Challenge: Customer switched to Workforce.com mid-quarter with incomplete returns from previous provider.
Industry Standard: Most providers would require the client to resolve issues with their previous provider or charge significant fees for manual corrections.
Workforce.com Approach: Submitted manual corrections free of charge, saving the client time, stress, and potential penalties.
Implications of Workforce.com Approach: Without Workforce.com’s intervention, the employer would face potential IRS penalties for incomplete filings, interest on unpaid taxes, and compliance violations that could trigger audits. The employer would also need to divert staff time to resolve the issue or pay their previous provider additional fees. Workforce.com eliminated these financial risks and administrative burdens completely.
Case Study 2: IRS EIN Merger Complication
Challenge: IRS automatically merged a customer’s two EINs, creating filing discrepancies.
Industry Standard: Typical providers might identify the issue but expect the client to resolve it directly with the IRS.
Workforce.com Approach: Invested hours on calls with the IRS to investigate the root cause, then manually reconciled transcripts with submissions to ensure compliance.
Implications of Workforce.com Approach: The standard approach would leave the employer facing potential IRS notices, penalties for apparent underpayment of taxes, and the need to hire specialized tax consultants to resolve the issue. These discrepancies could lead to incorrect tax assessments costing thousands of dollars and jeopardizing the company’s tax compliance record. By taking ownership of this complex problem, Workforce.com saved the client approximately 15-20 hours of specialized accounting work (valued at $3,000-5,000) and prevented potential penalties that could have exceeded $10,000.
Case Study 3: Late Discovery of Missing Payroll Data
Challenge: Client forgot to share January payruns during February implementation, only revealing this two weeks before federal filing deadlines the following January.
Industry Standard: Most providers would either charge rush fees, delay corrections until after deadlines, or require the client to file amendments themselves.
Workforce.com Approach: Rapidly produced corrected W-2s and completed all federal and state filings within just three business days.
Implications of Workforce.com Approach: The standard industry response would likely result in missed filing deadlines, triggering automatic IRS penalties (starting at $50 per W-2 and increasing to $260 for extended delays), plus separate state penalties. Employees would receive incorrect W-2s, potentially delaying their personal tax filings or requiring them to file amendments. The employer would face not only financial penalties but also diminished employee trust. Workforce.com’s rapid response prevented additional penalties and preserved the employer’s reputation with employees. Additionally, this quick resolution allowed employees to file their personal taxes on time without complications.
Pay transparency laws help promote pay equity and transparency by requiring employers to disclose information, such as wage information and benefits, in job postings.
There is no federal law on pay transparency, but several states have implemented their own regulations.
Payroll software can help standardize pay rates and ensure compliance, especially for businesses operating across state lines.
To bridge the pay equity gap, several states and localities in the United States have enacted pay transparency laws. These laws have helped promote openness around hiring processes and compensation, but they’ve also introduced challenges for HR and payroll teams.
What does pay transparency mean?
Pay transparency refers to the practice of disclosing compensation-related information to employees, job applicants, or the public. This can include salary ranges, benefits, wage changes due to promotions, or pay by role or department. The level of disclosure depends on local or state laws. Some jurisdictions require proactive disclosures, while others only mandate sharing this information upon request. Certain regulations also specify whether disclosures must be made internally, externally, or both.
The goal of pay transparency is to ensure employees are paid fairly and to help them assess whether their compensation aligns with their role. When implemented effectively, pay transparency can support talent attraction and retention, enhance employee morale, strengthen employer branding, promote pay equity, and mitigate wage discrimination or unfair labor practices.
However, transparency also puts the responsibility on employers to manage how employees respond, especially when they discover they’re earning at the lower end of a wage range. It also adds compliance complexity, particularly for multi-location businesses navigating a patchwork of state and local laws.
Is there a federal law on pay transparency?
At the federal level, there are currently no federal laws requiring businesses to disclose pay information. In the absence of nationwide regulations, some states have introduced their own pay transparency laws, requiring organizations operating within their borders to meet specific disclosure requirements.
Which states have pay transparency laws?
Currently, 14 states, including D.C., have implemented pay transparency laws at the state level. While Ohio doesn’t have a statewide policy, some of its local jurisdictions have adopted their own rules.Here’s a running list of states and localities with pay transparency laws in place:
California
Employers with 15 or more employees must include the pay scale for a position in any job postings, including third-party organizations that are posting job ads on their behalf.
Upon request, employers must provide the pay scale to an employee for the position that they are currently employed.
Employers must maintain records on the job title and wage history of each employee for the duration of their employment plus three years after they’re no longer with the company. Records should be open to inspection by the Labor Commissioner.
Employers with 100 or more employees are required to submit an annual report on pay data, which is due every year in May.
Colorado
Under Colorado’s Equal Pay for Equal Work Act, pay transparency rules require employers with at least one employee in the state to:
Disclose pay and other information in job postings and notices, internally and publicly:
Compensation, benefits information, how and when to apply
The rate of pay or a range of offered rates (hourly, salary, piece rate)
General description of any other compensation (e.g. bonuses, commissions, or tips)
Disclose available job opportunities to all employees and also disclose who was selected.
Disclose how to advance through career progressions to eligible employees.
Keep records of wages and job descriptions.
Connecticut
Employers must include the pay range (salary or hourly rate) and a description of benefits to external job ads, internal job postings (promotions or transfers), and remote jobs if an employee would report to someone in Connecticut.
Disclosure should be upfront and proactive.
District of Columbia
Employers with one or more employees in D.C. must provide the minimum and maximum projected salary or hourly pay in all job listings.
Employers must disclose healthcare benefits before the first interview.
Employers must post a notice about employee rights under this law in a visible, shared space at work.
Hawaii
Employers with 50 or more employees must include the hourly rate or salary range in job listings.
However, the law does not specify the location of the 50 or more employees nor the type of their employment.
Unlike other states, Hawaii does not require employers to disclose pay information on internal transfers and promotions.
Illinois
Employers with 15 or more employees (full-time or part-time) must include a pay range and a description of benefits.
Employers must inform current employees of job openings.
If an employer posts a job posting publicly, they are also required to inform all current employees of the job opportunity within 14 days.
Maryland
Internal and external job postings should include the pay range, a general description of benefits, and other compensation details offered (e.g., overtime, tips, commissions, bonuses, etc.).
Massachusetts
Employers with 25 or more employees must disclose the pay range in the job posting for any position.
Employees and job applicants have the legal right to know the pay range for a job when they apply, get promoted, transfer, or start a new position with an employer that has 25 or more employees.
Current employees can also ask for the pay range for their current position.
Minnesota
Employers with 30 or more employees are required to disclose the pay range for each job posting.
Employers must also provide a general description of benefits and other compensation (e.g. health or retirement benefits).
If the employer can’t provide a salary range, they must list a fixed rate.
Nevada
Employers must disclose the wage or salary range for a position to applicants after an interview.
Employers must also disclose the wage and salary range for current employees who are seeking a promotion or transfer.
New Jersey
Employers with 10 or more employees over 20 calendar weeks must disclose the hourly wage, salary, or pay range in external job postings, internal promotions, or transfer opportunities. They must also provide a description of benefits an employee can expect to receive in the first 12 months.
Jersey City: Local rules in Jersey City require employers with five or more employees to disclose the minimum and maximum base salary or hourly wage, as well as the job benefits being offered.
New York
New York has statewide rules and local regulations in place.
In New York state, employers with 4 or more employees are required to:
Disclose pay ranges for all jobs, promotions, and transfer opportunities.
Include a job description, except when the job title itself is self-explanatory.
New York City, Ithaca, Albany, and Westchester County have their own pay transparency rules. Their regulations are similar and aligned with state requirements but may have differences in who can file a complaint to the state’s department of labor and the penalties involved. For instance, New York City allows employers a 30-day window to correct their pay information once they receive a notice of violation. The state law doesn’t have this provision.
Rhode Island
Employers are required to disclose the pay range when someone is hired, when an employee moves to a new job within the company, or when an employee requests it.
Vermont (Effective Date: July 1, 2025)
Businesses with 5 or more employees, with at least one working in Vermont, must include a minimum and maximum salary range in all job ads, including internal and external postings, promotion opportunities, and transfers.
Employers must clearly state if jobs are commission-based.
Employers must specify a base wage for tipped positions.
Washington
Employers with 15 or more employees must include the salary range, general description of all benefits, and other compensation offered in their job postings.
Employers must provide the salary range for new positions to employees who are offered a transfer or promotion.
Ohio
Ohio does not currently have a statewide pay transparency law. However, some local rules are currently in effect.
Cincinnati and Toledo: Employers with 15 or more employees must disclose the salary range upon request after the first interview.
