California Wage-Hour Laws Require Payroll’s Special Attention

Payroll professionals must pay special attention to California’s wage and hour laws, since they often differ from federal law and have stricter rules for employers, two payroll experts said May 8.

California law, for example, requires an employer to generally pay overtime at 1.5 times a nonexempt employee’s regular rate of pay for any hours worked in excess of eight in a workday or for any hours worked in excess of 40 in a workweek, said Mindy Mayo, a managing director for KPMG LLP. Federal law only requires overtime pay for nonexempt employees for hours worked in excess of 40 in a workweek.

If employees work for seven consecutive days, employers must also provide overtime at 1.5 times the regular rate of pay for the first eight hours worked on the seventh consecutive day, under state law. The amount of overtime pay rises to twice the regular rate of pay for any hours worked in excess of eight on the seventh consecutive day of work and for any hours worked in excess of 12 during any workday, she said.

"[Overtime pay] is for your defined workweek, not necessarily Sunday to Saturday,” added Hannah Huneidi, Payroll Manager for Payroll Helps LLC.

Also unlike federal law, California requires employers to provide meal and rest breaks to employees, Mayo said. A meal period of at least 30 minutes must be given to employees who work for at least five hours in a workday, and a rest period of at least 10 minutes must be given to employees who work for at least four hours in a workday.

“If you work less than six hours a day, you can voluntarily waive the meal period,” Huneidi said. “I highly advise that you have this documented in case of an audit.”

If an employee works more than 10 hours in a day, the employer must provide a second meal period of at least 30 minutes. However, the employee and employer can mutually agree to waive the second meal period as long as the first meal period was not waived, she said.

Rest periods are only required if an employee works more than 3.5 hours in a workday, she said. If possible, the rest period should be taken midway through the work period.

The state also requires employers to provide paid sick leave to employees, which is not required under federal law, Mayo said. Last year, the state enacted SB 616, a law that increased the minimum amount of paid sick leave that employees may use each year to 40 hours from 24 hours.

Employees must be able to accrue at least 80 hours, or 10 days, of paid sick leave in a year, she added. Previously, employers could prevent employees from accruing more than 40 hours, or five days, of paid sick leave in a year.

SB 616 also preempts any local ordinances governing paid sick leave that are less generous than the state’s paid sick leave laws and regulations, she said.