Paying overtime seems simple — time and a half for hours over 40, right? Wrong. California’s overtime laws are far more complex, and calculation errors can trigger not just back pay, but penalties, interest, and attorney fees that can devastate a small business budget.

Here are five overtime calculation mistakes that could cost you big:

1. Using Federal Rules Instead of California Rules
California requires overtime after 8 hours in a day AND 40 hours in a week, plus double-time after 12 hours daily. Federal rules alone won’t cut it.

2. Excluding Bonuses from Overtime Calculations
Non-discretionary bonuses, commissions, and shift differentials must be included in the regular rate when calculating overtime premiums.

3. Misclassifying Employees as Exempt
Just because someone has a salary doesn’t make them exempt. California’s exemption tests are strict, and misclassification can result in years of back overtime pay.

4. Incorrect Workweek Calculations
Your workweek must be consistent and clearly defined. Changing workweeks to avoid overtime or using inconsistent periods can trigger violations.

5. Forgetting Alternative Workweek Schedules
Four 10-hour days can be legal, but only with proper alternative workweek agreements approved by employees through specific voting procedures.

Need an Overtime Reality Check?
DP Human Capital Management can help you audit your overtime practices and ensure your calculations comply with California’s complex requirements. Don’t let overtime errors work against your bottom line.

Schedule an overtime compliance review today.