Cleveland: Employers with 15 or more employees must include the salary range in job postings. (Effective date: October 27, 2025)
How can businesses adapt to pay transparency laws?
Pay transparency is gaining momentum, and more states and localities are expected to enact rules in the near future. While these laws aim to close wage gaps, they can present challenges, especially for businesses operating across multiple jurisdictions.
Pay transparency laws often trigger company-wide policy changes. While HR usually leads these updates, payroll teams play a crucial role in ensuring that publicly disclosed pay ranges align with actual employee compensation.
Here are some practical tips to help payroll teams prepare and comply with current wage transparency rules and stay ahead of new laws:
Standardize pay rates across job sites and states
Consistent pay structures are crucial for compliance, particularly when hiring across multiple locations. Job titles and pay ranges should be clearly defined and aligned to meet local disclosure requirements. Inconsistencies can result in compliance risks and employee mistrust.
Post accurate and realistic pay ranges
Job postings must reflect actual compensation, not placeholders. Pay ranges should be based on current pay data and reflect what job candidates can realistically expect to earn. Ranges like “$50,000–$100,000” can signal noncompliance or raise red flags with regulators.
Evaluate internal pay equity across similar roles
Regular pay equity audits can help identify whether employees in similar roles are being paid fairly and equitably. If differences or disparities exist, document whether they are justified by performance, tenure, or other legitimate factors. Transparency laws make it critical to catch and address any unexplained gaps.
Keep organized payroll records
Accurate, centralized payroll records are essential. You’ll need clear documentation connecting job titles, hours worked, and pay rates, especially if employees or regulators request it.
Upgrade your systems to support compliance
Manual processes and outdated tools make compliance more difficult and prone to error. Upgrade your existing systems to centralize all your data and make it easy to track pay rates, monitor pay equity, and stay ahead of legal requirements.
How Workforce.com helps with pay transparency compliance
Workforce.com combines payroll, time tracking, and scheduling into a single system. You can assign pay rates by role and location, ensure job postings reflect current compensation, and quickly identify any gaps and inconsistencies. With centralized records and reporting, it’s easier to comply with transparency requirements and to build a more consistent payroll process overall.
Discover how Workforce.com can help simplify payroll and compliance with pay transparency rules. Book a demo today.
This information is for general purposes only and should not be considered legal advice. While we strive to keep it updated, labor laws and regulations can change at any time. It’s always a good idea to consult with a legal professional or relevant authorities to comply with the most current standards.
New Jersey’s Pay Transparency Act will be in effect by June 1, 2025.
Employees will be required to disclose pay ranges and benefits new hires can expect to receive within 12 months of employment..
Payroll software is crucial to ensuring that publicized salary ranges match what employees are being paid.
New Jersey joins a growing list of states that have implemented pay transparency laws, including New York, California, and Colorado. Starting June 1, 2025, the Pay Transparency Act will require covered employees to include pay information and benefits data in job postings, both for new roles and internal opportunities.
The act is designed to improve pay equity by making compensation more transparent to job seekers and employees alike.
Who’s covered?
The law applies to employers who meet the following criteria:
Have 10 or more employees over 20 calendar weeks
Conduct business in New Jersey
Employ workers in New Jersey
Accepts applications for employment in New Jersey
What must be disclosed?
Employers must disclose:
The hourly wage, salary, or pay range
A description of the benefits an employee can expect to receive in the first 12 months
These conditions apply to external job postings, internal promotions, and transfer opportunities. Employers must disclose any opportunities for promotion to all current staff in the affected department. However, promotions resulting from “unforeseen events” or based on years of service or performance are exempt from the notice requirement.
What happens if you don’t comply?
Employers who fail to comply can be subject to a penalty of $300 for first-time violations and up to $600 for subsequent violations.
What the new law means for payroll teams and how New Jersey businesses can adapt
Compliance with this new regulation has a lot to do with policy changes, and it’s easy to think that this is more of HR’s domain. However, once salary bands are made public, payroll teams must ensure that those numbers align with actual compensation data.
Here are some practical tips to help payroll teams prepare:
Standardize pay rates across locations
If you’re hiring across state lines, you must ensure that each job post meets corresponding pay disclosure requirements in every state.
Businesses operating in multiple locations often face challenges with standardizing job titles and pay rates. With Workforce.com, you can set pay rates for different roles or locations, which helps avoid any inconsistency between what’s posted on job listings and what’s paid.
Align job postings with actual pay data
To comply with laws like this, job postings must be audited against internal pay data. But this is easier said than done when compensation information is scattered across different spreadsheets or platforms.
With Workforce.com, all your pay and role information lives in one system, making it easy to review, audit, and generate realistic pay ranges.
For instance, instead of posting a vague range of $15-$25/hour, Workforce.com can help you determine the median pay rate for the role across locations, which will help you set a more realistic pay band.
In states that already have pay transparency laws, some businesses have received criticism for posting an overly broad range (e.g. $40,000-$120,000), which feels less like transparency and more like an attempt to skirt the law. If you’re serious about compliance and attracting the right people, realistic ranges matter.
Audit job titles across roles
Payroll teams should look for pay disparities between employees with similar roles. If two people are doing the same work but receiving different pay, it’s important to understand why.
Again, addressing these gaps is a matter of having the right data. Workforce.com houses employee records and pay rate history, which enables you to quickly identify inconsistencies among job titles and their pay. Managers can filter reports by job title and location to check whether employees with similar roles are paid within the same pay range.
Maintain clean payroll records
Keeping payroll records organized is a huge part of complying with different labor laws, including pay transparency requirements. Workforce.com keeps this information organized because it unifies time tracking, scheduling, and payroll. Ultimately, it creates a clean audit trail that connects job titles, hours worked, and pay rates. Having that information organized can help with compliance, especially if state regulators and employees ask for proof.
Invest in a good payroll system
Payroll is too complex to manage manually or with outdated tools. More than processing paychecks, a good payroll system centralizes your data such as pay rates, job roles, and other relevant information that can be crucial to compliance.
Workforce.com was built to simplify this. It brings payroll and HR together, giving you a clearer view of your team and helping you stay compliant with new regulations.
Simplify compliance with Workforce.com
Pay transparency is both an HR and payroll challenge. With New Jersey’s law taking effect, it’s high time to ensure job postings align with what employees are actually paid. Workforce.com has the tools to help audit pay data, standardize pay rates across locations, and make payroll reports—all to help you stay compliant.
See how Workforce.com makes payroll transparency easy for hourly teams. Book a demo today.
The Trump administration is resuming wage garnishment for defaulted student loans starting May 5, 2025, with employers required to withhold up to 15% of employees’ disposable income. Small and mid-market businesses face significant administrative responsibilities including calculating garnishment amounts, processing deductions, and maintaining documentation, with estimated costs of 1-2 hours of staff time for initial setup and 15-30 minutes per affected employee each pay period.
Unlike most debt collection, federal student loan garnishment requires no court order, making implementation immediate once employers receive notice. Businesses that fail to comply face substantial liability risks, potentially becoming responsible for the employee’s entire debt plus penalties.
The concept of garnishing student loan payments directly from paychecks first emerged in February 2019, when then-Senator Lamar Alexander proposed it as part of reauthorizing the Higher Education Act. That original proposal called for a universal withholding system for all federal student loan borrowers, offering two options: an income-driven plan capping payments at 10% of discretionary income or a standard 10-year repayment plan.
While that proposal never became law, the current Trump administration announced in April 2025 that collection efforts on defaulted federal student loans would resume after a five-year pause that began during the COVID-19 pandemic. This implementation differs significantly from the 2019 proposal:
The current policy applies only to defaulted loans (typically 270+ days delinquent)
It follows administrative wage garnishment procedures established in the Debt Collection Improvement Act of 1996
Collections through the Treasury Offset Program began May 5, 2025
Wage garnishment notices will be sent to employers “later this summer”
The Department of Education maintains that resuming collections is not discretionary but required by the Higher Education Act. Education Secretary Linda McMahon stated that “American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies.”
Employer Responsibilities and Implementation Mechanics
When an employer receives a student loan wage garnishment order, they face several mandated responsibilities:
Immediate Responsibilities
Process garnishment orders as soon as received (no court order required)
Calculate the employee’s “disposable earnings” (gross pay minus legally required deductions like taxes)
Withhold up to 15% of disposable income
Notify affected employees about the garnishment
Begin withholding from the next available pay period
Send garnished funds to the agency specified in the order
Ongoing Requirements
Continue garnishment until receiving an official release or the debt is paid
Recalculate withholding if employee income changes
Maintain proper documentation of all garnishment activities
Ensure total garnishments don’t exceed legal limits (25% across all garnishments in most cases)
Manage priority order if multiple garnishments exist
The process differs from typical debt collection garnishments in critical ways. Most significantly, federal student loan garnishment is an administrative wage garnishment that doesn’t require judicial process. This means employers must implement these orders immediately upon receipt, with no court validation required.
