outside salesperson, do not have salary requirements; in this case, the exemption is based solely on his job duties.
Considerations
A California employer must ordinarily pay an exempt employee full salary regardless of days or hours worked. However, during difficult economic times, such as if business slows down, an employer can reduce the employee's guaranteed salary provided that it does not fall below twice the state minimum wage and that it's not linked to days or hours worked.
Overtime Identification
Nonexempt employees in California receive overtime at 1 1/2 times the regular pay rate for works hours exceeding eight for the day, up to 12, and for the initial eight hours worked on the seventh straight day of the week. Employees receive double-time payment at twice their regular pay rate for work hours exceeding 12 for the day and for work hours exceeding eight on the seventh straight of the week.
Regular Rate Calculation
A salaried employee whose job duties do not qualify her for exempt status receives overtime and double time, if worked. To determine the regular rate for a salaried employee, the employer divides the annual salary by 52 weeks and divides the total by 40 hours.
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