Calculating the “Regular Rate of Pay” in California
In California, the “regular rate of pay” is used to calculate overtime pay, paid sick leave under the Healthy Workplaces, Healthy Families Act, meal and rest period premiums, split shift premiums, and reporting time pay. Employers often assume the regular rate of pay is simply the employee’s base hourly rate. However, if an employee is paid multiple rates for different work, or receives other forms of compensation, their “regular rate of pay” will be more than the base rate. Employers who ignore this distinction risk costly wage and hour claims, PAGA actions, and Labor Commissioner audits. What Is the Regular Rate of Pay? The regular rate of pay is the true hourly rate an employee earns, factoring in most types of compensation—not just their base wage . Employers must calculate this rate accurately any time pay employees more than a base hourly rate. This concept is particularly important in California, which imposes stricter requirements than federal law in some situations. To calcula...