Administrative Burden and Costs for Small/Mid-Market Businesses
Small and mid-market businesses bear disproportionate burdens from wage garnishment requirements due to limited administrative resources and less sophisticated payroll systems.
Time Requirements
The administrative work includes:
1-2 hours of staff time for initial processing of each garnishment order
15-30 minutes per affected employee each pay period for ongoing maintenance
Additional time for addressing employee questions and concerns
Small businesses face higher garnishment rates (13%) than large firms (8.7%), according to ADP Research Institute data, meaning they often handle more garnishments with fewer resources.
Financial Costs
While exact costs vary by business size and number of affected employees, expenses typically include:
Staff time costs (payroll/HR personnel diverting from core functions)
Potential investment in payroll system upgrades
Legal consultation expenses
Administrative fees (some states allow employers to charge employees $1-10 per payment)
Potential liability costs if garnishment orders aren’t processed correctly
For a small business with 25 employees and 3 garnishment orders, this could translate to approximately 6-8 hours of initial setup time plus 1-2 hours per pay period for ongoing maintenance—significant for operations with limited administrative staff.
Compliance Risks
The most severe cost comes from non-compliance. Employers who fail to properly implement garnishment orders can be held liable for the entire amount that should have been withheld, plus potential penalties and interest. For businesses processing multiple student loan garnishments, this represents substantial financial risk.
Timeline and Implementation Challenges
The current timeline creates several challenges for employers:
The Treasury Offset Program (seizing tax refunds, certain federal benefits) resumed May 5, 2025
Wage garnishment notices will be sent to employers “later this summer”
Approximately 5.3 million borrowers are currently in default, with nearly 4 million more at risk
Employers may face a sudden influx of garnishment orders with minimal preparation time
This compressed timeline coincides with other significant challenges:
The Department of Education is reducing staff by approximately 50%
Student loan management is transitioning from the Department of Education to the Small Business Administration
Many businesses face other economic pressures from inflation and tariffs
The administration has not announced any implementation assistance programs for affected employers despite the sudden resumption of collections.
Reasoning and Context for the Policy Shift
The Trump administration presents several justifications for resuming wage garnishment:
Fiscal responsibility: Officials argue taxpayers should not continue bearing costs of nonrepayment
Legal requirement: The administration maintains the Higher Education Act requires them to pursue collections
Normalizing operations: Officials frame this as returning to standard practice after an extended pandemic pause
Deterrent effect: Research suggests potential garnishment can motivate some borrowers to seek repayment options
Critics counter that the timing is problematic amid economic pressures, and that more effective alternatives exist, such as expanded income-driven repayment options.
Federal vs. Private Student Loan Treatment
The enforcement mechanisms differ significantly between federal and private student loans:
Aspect
Federal Student Loans
Private Student Loans
Legal process
Administrative wage garnishment without court order
Requires lawsuit, judgment, and court order
Garnishment limit
Up to 15% of disposable income
Up to 25% of disposable income (varies by state)
Default timeline
270 days of missed payments
Often 90 days of missed payments
Notice requirement
30-day notice before garnishment
Varies by state law
Additional collection
Tax refund offsets, Social Security reduction
Limited to wage garnishment and asset seizure
Protected income
Some federal benefits partially protected
Social Security and disability typically fully protected
For employers, the key difference is that federal loan garnishments arrive directly from the Department of Education with no court validation required, while private loan garnishments must first go through judicial process, potentially giving employers more time to prepare.
Precedents for Similar Wage Garnishment Systems
The current policy builds on established legal frameworks:
Higher Education Act of 1965 (Section 488A): Authorized garnishment up to 10% of disposable pay for defaulted student loans
Debt Collection Improvement Act of 1996: Expanded authority to 15% and standardized administrative wage garnishment procedures
Consumer Credit Protection Act: Provides general protections for all wage garnishment (maximum 25% total garnishment, employment protection)
The Department of Education has successfully implemented wage garnishment for student loans for over 20 years. Many of the debt collection mechanisms in current use were modeled after the Department’s existing practices.
Other similar systems include:
IRS wage levies for tax debts
Child support wage withholding
Bankruptcy-related wage earner plans
Expert Opinions on Feasibility and Impact
Experts offer varied perspectives on the policy’s implementation and effects:
On Feasibility
Mark Kantrowitz, higher education expert, questions the accelerated timeline: “It sounds like they are not pursuing the normal due diligence schedule for collecting defaulted federal student loans.” (CNBC)
On Economic Impact
Pew Research found 79% of borrowers who experienced wage garnishment reported it had a “major” financial impact, more severe than other consequences of default. (Pew Trust)
Federal Reserve projections suggest borrowers with delinquencies could see credit scores fall by up to 171 points, affecting their ability to secure housing and transportation. (CNBC)
Mike Pierce, executive director of the Student Borrower Protection Center, warns: “This will further fan the flames of economic chaos for working families across this country.” (Student Borrower Protection Center)
On Business Impact
Small business advocates note the disproportionate burden on smaller operations without dedicated compliance resources.
Scott Buchanan, executive director of the Student Loan Servicing Alliance, emphasizes proactive approaches: “Most borrowers…they’re not in danger of default today, but in five months, they could be. Taking action today is pretty important.” (NEPM)
Conclusion
The resumption of student loan wage garnishment represents a significant administrative challenge for employers, particularly small and mid-market businesses. While the legal framework for these garnishments is well-established, the sudden implementation after a five-year pause creates operational burdens with minimal preparation time. Small businesses face disproportionate impacts due to limited administrative resources, higher garnishment rates, and potential liability risks. For affected employers, developing clear internal processes, ensuring payroll systems can handle garnishment calculations, and documenting all actions will be crucial to navigating this policy shift without incurring significant costs or liability exposure.
Payroll deductions can be more challenging to manage for hourly teams due to different factors such as variable schedules, different pay rates, higher turnover, and location-based compliance rules.
Handling payroll deductions for hourly teams goes beyond automation. It requires a system that can adapt to the complexities of hourly work.
Workforce.com’s payroll software simplifies deduction tracking, ensuring accurate wage calculations and compliance on every pay run.
Effective January 1, 2025, the minimum wage in California is at $16.50 per hour. But that’s not the only thing you should know, especially if you have multiple business locations in the state. Many cities and counties in California have their own minimum wage laws, many with rates higher than the state’s.
Whether you’re operating in one city or twenty, staying compliant means more than being adept at the law; it’s about having the systems in place to implement it.
The minimum wage landscape in California
California’s state minimum wage is currently $16.50, which is well above the federal minimum, with enforcement being overseen by the Department of Industrial Relations. The 2025 increase was deemed necessary because the consumer price index (CPI) grew by 3% over the previous year, as required by state law.
California also enforces prevailing minimum wage laws specific to certain industries, such as fast food and healthcare.
Fast food employees – $20 per hour, effective April 1, 2024 for covered workers
Healthcare workers – $18-23 per hour effective October 16. 2024 for covered workers depending on the type of facility
Beyond statewide and industry-specific labor laws, business owners must also monitor local minimum wage rates. Some localities follow the state minimum wage, but other cities and counties impose their own, which is often higher than the state’s. Cost of living, economic conditions, and local policy goals are typically the factors that drive local regulations for setting unique minimum wage rates.
California minimum wage by city or county
Below is a breakdown of cities and counties in California that have their own, many of which have higher minimum wage rates than the state’s.
City/County
2025 Minimum Wage
Alameda
$17
Belmont
$18.30
Berkeley
$18.67
Burlingame
$17.43
Cupertino
$18.20
Daly City
$17.07
East Palo Alto
$17.45
El Cerrito
$18.34
Emeryville
$19.36
Foster City
$17.39
Fremont
$17.30
Half Moon Bay
$17.30
Hayward
$17.36
*$16.50 or state minimum wage for businesses with 25 or fewer employers
Los Altos
$18.20
Los Angeles City
$17.28
Los Angeles County (unincorporated)
$17.27
Malibu
$17.27
Menlo Park
$17.27
Milpitas
$17.70
Mountain View
$19.20
Novato
$17
Oakland
$16.89
Palo Alto
$18.20
Pasadena
$17.50
Petaluma
$17.97
Redwood City
$18.20
Richmond
$17.77
San Carlos
$17.32
San Diego
$17.25
San Francisco
$18.67
San Jose
$17.95
San Mateo
$17.95
San Mateo County (unincorporated)
$17.46
Santa Clara
$17.27
Santa Rosa
$17.87
Sonoma
$18.02
$16.96 for employers with 25 or fewer employees
South San Francisco
$17.70
Sunnyvale
$19.00
West Hollywood
Local minimum wage variations by size
In some cities, local minimum wages include different rates based on employer size. For example, Hayward and Sonoma set lower minimum wage thresholds for small businesses with 25 or fewer employees.
