Staying compliant with California’s employment laws is a challenge for every business owner and HR professional.
With some of the strictest labor regulations in the country, failing to follow overtime rules can result in hefty penalties, lawsuits, and employee disputes. As we move into 2025, it’s crucial to understand the latest overtime laws, how they apply to your workforce, and what steps you need to take to stay compliant. Let’s break it down.
Understanding California’s Overtime Laws in 2025
California law provides greater overtime protections than federal law, meaning employers in the state must comply with stricter requirements. Here’s what you need to know
1. Employee Classification Matters
Under California law, every worker is presumed to be an employee unless the employer can prove the worker qualifies as an independent contractor under the strict ABC Test.
Why It’s Important: Misclassifying employees can lead to wage claims, back pay requirements, and legal penalties. If your business works with independent contractors, it’s critical to review your classifications now.
2. Overtime Pay Requirements in California
Nonexempt employees in California must receive overtime pay under the following conditions:
Time-and-a-half (1.5x regular pay rate):
- After 8 hours in a single workday
- After 40 hours in a single workweek
- For the first 8 hours worked on the 7th consecutive workday in a single workweek
Double-time (2x regular pay rate):
- After 12 hours in a single workday
- After 8 hours on the 7th consecutive workday in a single workweek
NOTE: Federal law only requires overtime after 40 hours per week. California’s daily overtime rule is stricter—a common mistake many businesses make.
3. What Happens If You Violate Overtime Laws?
Failing to comply with overtime regulations can lead to:
- Employee wage claims for unpaid overtime
- Penalties & fines from the California Labor Commissioner
- Lawsuits for wage and hour violations
If your payroll system isn’t tracking hours properly, or if managers aren’t enforcing overtime pay correctly, your business could be at risk.
How Employers & HR Can Ensure Compliance
1️⃣ Audit Employee Classifications – Ensure workers are correctly classified as either exempt or nonexempt. If in doubt, consult with an employment attorney.
2️⃣ Review Payroll Practices – Confirm that overtime wages are calculated and paid accurately under California’s daily and weekly overtime rules.
3️⃣ Update Employee Handbooks & Policies – Make sure your overtime policies are clearly defined and communicated to employees.
4️⃣ Train Managers & Supervisors – Those in charge of scheduling must understand when overtime kicks in and how to avoid unintentional violations.
5️⃣ Work with an Employment Law Attorney – Staying compliant isn’t just about knowing the law—it’s about having the right legal protections in place.
Need Help Navigating California’s Overtime Laws?
Overtime compliance isn’t just a legal requirement—it’s a business necessity. At Koegle Law Group, we help employers:
- Review employee classifications to prevent misclassification issues
- Ensure payroll systems align with California wage laws
- Create policies that protect businesses from legal risks
Don’t wait until a compliance issue arises. Contact Koegle Law Group today to ensure your business is prepared for 2025 and beyond.
Schedule a Consultation Today: https://www.koeglelaw.com/contact/
Call us at (661) 362-0813
