California Wage Hour Laws: The Golden State Follows Its Own Drummer
As payroll professionals we all must follow federal and state wage and hour laws when processing payroll. However, sometimes these two entities can coincide without much conflict. As a quick example when calculating overtime, the Fair Labor Standards Act (FLSA) requires that overtime be calculated based on what is known as “the work week”. The FLSA gives us a definition of the term “workweek” and all the states (including California) follow this definition. Some states may vary their definitions but usually they are less strict than the FLSA. For example, some states do not include bonuses when calculating the regular rate of pay in the same way that the FLSA does, but the FLSA will be the higher standard so that is what the payroll professional would follow. Of all 50 states there’s only one that stands out with its own set of rules and regulations that far exceed the FLSA. And that state is… California!
The Golden State has been marching to its own drummer in terms of wage and hour law for decades. Although not the first state to have a minimum wage it was the second, back around 1916. It is one of only four states that requires daily overtime, the others being Alaska, Colorado, and Nevada. But to demonstrate its differences, it is the only state that has double-time. California has long taken the view that it is the state’s responsibility to protect its workers from what it considers unfair employment practices. One of the methods that it uses is to restrict the number of hours an employee can work without being paid additional monies. Therefore, the requirement of daily overtime and double-time. In addition, it also exceeds the FLSA standards for weekly overtime. Yes, you must pay overtime after 40 hours worked in the workweek, but unlike the federal government California requires a different overtime if the employee works seven days in a row in one workweek. Under that scenario the employee would receive over time up to eight hours on the seventh day and double-time after eight. Again, this is for protection of the worker.
But it isn’t just minimum wage or overtime where California is unique and vastly different from the FLSA. For example, if an employee is called back to work after completing a day’s work or shift, they are required to receive a minimum number of hours, usually two hours. If an employee is called into work but then finds out there is no work for them, again they must be paid a minimum number of hours, this is usually half of their shift or a minimum of two hours. There is no such protection under the federal law.
But established wage and hour law is not the only area of concerned for payroll professionals when processing payrolls in California. This area of law is always under constant flux from court cases. And payroll professional must keep up with the latest and the greatest. The most recent example is the Alvarado v. Dart Container Corporation of California. This court case changed, as of April 2018, how we calculate regular rate of pay when an employee receives a certain type of payment such as a flat sum bonus. Payroll professionals in California must have a thorough understanding not only of the current wage and hour law but also how it is affected by the result of current court cases.
To sum it all up California is one of the toughest states if not the toughest date to process payroll for. Whether it’s just one employee working out of their home or 10,000 employees working across the state it doesn’t matter. California wage and hour rules apply, and it is up to the payroll professional to make sure that they are applied correctly.
To learn more processing payroll and keeping in compliance with California requirements, view our on-demand webinar.