This adds yet another layer of complexity for business owners, especially when it comes to calculating pay accurately and staying compliant across multiple jurisdictions.
Understanding unincorporated localities
Another detail to watch out for is unincorporated areas. These regions are not part of an incorporated city but fall under the direct jurisdiction of the county government.
Take Los Angeles County, for example. Cities like Los Angeles or Pasadena have their own local governments and wage laws. But places like Hacienda Heights and Walnut Park are unincorporated and are not part of the City of Los Angeles but within Los Angeles County. This means that the county’s minimum wage applies to them, not the city’s.
Challenges for California employers
Handling minimum wage in California presents unique challenges, especially for businesses operating in multiple areas. Here are some challenges business owners typically face and tips on what to watch out for:
Payroll complexities
Managing payroll is never simple, but it becomes more complex when you’re dealing with multiple locations, varying pay rates, and hourly employees working in various roles. Add to that the different local minimum wages across cities and counties. It could be easy to overlook details, such as mistakenly paying an employee in an unincorporated area the city minimum wage rather than the county wage.
Inconsistent labor costs
Multiple minimum wages in California, along with industry-specific wage laws, overtime and meal/rest break laws, and other labor ordinances, can lead to inconsistent labor costs for businesses in the state. This presents a significant challenge to organizations wanting to keep their labor costs leveled and consistent as much as possible.
Wage compression issues
Wage compression occurs when the pay gap between entry-level employees and more experienced workers narrows. This often happens when minimum wage increases outpace raises for more seasoned staff, making the difference between the two smaller.
To further illustrate, here’s an example. Let’s say your business in Los Angeles used to pay entry-level workers $16 and shift supervisors $18. And now, the minimum wage is at $17.28 per hour. Naturally, entry-level pay should follow this new rate to comply with the law. However, your shift supervisors will end up just earning $0.72 more, which may not be reflective of their responsibilities and roles.
This can result in a drop in morale, and experienced employees may feel undervalued. Raises may also become reactive rather than strategic, creating a ripple effect in your payroll structure.
Best practices for complying with California’s minimum wage laws
California has one of the most complex labor landscapes in the country, including local minimum wage rates and rules. So, how do employers stay on top of compliance?
Automate HR and payroll
Even the most experienced payroll and HR professionals can make mistakes, especially when handling multiple wage rates across cities, industries, and employee roles. That’s why using software to automate processes is vital.
However, not all payroll systems are built the same. If you’re managing something as nuanced as California minimum wage laws, you need a robust and centralized system. This is where Workforce.com comes in, and these are the ways it helps California businesses stay compliant and efficient:
Wage and hour automation: Multiple pay rates and minimum wages are the least of your concerns with Workforce.com. The platform automatically applies the minimum wage according to role and location, including cases where employees work multiple roles across different cities. It also accurately calculates overtime.
Employee classifications: Another cause of payroll mistakes is misclassifying employees, and that’s one thing that Workforce.com eliminates for employers because all data and information live in one place. This includes employee details, such as their employment status, corresponding pay rates, and bank information. If any employee information gets changed down the line, it’s reflected instantly across schedules and payroll. No need for manual re-entry.
Accurate time and attendance tracking: Inaccurate employee time logs can lead to payroll mistakes.. Workforce.com turns employee clock-in and clock-out into timesheets, which managers can easily verify and check.
Labor forecasting: California’s ever-changing labor rules can cause inconsistent labor costs. Workforce.com helps stabilize costs by forecasting demand based on relevant factors such as historical sales, upcoming events, booked appointments, foot traffic, and even weather.
When creating schedules, managers can easily see how much each shift would cost and receive alerts if they schedule someone for overtime or forget to schedule break times. This will help avoid unnecessary labor costs or potential fines for non-compliance.
Real-time alerts: Managers get live updates when employees fail to clock in or out for a shift or break time. They will also get alerts when employees are about to breach overtime, especially if they’re not scheduled for it. This allows teams to fix small issues before they turn into bigger problems.
Conduct regular wage audits
Conducting wage audits in the state of California is essential because it helps employers stay on top of local rate changes. While most cities raise their minimum wages annually, note that they can do so on different schedules.
Regular wage audits ensure your pay structure reflects the latest local rates. They also help you catch wage compression issues early, keeping your compensation strategy fair and employee morale intact. In case you face a labor board inquiry or employee complaint, having audit records on hand gives you the evidence you need to respond quickly.
Train your managers
Automation is powerful, but it also pays to equip your managers with the right information and training on handling complicated labor rules.
Regularly train your management team on California’s local wage laws. These rules can change frequently, so ongoing refreshers are vital. Managers should also have tools and resources to help them explain wage-related issues and faqs to employees and recognize compliance gaps in workflows or systems.
California’s minimum wage rules can change quickly. Stay ahead by automating wage rates and catching compliance issues before payroll with Workforce.com. See the platform in action and book a demo today.
Federal overtime laws require that employers provide overtime pay to those who work over 40 hours per workweek.
Many states have their own overtime laws. States that do not have their own overtime rules default to the federal law.
Many employers opt to use specialized payroll platforms that can automate overtime calculations and payments.
If you are in charge of hourly employees, it’s likely that there will be days, weeks, or even months when your staff needs to work extra hours. Whether that’s over a typical eight-hour workday or a 40-hour workweek, the federal government has made it mandatory to compensate all non-exempt employees. This is important as it protects workers and rewards them for the additional time they spend supporting your business.
Some states have their own overtime laws, while others do not. It’s crucial to stay informed on the current overtime regulations in your state. In fact, if an employer willfully or repeatedly violates overtime requirements, they will be subject to a civil money penalty of up to $1,000 for each violation.
Luckily, the laws themselves are relatively straightforward. Below we’ve compiled the federal laws along with a table outlining the overtime laws by state.
According to the US Department of Labor, federal laws on overtime pay are determined by the Fair Labor Standards Act (FLSA). The FLSA states that all non-exempt employees are entitled to overtime pay for working over 40 hours in a workweek. If an employee has exempt status, such as a salaried employee, you are not required to provide overtime.
The rate of overtime pay must be no less than time and a half their usual hourly rate of pay (or 1.5 times the regular rate of pay). Additionally, there is no limit to the number of hours an employee can work in any workweek.
A “workweek” is seven consecutive days or a fixed set of 168 hours. These seven days do not need to align with a typical calendar week or job starting time. As long as a fixed and regularly recurring schedule is established, employees should receive the overtime rate owed to them. Typically, overtime pay is included with the wages earned in a regular payday or pay period.
Forced overtime work
In most states, workers can be “forced” to work overtime by their company. Employers can schedule workers for any shift length or consecutive work days. Additionally, federal law does not require breaks to be provided to the employee. However, many states have mandatory breaks and paid rest periods. If a worker refuses to work overtime, the employer has a legal right to terminate the employee.
Salaried employees and other overtime exemptions
Various occupations and job duties are exempt from overtime pay. The standard salary level that currently exempts executive, administrative, and professional (EAP) employees is at $684 per week ($35,568 annually).
On April 2024, the U.S. Department of Labor announced a rule that aims to increase the salary thresholds for EAP employees to $844 per week ($43,888 annually) effective July 1, 2024, and further to $1,128 per week ($58,656 annually) starting January 1, 2025. However, the U.S. District Court for Eastern District of Texas vacated the 2024 final rule. Currently, the 2019 thresholds are being enforced.
If a state does not have its own overtime laws, it must default to the federal law. However, if a state has its own overtime laws, the state law is added on top of the federal law. In other words, employers need to abide by whichever law is more generous and provides their staff with the highest earnings.
When it comes to remote workers who work in different states, the labor laws of the state in which they are physically located and perform work apply. This is true regardless of where the company is located. So if your company is based in New York, but your employee is working from California, you would follow California’s overtime laws for that employee.
A look at overtime laws by state
Column two denotes whether or not a state has a law establishing a daily overtime threshold and the rate at which these hours are paid. The dashes indicate that the state does not have any laws pertaining to daily overtime.
Column three lists each state’s weekly overtime threshold as well as the rate at which overtime is paid. States with notable exceptions or unique labor laws have links to their respective Department of Labor pages.
As you can see from the table above, the majority of states base overtime pay on a 40-hour workweek, defaulting to the federal law. However, some states require overtime pay based on the hours worked in a single workday or other unique exceptions. Below we’ve delved into a few examples of state-by-state exceptions. For other exceptions, click through the links in the table above.
