Overtime For Non-Exempt Salaried Employees / California enacts new law closing a loophole that employers had used to avoid paying overtime to salaried employees.

Overtime For Non-Exempt Salaried Employees

Posted by moondog_wp in California Employment Law Updates 01 Sep 2013

In one of my videos, I explained that an employer’s duty to pay overtime is not based on whether the employee receives a salary.  An employer’s duty to pay overtime turn, instead, on whether the employee qualifies as an exempt employee.  What happens, therefore, when a non-exempt salaried employee works overtime?  In an effort to contain costs, employers would include contract provisions whereby the employee would agree that any overtime pay be incorporated as part of his/her salary.  (Arechiga v. Dolores Press, Inc., 192 Cal. App. 4th 567 (2011))

Effective this year, California effectively ended this practice by amending Labor Code § 515(d) such that employers are required to pay non-exempt salaried for each overtime hour at a rate equal to at least 1.5 times the employee’s weekly salary divided by 40.  (Labor Code § 515(d)(1))  Furthermore, the new law provides that a salary this duty shall not affected by any agreement between the employer and the employee.  (Labor Code § 515(d)(2))

The bottom line for employers is that any salary given to a non-exempt employee entitles the employer to no more than forty hours per week.  Whenever the employee worked beyond 40 hours in a week, the employer has an absolute duty to pay the employee time and a half.

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