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California Question about Non-Exempts California

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  • California Question about Non-Exempts California

    I have a couple of questions about California payments to Non-Exempts:
    1) We pay semi-monthly to our Non-Exempts for the current period, but their hours for exceptions (i.e. overtime, shift diff, etc) are paid in arrears based on our pay calendar. In order to pay accurately we withhold hours from their exception weeks if they don't work their entire standard hours as paid in their prior paycheck. Is this a practice that we could get into trouble with?
    2) The meal period premium that is owed to employees. Is this additional pay beyond what they work in the day or is it just paying them for working the break?

  • #2
    1) I think I understand what you are trying to do. If I am correct, I would recommend doing it a different way. I think you are paying your employees based on scheduled hours that they should work during the pay period. If they don't work those hours, you deduct that pay amount from the OT check. While the math makes sense, I would argue that you should refrain from deducting from a check involving legally protected wages. It wouldn't take much to convince an outsider that you were illegally reducing their overtime pay. Doesn't matter if that is what is happening, just that it sounds like it might look that way. It would be much better to pay them in one check showing regular hours and "exceptions" worked for that pay period. Then you also have an accurate record of what their true hours worked were. Right now, it would be your word against the worker's word.

    2) The premium is in addition to paying them for the extra hour worked. Adding my editorial comment, it is much better to give your workers the breaks that they deserve rather than pay the premium.


    • #3
      Thanks for the response!

      Just for clarification on #1. We are not reducing the OT, just the standard hours that they didn't work are being reduced from the prior pay period. As an example the employee works 37 hours the week of August 7th and since we have paid through August 15th for the standard hours, on the August 31st check we would reduce their standard hours by 3 since we overpaid them on their base pay. Do you view that as could be construed negatively to our business?


      • #4
        As long as the check details that you are reducing regular pay and not OT pay, then you should be ok.

        You are being generous by paying them in advance. Most employers hold the regular and OT pay until the pay period is finished to make sure that those type of adjustments aren't necessary.


        • #5
          Are you paying the SAME "standard hours" each pay period? For example, full-time, 40 hours per week, the "standard hours" for a semi-monthly pay period is 86.67. Of course, there are no combinations of 8-hour days that equal 86.67.

          So, let's say there were 10 working days in the current semi-monthly pay period, and you are making a correction to the prior pay period in which the employee was paid their regular SM amount, but instead missed one day of work, so you want to short them one day this pay period.

          In effect, this would result in the employee getting paid for only 78.67 hours for the pay period, when there were 80 working hours in the period. Now, having said all this, does it normally work out over the long haul? More likely, yes than no. But, is it a PITA to administer and to explain to an employee? Yes, especially since the pay period hardly ever includes 2 full workweeks and 2 full workweeks only.

          Which is why, as a payroll and compensation professional with MANY years of experience, I recommend strongly that nonexempt employees be paid no less frequently than biweekly (with the pay period corresponding to full workweeks) AND paid after the fact (in "arrears"). Much cleaner, easier, explainable, etc. Plus, NO chance of "underpaying" the employee.
          I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.


          • #6
            Your pay calendar is covered in Cal. Labor Code 204:

            All wages, other than those mentioned in Section 201, 202,
            204.1, or 204. 2, earned by any person in any employment are due and
            payable twice during each calendar month, on days designated in
            advance by the employer as the regular paydays. Labor performed
            between the 1st and 15th days, inclusive, of any calendar month shall
            be paid for between the 16th and the 26th day of the month during
            which the labor was performed, and labor performed between the 16th
            and the last day, inclusive, of any calendar month, shall be paid for
            between the 1st and 10th day of the following month.
            Notwithstanding any other provision of this section, all wages
            earned for labor in excess of the normal work period shall be paid no
            later than the payday for the next regular payroll period.

            In terms of taking the automatic deductions for overpayments, this is a general practice used by many companies. However, in most cases, the employer has a statement on each timecard which authorizes the deduction. Something along the lines of:

            "By signing this time card, I represent that all the above hours are true and correct. I also authorize employer to deduct any previously overpaid wages from my paycheck."

            The above signed release on each timecard may not be legally necessary, but it does help to clarify to the employee that the deduction will be taken.
            Michael Tracy

            Disclaimer: The above response is a general statement of the law and should not be relied upon as legal advice. It only assumes the facts that are stated in the message. The above response does not serve to form an attorney-client relationship.


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