In California, employers are required by law to provide 1.5x pay for every hour an employee works beyond:
40 hours in a workweek
8 hours in a workday
6 days in a workweek
Moreover, California also has a law in which an employer must pay 2x an employee’s regular hourly rate, also known as double time pay, if they work over:
12 hours in a workday
8 hours on the seventh consecutive day of work in a workweek
Alaska
Like California, Alaska’s state overtime law requires that employers pay overtime when a non-exempt employee logs more than 40 hours of work and eight hours in a workday. However, the overtime rules have a number of exemptions related to occupations in agriculture and aquatic work.
Colorado
Colorado’s state overtime law requires overtime pay for hours worked beyond:
40 hours in a workweek
12 hours in a workday
12 consecutive hours, regardless of the start and end time of the workday
Kansas
Unlike the conventional 40 hours of most states, Kansas overtime law requires employers to pay overtime when an employee has worked over 46 hours in a workweek. However, because the FLSA requires that overtime is awarded at 40 plus hours, Kansas businesses that are covered by the FLSA must follow the federal law. If not, they must follow Kansas’s overtime rules for non-exempt employees.
Minnesota
Minnesota’s state overtime law requires companies to pay overtime for those working over 48 hours in a workweek. Like Kansas, Minnesota businesses covered by FLSA must follow the federal law.
Stay on Top of Overtime
Overtime is expensive. While necessary at times, ideally, it should never be the norm. If you find yourself consistently paying out overtime hours even in the face of manageable workloads, something is probably wrong. Check out the free webinar below to figure out how to keep your labor costs low by drilling down on where you are overspending on overtime.
For the few times you do need to pay overtime, make sure you are doing it correctly. There are many ways to do this; however, manually tracking and calculating overtime hours is a dangerous game.
Workforce.com’s Payroll platform makes the hassle of recording, calculating, and paying overtime much easier. Through an extensive time clock system, employee overtime hours and pay are automatically compiled on electronic timesheets, helping you improve visibility, reduce errors, and avoid compliance risks. With special tags, you can customize multiple earnings rates to match your state’s specific overtime rules. These rates automatically trigger whenever an employee crosses into overtime.
To learn more about how Workforce.com can help you manage overtime, book a calltoday.
This information is for general purposes only and should not be considered legal advice. While we strive to keep it updated, labor laws and regulations can change at any time. It’s always a good idea to consult with a legal professional or relevant authorities to comply with the most current standards.
Paid sick leave in Missouri will take effect on May 1, 2025. However, some groups and state lawmakers are currently opposing it.
Under the law, employees can accrue an hour of paid sick leave for every 30 hours worked.
More than a compliance plan, employers need an all-in-one system that adapts as the law evolves.
Paid sick leave in Missouri is set to take effect on May 1, 2025. Proposition A, approved by Missouri voters in November 2024, introduces significant changes to the state’s labor laws, including mandatory paid sick leave for many workers.
Under the new law, employees will accrue one hour of paid sick leave for every 30 hours worked. Businesses with fewer than 15 employees must offer up to 40 hours of paid sick leave per year, while larger employers must provide up to 56 hours annually. Exceptions apply to certain workers, like government employees and businesses making less than $500,000 in annual revenue.
In addition to paid sick leave, Proposition A also increases the minimum wage to $15 by January 1, 2026.
Efforts to repeal Proposition A
Proposition A faces pushback from business advocacy groups and state lawmakers who argue the law is flawed and burdensome for employers.
The Missouri Chamber of Commerce and Industry, the Missouri Grocers Association, the Missouri Restaurant Association, the National Federation of Independent Businesses, and three individuals linked to these organizations have filed a lawsuit challenging Proposition A with the Missouri Supreme Court.
The plaintiffs claim the ballot summary and fiscal note were misleading and argue that Proposition A violates the state constitution’s single subject rule by combining minimum wage and sick leave provisions into one measure.
Lawmakers are also moving to repeal Proposition A. House Bill 567 pushes to overturn paid sick leave rules and remove inflation-based minimum wage adjustments. The bill has passed the Missouri House and is currently being considered by the Senate. However, it doesn’t have an emergency clause, which means that even if it’s enacted, it would not become effective until August 28, 2025.
Tips for managing Missouri’s paid sick leave law
Missouri’s new paid sick leave law isn’t just a challenge for policymakers. It also puts employers in a tough spot. Businesses must balance compliance with labor laws while staying agile in case of legal or legislative changes. Here’s how employers can stay ahead.
Focus on the facts and prepare accordingly
Proposition A will take effect on May 1, 2025. Therefore, employers should be ready to implement paid sick leave policies by that date.
Notify employees in writing about the earned paid sick time policy by April 15, 2025, as mandated by the law.
Ensure payroll and scheduling systems are updated to track sick leave accrual and usage.
Train managers on policy changes to avoid confusion and ensure employee questions can be addressed.
Monitor any legal developments
Labor laws are constantly changing, and Proposition A remains a pressing issue in Missouri courts and legislature. Rules can change at any time, and employers must always be updated about developments.
Check the Missouri Department of Labor for official updates and guidance, monitor senate discussions, and review bill statutes and amendments to stay on top of changes that could impact compliance.
Be prepared to adjust
Missouri’s paid sick leave laws can change at any time. With lawsuits and legislative challenges underway, they could be amended, repealed, or upheld. A flexible system allows employers to adjust quickly, regardless of the outcome.
Workforce.com helps organizations stay compliant and adapt to potential changes by:
Automatically tracking sick leave accrual based on hours worked.
Providing employees real-time access to their leave balances via a mobile app.
Calculating accurate sick leave payouts and preventing payroll errors.
Employees can check their leave balances anytime through the employee mobile app.
Offering real-time visibility into who’s out sick, helping managers fill vacant shifts with available and qualified staff.
Enabling HR teams to instantly adjust policies and ensure staff have easy access to updated rules.
Missouri businesses need more than just a plan. They need a system that adapts as Proposition A evolves. A flexible, all-in-one system for time and attendance, employee scheduling, HR, and payroll is vital to keeping up. Workforce.com simplifies compliance and helps you adapt to legislative changes with ease. Book a call to learn how.
California has strict pay transparency laws that require employers to include pay ranges in job postings. Current employees also have the right to request pay scale information at any time.
While these laws promote fairness and build trust, they can also create challenges, particularly with recordkeeping and other administrative tasks.
HR and payroll software can simplify compliance and help businesses stay organized.
Pay transparency is a strategy to attract talent and retain current staff. In California, pay transparency is backed by a series of regulations, one of the most recent being Senate Bill 1162.
With the bill’s enactment, employers in California must be upfront about pay scales and clearly communicate them to candidates and current employees. While the bill intends to promote transparency, retention, and engagement, putting it into practice isn’t always straightforward, especially for employers who handle various job positions, locations, and levels of expertise.
So, what does the bill require, and how can hourly workforces implement these rules? Let’s take a closer look.
What is California Senate Bill 1162?
California SB 1162 is legislation that aims to promote transparency in pay scale disclosure. It requires employers to reveal pay ranges in job postings, submit pay data reports, and take steps to uphold pay transparency in the state. It went into effect on January 1, 2023.
Essentially, this bill encompasses transparency with job listings, current employees’ right to know, and recordkeeping and applies to California employers with 15 or more employees. Here are some fundamental points that the bill entails:
Employers must disclose the pay range for a position in any job listing. If you employ a third-party recruitment agency, they should also include pay information in their job descriptions and job posts.
Should current employees request it, employers must provide the pay scale of their position.
Employers must keep records of each employee’s job title and wage history for the duration of the employee’s employment and three years after the end of employment. This information must always be ready for inspection by the Labor Commissioner’s Office.
If an employee files a complaint and pay records are not available, it could be a point against the employer in court.
Failure to comply can result in investigations by the Labor Commissioner. If violations are proven, penalties can be imposed.
If someone is “harmed” based on this legislation, meaning they didn’t get any pay information as stated in the law, they can sue the company or seek legal remedies by taking them to court.
SB 1162 basically makes pay information more transparent and accessible, helps employees understand how much they can earn, and ensures that companies have the pay records and information to justify their pay decisions.
Other California Laws on Pay Transparency
California is known for having some of the most comprehensive employment laws, such as overtime pay and cell phone usage laws. The state takes the same thorough approach to pay transparency and disclosure requirements. Aside from SB 1162, here are other relevant state laws.
Pay Data Reporting
Under Senate Bill 973, private employers with 100 or more employees must submit an annual report on pay data to the California Civil Rights Department. SB 1162 expanded this and included rules on pay scale transparency and record keeping. The annual pay data report must cover pay information by race, ethnicity, and gender with specific job categories and is due every second Wednesday of May.
Salary History Ban
Aside from pay transparency and reporting, California Assembly Bill 168 also prohibits employers from asking about an applicant’s salary history or using their past pay information to make a salary offer. Employers, however, can ask applicants for their expected salary.
