Under both California and federal law, nonexempt employees must be paid daily and weekly overtime at the rate of 1.5 times the employee's "regular rate" of pay. Daily double-time must be paid at 2.0 times the "regular rate."

But, what constitutes an employee's "regular rate" of pay?

Paying Overtime: 10 Key Exemption Concepts

Only one thing really matters in the determination as to whether or not an employee is exempt: The duties the employee performs. Learn how to avoid costly, preventable mistakes with our free White Paper, Paying Overtime: 10 Key Exemption Concepts.

All "remuneration" paid to an employee must be included in calculating a nonexempt employee's regular rate of pay — this means not only the employee's normal hourly rate (or weekly rate divided by 40 hours to determine the hourly rate), but also:

  • Any amount paid to an employee for completing a particular task or duty (such as a set amount paid for training other employees, or for working a holiday or a particular shift).
  • All nondiscretionary bonuses.
  • The value of certain non-monetary benefits paid to employees (such as the value of employer provided meals to restaurant workers, if the meals are regularly and routinely provided as part of the employee's overall compensation package).
  • The value of commission earnings for nonexempt commissioned salespeople.

Failure to properly calculate the right regular rate of pay for overtime and double-time can result in owing employees backpay, as well as waiting time and other civil penalties, if a complaint is brought by the Labor Commissioner or if an employee sues.