California has some of the most worker-friendly wage and hour laws in the United States, offering greater protections than federal law in many areas. These laws dictate how employees must be paid, when overtime applies, and the rights workers have to breaks, proper classification, and remedies for violations. Employers who fail to comply can face significant penalties, including back pay, fines, and lawsuits.
Key Principles of California Wage and Hour Laws
California’s wage and hour regulations are governed by the California Labor Code, the Industrial Welfare Commission (IWC) Wage Orders, and certain federal laws such as the Fair Labor Standards Act (FLSA). However, when state law is more protective than federal law, the state standard prevails.
Minimum Wage Requirements in California
California’s minimum wage is set higher than the federal rate and increases annually under a phased schedule. As of January 1, 2025, the statewide minimum wage is $16.50 per hour for all employers, regardless of size. Some cities and counties, including Los Angeles, San Francisco, and San Jose, have higher local minimum wage ordinances, which employers must follow if they are more favorable to the worker.
Employers are prohibited from using tips as a credit toward minimum wage, meaning tipped employees must receive the full minimum wage in addition to any tips earned.
Overtime Pay Rules in California
Overtime in California is calculated more generously than under federal law. Non-exempt employees must be paid:
- 1.5 times their regular rate for hours worked over 8 in a workday
- 1.5 times their regular rate for the first 8 hours on the seventh consecutive workday in a workweek
- Double their regular rate for hours worked over 12 in a workday
- Double their regular rate for hours worked over 8 on the seventh consecutive workday in a workweek
The “regular rate” includes not just hourly wages, but also certain bonuses, commissions, and other forms of compensation.
Understanding Time Pay Rules
California has specific reporting time pay requirements. If an employee is required to report to work but is given less than half of their usual or scheduled shift, they must be paid for at least half the scheduled hours, with a minimum of 2 hours and a maximum of 4 hours of pay at their regular rate. This is commonly referred to as the “2-hour pay rule.”
Employee Misclassification in California
One of the biggest compliance issues in wage and hour law is worker misclassification. Employers sometimes incorrectly label employees as independent contractors to avoid paying overtime, benefits, and payroll taxes.
Under California’s ABC test (established by Assembly Bill 5 and now codified in Labor Code section 2775), a worker is presumed to be an employee unless:
A. The worker is free from the control and direction of the hiring entity in performing their work.
B. The work performed is outside the usual course of the hiring entity’s business.
C. The worker is engaged in an independently established trade, occupation, or business.
If all three conditions are not met, the worker must be classified as an employee.
The Consequences of Misclassification
Misclassifying employees as independent contractors can lead to severe penalties, including liability for unpaid wages, unpaid overtime, missed meal and rest break penalties, back payroll taxes, and civil fines. In some cases, intentional misclassification can result in additional damages and legal costs.
Meal and Rest Break Rights in California
California law mandates specific meal and rest break requirements for non-exempt employees. These rules are more protective than federal standards and must be followed precisely.
Rules for Meal Breaks
- Employees who work more than 5 hours in a day are entitled to a 30-minute unpaid meal break.
- If the workday is 10 hours or longer, employees must receive a second 30-minute unpaid meal break.
- The meal break must be uninterrupted, and employees must be relieved of all work duties.
- If the employer fails to provide a meal break, the employee is entitled to one additional hour of pay at their regular rate for each workday a meal break is not provided.
Rest Break Requirements
- Employees are entitled to a paid 10-minute rest break for every 4 hours worked or major fraction thereof.
- Rest breaks should be in the middle of each work period whenever possible.
- As with meal breaks, failure to provide rest breaks results in one additional hour of pay at the employee’s regular rate for each workday a rest break is missed.
Legal Options for Wage and Hour Violations
Employees whose wage and hour rights are violated can take legal action to recover unpaid wages, penalties, and other damages.
Filing Individual Lawsuits
Workers may file individual claims in civil court or with the California Labor Commissioner’s Office. Individual claims can seek unpaid wages, missed break penalties, interest, attorney’s fees, and other applicable damages.
Class Action Lawsuits
When multiple employees are affected by the same wage and hour violations, they may file a class action lawsuit. This type of claim can be powerful, as it allows employees to combine their resources and present a unified case. Class actions often involve issues like unpaid overtime, systematic denial of breaks, or misclassification.
Work Hours and Definitions under California Law
A workday is defined as any consecutive 24-hour period starting at the same time each calendar day, and a workweek is any fixed and regularly recurring period of 168 hours, or seven consecutive 24-hour periods. Employers must clearly define these periods and apply overtime rules accordingly.
A Detailed Look at Work Time Rules
California counts all time an employee is subject to the employer’s control as hours worked. This includes time spent on the employer’s premises, time waiting to be engaged, certain travel time, and in some cases, mandatory training.
The Regular Rate: Beyond Just Hourly Wages
The regular rate of pay is not necessarily the employee’s base hourly wage. It includes:
- Hourly wages
- Nondiscretionary bonuses
- Commissions
- Certain incentive pay
This broader definition ensures employees receive the correct overtime pay.
Double Time: When It Applies
Double time in California applies in two situations:
- Hours worked over 12 in a single workday.
- Hours worked over 8 on the seventh consecutive day in a workweek.
Employers must carefully track hours to avoid double time violations, which can result in costly penalties.
Frequently Asked Questions about California Wage and Hour Laws
What are the legal working hours in California?
California does not limit the number of hours an adult employee can work in a day or week, but overtime and double time rules apply. Employers must also follow meal and rest break laws.
What counts as a wage and hour violation in California?
Common violations include:
- Failure to pay minimum wage or overtime
- Denying required meal or rest breaks
- Misclassifying employees as independent contractors
- Failing to reimburse business expenses
- Ignoring reporting time pay rules
Does overtime apply after 8 hours or 40 hours?
In California, overtime applies after 8 hours in a day and after 40 hours in a week, whichever comes first. This is more favorable to workers than the federal standard, which only requires overtime after 40 hours in a week.
What is California’s “2-hour pay rule”?
If an employee reports for work as scheduled but is given less than half of their scheduled shift, the employer must pay for at least 2 hours at the regular rate, even if less work is performed.
This article covers the core concepts of California’s wage and hour laws, but employers and employees should note that these rules can vary depending on industry-specific wage orders, local ordinances, and collective bargaining agreements. Staying informed and in compliance is the best way to avoid costly disputes and ensure fair treatment in the workplace.