Wage Theft Protection Act
This act requires employers to provide a notice that contains specific information once they hire an employee. It should include:
Rate or rates of pay and if it’s paid by the hour, shift, day, week, salary, piece, or commission.
Overtime rate
Applicable allowances that count toward minimum wage, such as for meals or lodging
Regular payday
Employer details such as name and other names they do business under, physical and mailing address, telephone number
Contact details of employer’s worker’s compensation insurance carrier
Any other necessary information deemed by the Labor Commissioner
Should the said notice change, employees must be notified in writing within seven calendar days unless the changes are reflected on the next pay stub or another legal notice with the updated details is issued within seven days.
Whistleblower Protection and Anti-Retaliation Law
California offers another layer of protection for employees who report disparities in pay information. Under this law, an employer cannot retaliate against an employee who discloses information to law enforcement, an investigative body, or someone with authority to address the issue about a law violation, a regulation not being followed, or unsafe working conditions.
Employees are also protected if they refuse to participate in activities they believe would break the law. Even if an employee hasn’t reported anything but the employer suspects they did, that employee is still protected under whistleblower laws.
If an employer retaliates against a whistleblower, they may be required to reinstate the employee’s employment and work benefits, pay lost wages and civil penalties, and take other actions to comply with the law.
The Impact of Pay Transparency Laws on Hourly Teams
Pay transparency laws can pose both advantages and challenges for hourly workforces. Such legislation helps enhance the employee experience, promote retention, and build trust. However, it can also come with administrative challenges, especially with recordkeeping and managing pay scales for each role.
Benefits
Greater wage transparency
Employees value transparency, especially with pay ranges and information. Pay transparency laws promote fairness and avoid any wage disparities. Such regulations also open the floor for better wage discussions, which can lead to higher morale and increased job satisfaction.
Improved hiring and retentionIncluding pay ranges in job listings helps attract job seekers who are not only interested in the role but also comfortable with the offered compensation. This speeds up the hiring process by filtering out those with mismatched salary expectations. It also helps with retention because when employees know the pay range upfront, they’re less likely to feel blindsided or dissatisfied later on.
Challenges
Consistency with pay scales
Staying on top of pay ranges can quickly become complicated when wages vary by location or experience level.
For example, the cost of living across cities can impact salary ranges. Typically, pay rates are higher in cities like San Francisco due to the higher cost of living compared to smaller towns, making it challenging to balance out pay ranges across multiple locations.
Roles can also differ significantly, even if they share the same title. The same position might carry different responsibilities depending on the team or location. Additionally, ensuring pay equity between new hires and existing employees can be tricky.
With all of these factors in play, employers must carefully document pay ranges, justify their pay decisions, and comply with pay transparency regulations.
Wage increases and bigger budget allocations
Employers may have to allocate bigger wage budgets to maintain pay equity. Pay transparency laws may also prompt current employees to request wage adjustments if they find that their current pay is on the lower end of the scale.
Recordkeeping
Complying with pay transparency laws involves meticulous recordkeeping. This can be especially true for big workforces that need to keep detailed records of all job titles and wage histories of employees across multiple locations.
Employees’ preferences for specific shifts
For employers offering shift differential pay, transparency can influence employee preferences. Once pay differences are made clear, less popular shifts might become more desirable, leading to imbalances in shift coverage. Employers may need to rethink their differential pay strategies to ensure all shifts are adequately staffed.
How to Avoid Non-Compliance with Pay Transparency Laws
California’s pay transparency laws come with a lot of fine print, and it’s easy to unintentionally slip into non-compliance. To help you navigate these regulations, here are practical strategies to keep you on the right track:
Implement smart recruitment practices
Never forget to include pay ranges and other components of employee compensation on your job listings. This level of transparency not only keeps you compliant but also helps you attract job applicants who are comfortable with the pay offered, speeding up the hiring process.
Workforce.com’s applicant tracking system simplifies this by allowing you to use in-store QR codes to attract local talent. When candidates scan the code, they can instantly view the job opening and pay range. You can even add a follow-up question to confirm that they’re aware of the compensation package before proceeding with the application.
Optimize recordkeeping for audits
Managing multiple pay rates is complex, and manual processes can quickly lead to errors and compliance issues. Automating recordkeeping is vital to staying organized and compliant. With the right system, you can easily store, retrieve, and sort pay data. No need to scramble to gather information during audits or employee requests.
An automated solution keeps all pay info in one place, making it simple to pull up details anytime. If the Labor Commissioner knocks or an employee asks for their records, you’ll be ready.
Workforce.com makes it easy to keep employee records and pay data organized. Staff can access their information, and management can quickly pull reports for audits or compliance checks.
Keep employees informed of any pay-related information
Pay transparency isn’t just about disclosing wage ranges—it’s about keeping employees consistently informed. In addition to providing access to their wage details, make sure to issue regular pay stubs. Automating this process reduces administrative work and ensures compliance.
Pay stubs should clearly outline their wage rates, earnings, overtime, deductions, and withholdings. Workforce.com’s payroll software automatically generates detailed pay stubs each payday, giving employees easy access to their payment breakdowns and salary information.
Define pay criteria for pay variations
You need to keep a record of pay data and justify assigning pay ranges to a particular role. Establish a clear policy that defines your pay scale criteria, such as experience, location, shift differentials, and team assignments. Communicate these criteria to employees so they understand how pay ranges are determined.
Provide training and support to HR and managers
Pay discussions can be sensitive, and managers must know how to handle them appropriately. Provide training and guidance on how to effectively address pay scale inquiries and manage pay adjustment requests. Equip them with the information and talking points that will allow them to explain company decisions clearly.
Simplify compliance with Workforce.com
Complying with pay transparency involves handling data and keeping its integrity intact. Workforce.com is an end-to-end HR, payroll, and scheduling system designed for the needs of hourly teams, including labor compliance. It helps eliminate the administrative burden that can come with complying with intricate laws such as California’s pay transparency laws. It has one source of information, which means that the chances of errors or things falling through the cracks are minimized.
Discover how different businesses stay on top of labor laws while keeping their teams efficient with Workforce.com. Book a call today.
California has some of the most comprehensive employment laws in the country, including overtime rules.
Compliance can be tricky because there are many nuances and rules that employers need to understand and implement.
Payroll software can ensure that workers entitled to overtime compensation in California are paid correctly and simplify compliance for employers.
California has some of the strictest overtime laws in the country, ensuring that employees are paid fairly for the extra hours they work. However, due to these strict rules and recent court decisions, many employers struggle to get it right, which can lead to costly lawsuits and hefty fines.
If you’re running a business in California, understanding overtime rules and staying updated with the regulations is crucial to staying compliant and paying your workers correctly. This guide will explain who qualifies for overtime, how it’s calculated, and best payroll practices to get it right.
Knowing the difference between California’s overtime rules and federal overtime laws
Under the Fair Labor Standards Act (FLSA), non-exempt employees earn overtime pay if they work more than 40 hours in a workweek at a rate no less than one and a half times their hourly rate. This is also known as time and a half pay.
Sounds simple, right? Well, California has its own rules. According to the California Division of Labor Standards Enforcement (DLSE), overtime applies when an employee works more than 8 hours in a single workday or over 40 hours in a single workweek. Additionally, for especially long shifts, California law requires double-time pay, a rule that goes beyond federal law.
When federal and state laws differ, the more beneficial rule to the employee prevails.Here’s a brief breakdown of how federal and California overtime rules differ:
Rule
FLSA Law
California Law
When overtime pay takes effect
Over 40 hours a week
Over 8 hours in a workday or 40 hours in a workweek
Overtime pay rate
1.5x of regular rate after 40 hours
1.5x after 8 hours a day 2x after 12 hours a day
Seventh consecutive day
NA
1.5x for first 8 hours 2x after 8 hours
Double time
NA
2x regular rate after 12 hours a day or after 8 hours on 7th consecutive workday
Key areas of CA overtime rules that employers must know
California’s overtime laws are strict, and understanding them is essential for staying compliant and ensuring employees are paid correctly. Below are some of the most important areas employers should know when handling overtime pay.
Regular rate of pay
Understanding an employee’s regular rate of pay is at the core of calculating overtime pay in California. So, what is it exactly?
The regular rate of pay refers to compensation for the work done, and it goes beyond a worker’s hourly wages. It could also include commissions, piecework earnings, and salary. The regular pay rate should never be lower than the applicable minimum wage.
It’s important to note that bonuses may or may not be included when computing the regular rate of pay. If it’s a nondiscretionary bonus or bonuses tied to work performance or output, it’s typically included in the computation of the regular rate of pay. Discretionary bonuses, meanwhile, are not included since they are bonuses or rewards that are not usually incentives that are discussed before work commences or are given during special occasions.
Alternative workweek schedules and multiple pay rates
What if your employees don’t work the standard 8-hour workday, 40-hour workweek? If your employees work on an alternative schedule, like 10 hours a day for 4 days or 12 hours a day for 3 days, the computation for weekly overtime will still apply once you hit the 40-hour mark for the workweek.
Meanwhile, if an employee has two or more pay rates, the overtime computation will be based on a weighted average based on their total earnings for the workweek.
Commissions and piecework payments
California employees earning commission or piece-rate pay have two ways to calculate their regular rate of pay for overtime. First, they can use the commission as the regular rate of pay and calculate overtime by one and one half times (1.5x) that rate for hours exceeding 8 hours in a day or two times(2x) for any hours beyond 12 in a single day.
Meanwhile, another way to calculate is to get a regular hourly rate from all the earnings. You do that by adding up all earnings for the week (including commissions and overtime pay) and dividing it by the total number of hours worked (including overtime hours). For each overtime hour, an employee gets an extra .5 pay for hours over 8in a day or 40 in a week or an extra 1x pay for hours over 12 in a day.
If a team works together on a piece-based pay, the total number of pieces made is divided among the workers. The regular rate is calculated by dividing their earnings by their work hours. The regular rate cannot be less than the minimum wage.
Unauthorized employee overtime
What employees work overtime and it’s not authorized? Employers still need to pay up. Workers are entitled to overtime pay if they “suffered or permitted to work, whether or not required to do so, ” meaning that it is work that the employer knew or should have known about.
In such cases, employers can discipline their workers if they incur unauthorized overtime, but workers must still be paid.
Collective bargaining agreements
According to California’s Labor Code, allows some exemptions from state overtime rules if a valid collective bargaining agreement meets specific conditions such as a clear outline of overtime rates and rules, a regular hourly wage that is at least 30% more than the state minimum wage, and providions for wages, hours, and working conditions.
CBAs in construction, hospitality, motion picture and TV production, healthcare can often modify overtime rules.
Who’s entitled to overtime pay in California?
Most hourly employees qualify for overtime. Salaried employees may also be eligible if their job duties don’t meet exemption requirements. Typically, executives, administrative professionals, and some high-level salaried employees are exempt, but employers must ensure they meet the strict exemption criteria.
When should employees receive overtime pay?
Overtime must be paid by the next regular payday, but not later. Regular wages for hours worked must be paid on time according to the usual pay period. Only overtime can be deferred to the next regular pay period.
The cost of noncompliance to California overtime rules
Non-compliance to California overtime laws can set your business back big time. It can result in repayment of unpaid wages, penalties, massive settlements, and expensive lawsuits.
Take the case of AOCLSC. While the company didn’t admit to the allegations, it settled a $920,000 lawsuit filed for allegedly failing to pay the correct hourly, minimum, and overtime wages under California law. The complaint also included failure to provide meal breaks, rest periods, and accurate wage statements.
As a result of the settlement, non-exempt employees who worked for the company in California between May 8, 2019 and May 15, 2023. The same goes for the Private Attorneys General Act class of AOCLSC employees who worked between June 1, 2021, and May 15, 2023.
Then there’s Alvarado v. Dart Container Corporation of California, which underscores just how precise overtime calculations must be. It centered around how the regular rate of pay for overtime calculations was computed, especially with a flat-sum bonus involved. In this lawsuit, the plaintiff received a $15-dollar bonus for working the weekend, and the court ruled that the bonus should be included in calculating the regular rate of pay.
Again, this further reiterates that employers should carefully examine all the remunerations an employee receives because even seemingly minor bonuses can impact payroll calculations.
The takeaway? Getting overtime laws wrong, even unintentionally, can lead to financial consequences and wage claims. California’s wage and hour laws have comprehensive rules and protections to ensure employee are paid fairly. However, they can be complex, and employers must correctly calculate regular pay rates, bonuses, and overtime wages to avoid costly mistakes.
Payroll best practices for complying with CA overtime rules
California overtime laws can be complicated, nuanced, and constantly evolving, with court rulings shaping how they’re applied. But with the right payroll practices, California employers can stay compliant, avoid mistakes, and pay employees accurately.
Classify employees correctly from the start
Misclassifying employees is one of the biggest (and most expensive) mistakes employers make. Get employee classifications correct upon onboarding. If you get this right from day one, you’ll properly calculate accurate wages, pay proper overtime, and comply with the rules. However, that can be easier said than done, and you should double-check whether a worker’s duties meet the overtime pay criteria.
Many assume salaried employees are automatically exempt from overtime, but that’s not always true. Some salaried workers still qualify for overtime, depending on their job duties and earnings. Always double-check the latest state and federal rules to properly classify employees.
Track employee time accurately
Overtime calculations are only as good as your timekeeping system. Wage and overtime calculations will depend on employee time logs. You should have a system that accurately records total hours of work, break and rest times, and hours of overtime, not just for accurate pay computations but also for proper recordkeeping.
If you ever face an audit or a wage dispute, having clear, reliable time records can protect your business and prove compliance. Invest in a digital time-tracking system that makes it easy to maintain accurate records and minimize errors.
Calculate the regular rate of pay correctly
A miscalculated regular rate of pay can easily land you in legal hot water and result in unpaid wages. Overtime pay is based on this rate, so it must include all eligible earnings like commissions, piecework, and nondiscretionary bonuses. Get this wrong, and you risk underpaying employees, leading to potential lawsuits and penalties.
Automate compliance at critical steps
Compliance mistakes often happen when things slip through the cracks. Automation can safeguard your team from committing unintentional violations. Implement a system that alerts you when you’re about to hit unplanned overtime, an employee missed a meal or rest period, there are discrepancies in time logs, or when you’re creating schedules that can create unnecessary overtime.
Optimize schedules to minimize overtime
Overtime isn’t necessarily bad, but it’s often unavoidable when demand is high. However, excessive or unplanned overtime can drain your budget and create compliance risks.
Using labor forecasting, you can prevent unnecessary overtime, ensure proper staffing levels, and avoid last-minute surprises. With demand-based scheduling, you can pay overtime when it’s needed, but never by accident.
Workforce.com payroll can simplify compliance with CA overtime laws
Workforce.com is an all-in-one system designed to handle complex labor laws and ensure you release accurate pay every payday.
Payroll compliance starts long before payday. It begins with onboarding, time tracking, scheduling, and shift management. Workforce.com streamlines each step to reduce errors, prevent compliance risks, and ensure workers are paid correctly.
Onboardingis automated; employees enter their details, eliminating double data entry and reducing errors.
Time and attendance trackingrecords employee time logs, daily overtime, and ensures employees take meal and rest breaks.
Alerts will be sent when employees fail to take breaks, are about to exceed their legal work limits or hit unplanned overtime.
Accurate payroll calculationsbased on employee classifications, overtime rates, and state-specific rules that are automatically factored into payroll.
See Workforce.com in action and discover how it can help you ensure compliance in California and beyond. Book a call today.
This information is for general purposes only and should not be considered legal advice. While we strive to keep it updated, laws and regulations can change at any time. It’s always a good idea to consult with a legal professional or relevant authorities to compliance with the most current standards.
Federal law doesn’t require employers to provide employees leave, compensation, or benefits for jury duty-related absences. It is up to states and employers to determine these rules.
There are 10 states (plus the District of Columbia) that require employers to pay employees serving mandatory jury duty.
17 states explicitly prohibit employers from requiring employees to use paid vacation or any other personal leave due to jury duty obligations.
While jury duty is legally required for those selected, most US citizens view it as not just a responsibility but also as an important civic function. According to Bar Prep Hero’s recent study, 60.2% believe jury duty should be mandatory for all citizens.
Some would rather avoid it if possible. Bar Prep Hero’s survey found that 9.2% admitted that they lied during jury selection in order to get out of jury duty. The biggest reason people want to avoid jury duty is that they see it as a financial inconvenience.
When employees have to attend court for jury duty, they are unable to go to work for as long as the trial lasts. And even though employees are required by law to fulfill their jury duty if summoned, employers in a majority of states are not obligated to compensate them for working hours missed as a result of jury duty.
Are you, as an employer, obligated to compensate or grant additional PTO to staff on jury leave? If you’re not sure, we’ve made a complete guide of jury duty laws by state to help you understand your legal obligations.
How does jury duty work?
Jury duty is not only a legal obligation but also an opportunity for American citizens to participate in their country’s judicial process firsthand.
The jury selection process differs slightly depending on the jurisdiction, but it most commonly includes the following steps:
Summoning potential jurors: Potential jurors are randomly selected from a pool of eligible individuals. This pool is usually compiled from voter registration lists, driver’s license records, or other sources, depending on the jurisdiction.
Questionnaires: Potential jurors must complete questionnaires, answering basic questions about their occupation, educational background, and any potential biases or conflicts of interest. Diversity is an important factor when selecting juries.
Jury panel selection: A group of potential jurors is called to the courtroom, and they are seated in the jury box. The judge and attorneys question potential jurors to determine their suitability for the case. The purpose is to identify any biases, prejudices, or personal experiences that could impact their ability to be impartial.
The judge and attorneys then select the final jurors who will serve on the jury for the trial. Their duty is to follow the trial proceedings — to listen to the evidence presented, witness testimonies, and arguments from both sides. Their duty is complete once the jury deliberates together and reaches a verdict based on the evidence and instructions provided by the judge.
While the length of your jury duty depends on the complexity of the trial, the Commonwealth of Massachusetts claims that most people finish their jury duty in a matter of one to three days in that state. Once a person has served jury duty, they will not be required to do so again for at least another three years.
What federal laws say about employer responsibilities regarding jury duty
According to the Fair Labor Standards Act (FLSA), federal law doesn’t require employers to provide employees paid leave for jury duty or with compensation or benefits.
However, state laws are a different matter. Some states require employers to pay an employee while they are serving jury duty. Many have laws protecting employees from being fired or penalized while serving jury duty. Several have laws requiring employers to allow employees to use their paid time off (PTO) if they wish to do so for jury service.
Employers also have the ability to create their own jury duty policies for employees. For example, employers in states that don’t require them to compensate employees for jury duty could create their own policy that does offer compensation in order to stand out from competitors in terms of employee benefits.
Jury duty laws by state
Most employees don’t know what the laws regarding jury duty are in their state. That’s why it’s important for human resources (HR) professionals to have a full understanding of their legal requirements regarding jury duty leave, as well as their company’s specific policies if any exist.
A total of 10 states (plus the District of Columbia) require employers to pay employees who are called to serve mandatory jury duty:
Alabama
Colorado
Connecticut
Florida (Broward County and Miami-Dade County)
Georgia
Louisiana
Massachusetts
Nebraska
New York
Tennessee
There are also 17 states that explicitly prohibit employers from requiring employees to use any personal leave to fulfill their jury duty obligations.
Alabama
Arizona
Arkansas
Indiana
Louisiana
Massachusetts
Mississippi
Missouri
Nebraska
Nevada
New Mexico
New York
Ohio
Oklahoma
Oregon
Utah
Virginia
Even though not every state mandates that employees be paid when serving jury duty, every state has laws against employers discharging or penalizing employers for serving jury duty — or threatening to do so.
For quick reference, check this table to see if your state mandates employers to pay for employee jury duty absences and if employees are required by law to use personal time off for jury duty.
State
Are employers mandated to pay for jury duty absences?
Are employers prohibited from requiring staff to use PTO for jury duty?
Alabama
Yes
Yes
Alaska
No
No
Arizona
No
Yes
Arkansas
No
Yes
California
No
No
Colorado
Yes
No
Connecticut
Yes
No
Delaware
No
No
D.C.
Yes for jury service carried out by full-time employees for five days or less, minus the fee received for jury service. Employers with less than 10 staff are not required to pay compensation for employees who serve as jurors.
No
Florida
Yes in certain countiesIn Broward, employers must provide compensation to full-time employees for up to five days of jury service. In Miami-Dade, employees are entitled to pay when specific conditions are met.
No
Georgia
Yes
No
Hawaii
No
No
Idaho
No
No
Illinois
No
No
Indiana
No
Yes
Iowa
No
No
Kansas
No
No
Kentucky
No
No
Louisiana
Yes, but only up to a single day of service.
Yes
Maine
No
No
Maryland
No
No
Massachusetts
Yes, but only for the first three days of jury duty.
Yes
Michigan
No
No
Minnesota
No
No
Mississippi
No
Yes
Missouri
No
Yes
Montana
No
No
Nebraska
Yes, but their pay may be reduced by the fees paid by the court.
Yes
Nevada
No
Yes
New Hampshire
No
No
New Jersey
No
No
New Mexico
No
Yes
New York
Yes
Yes
North Carolina
No
No
North Dakota
No
No
Ohio
No
Yes
Oklahoma
No
Yes
Oregon
No
Yes
Pennsylvania
No
Yes
Rhode Island
No, unless required by contract or collective bargaining agreement.
No
South Carolina
No
No
South Dakota
No
No
Tennessee
Yes
No
Texas
No
No
Utah
No
Yes
Vermont
No
No
Virginia
No
Yes
Washington
No
No
West Virginia
No
No
Wisconsin
No
No
Wyoming
No
No
Here’s a more in-depth look at some states that have more specific jury duty laws:
Alabama
Alabama state law requires employers to grant paid leave for jury duty to full-time employees. To be eligible for paid leave, the employee must show their employer the jury summons on the next workday after receiving it.
If a company has five or fewer full-time employees, only one employee can serve jury duty at a time. The court will automatically postpone or reschedule jury duty if a second employee is summoned during the same time.
Colorado
Colorado laws require employers to pay employees up to $50 per day for the first three trial days of jury duty unless the employer has a policy in which they are obligated to pay more. This law includes not just full-time salaried employees but also part-time, temporary, and casual employees.
Connecticut
Connecticut laws stipulate that employers must pay full-time employees regular wages for the first five days of jury service. The only way employers can be excused from paying is by submitting an application to the Chief Court Administrator with proof of sufficient financial hardship.
District of Columbia
District of Columbia laws require employers to provide employees with leave to serve jury duty. However, the laws don’t require employers to offer paid leave.
Florida
There is no state law in Florida that requires employers to pay employees for jury duty. However, there are several county ordinances that do. In Broward County, employees must be paid a regular salary for up to five days of jury duty-related leave, provided that the employee gives a copy of the summons to their immediate supervisor at least five days before the first day of scheduled jury duty.
In Miami-Dade County, employers must pay employees for jury service if:
The employee has a regularly scheduled workweek of at least 35 hours.
The employee provides a copy of the summons at least five working days prior.
The employee is serving their jury duty in Miami-Dade County.
The employer has 10 or more full-time employees.
The employer has offices or does business in Miami-Dade County.
Georgia
Even though Georgia laws do not require employers to offer paid leave for jury service, the Attorney General issued an opinion in 1989 interpreting a statute as requiring employers to pay employees for jury service leave.
Massachusetts
In Massachusetts, employers must pay employees at the regular rate for the first three days of jury duty. This includes part-time, temporary, and casual employees.
Nevada
In Nevada, employers are not required to pay any wages for time spent serving on a jury. However, they can’t require staff to work within eight hours of the time they’re supposed to serve.
Also, on the day of jury duty, employees can’t be required to work between 5:00 p.m. and 3:00 a.m.
New York
According to New York State laws, employers with ten or more employees must pay the first $40 of the employee’s regular daily wages for the first three days of jury duty.
Oregon
In Oregon, it’s common for employers to have internal policies that mandate regular pay for employees on jury duty; however, it is not legally required by the state. Employers are, however, prohibited from requiring staff to take personal leave for jury duty service.
Tennessee
Tennessee laws mandate that employers who have five or more employees must pay for time spent serving jury duty as long as the employee has been with the company for at least six months.
Create your own jury duty policies
All employers have the ability to create their own jury duty compensation policies regardless of what state laws mandate.
If you’re looking to develop your own employer policy, here are a few key areas to consider:
Legal obligations: Familiarize yourself with the state laws and regulations pertaining to jury duty. Understand the rights of employees and any legal obligations you have as an employer to accommodate them.
Criteria to qualify: Establish a process to verify employee eligibility for jury duty. Typically, employees may be required to provide a copy of their jury duty summons or a letter from the court confirming their selection.
Leave policies: Outline the specific time-off policies for employees serving on jury duty very clearly. For example, if you give them paid days off, determine whether jury duty days count against their PTO total.
Compensation: Decide how you will handle compensation. Determine whether employees will continue to receive their regular salary or another fixed amount per day.
Once created, focus on clearly communicating your policy to employees. Ensure they understand their rights and responsibilities related to jury duty and how the company will support them during their absence.
Consider expressing support and encouragement to employees who are serving on juries. Acknowledging the importance of their participation in the legal system will help foster a positive work environment that values civic engagement.
Manage jury duty absences easily with Workforce.com
Once you have developed your jury duty policy, it’s important to maintain accurate records of employees’ jury duty absences, leave taken, and any related compensation or benefits provided to help ensure compliance with legal requirements and facilitate fair treatment across the company.
Contact us today to learn how Workforce.com can help you easily comply with your state’s jury duty leave policies.
This information is for general purposes only and should not be considered legal advice. While we strive to keep it updated, labor laws and regulations can change at any time. It’s always a good idea to consult with a legal professional or relevant authorities to comply with the most current standards.
