The construction industry in California is subject to a unique and complex set of regulations, particularly overtime laws. These laws are designed to protect workers, ensure fair pay, and promote safe working conditions, but they can be challenging for employers to navigate.
This blog provides an overview of the key overtime rules and laws that pertain specifically to the construction industry in California, offering clarity on how to comply and avoid potential legal pitfalls.
In California, overtime laws are primarily governed by the California Labor Code and the Industrial Welfare Commission (IWC) Wage Orders. These regulations are more stringent than federal overtime laws, making it crucial for construction companies to understand and implement them correctly.
Under California law, non-exempt employees (which include most workers in the construction industry) are entitled to overtime pay in the following circumstances:
In addition to daily overtime, California law also requires overtime pay for any hours worked over 40 in a single workweek, regardless of the number of hours worked each day. This is another layer of protection that ensures workers are compensated fairly for long workweeks.
California allows for alternative workweek schedules (AWS), which can be particularly useful in the construction industry where long workdays are common. An AWS allows employees to work more than eight hours a day without triggering daily overtime, provided the total weekly hours do not exceed 40.
To implement an AWS, an employer must follow specific procedures, including a proposal for the AWS, a secret ballot vote among employees, and a two-thirds majority in favor of the AWS. It’s important to note that even under an AWS, double time still applies for any hours worked over 12 in a day.
While the above rules apply generally across all industries in California, the construction industry has additional specific regulations that must be observed.
One of the most significant considerations for construction companies in California is the state’s prevailing wage laws. These laws require that workers on public works projects be paid at least the general prevailing wage rates, which are set by the Director of the Department of Industrial Relations (DIR).
Overtime rates under prevailing wage laws can differ from standard rates, especially for specific classifications of workers. Employers must pay the correct overtime rates based on the prevailing wage determinations for the project’s location and the type of work performed.
Many construction workers in California are union members, which often have collective bargaining agreements (CBAs) that specify their own overtime rules. These CBAs can include more favorable overtime provisions than the minimum standards set by state law, such as higher overtime rates or different thresholds for when overtime kicks in.
Employers must adhere to the terms of these agreements where applicable, ensuring they comply with both state law and any additional union requirements.
In the construction industry, travel time can be a significant factor, particularly when workers must travel to remote job sites. California law requires that employees be compensated for travel time that is part of their workday, and this time must be included when calculating overtime.
For example, if a worker’s day begins when they leave a central dispatch point and ends when they return, all travel time in between must be paid at the appropriate rate, including any overtime.
Despite the clear regulations, construction companies often face challenges in complying with California’s overtime laws. Some of the most common issues include:
One of the most significant risks for construction employers is misclassifying workers as independent contractors or exempt employees. Only non-exempt employees are entitled to overtime pay, and misclassifying employees to avoid paying overtime can lead to substantial legal and financial consequences.
Accurate timekeeping is essential in ensuring that employees are properly compensated for their work. Failing to track work hours accurately can result in underpayment of overtime, leading to legal action and fines.
Construction companies should implement reliable timekeeping systems that accurately capture all hours worked, including start and stop times, meal breaks, and any travel time that should be compensated.
California law mandates that employees are entitled to a 30-minute unpaid meal break after five hours of work and a 10-minute paid rest break for every four hours worked. If an employee misses a break, they are entitled to one additional hour of pay at their regular rate. This additional hour is not considered overtime but must be factored into the employee’s total compensation.
Failing to provide these breaks or compensate for missed breaks can lead to penalties, including premium pay for each day a break is not provided.
Employers must be particularly vigilant in paying the correct overtime rates as determined by prevailing wage laws on public works projects. These rates can vary significantly by region and job classification, making it essential to stay informed about the applicable rates for each project.
To avoid the pitfalls associated with California’s overtime laws in the construction industry, employers should consider the following best practices:
California’s overtime laws are designed to protect workers, but they also present significant challenges for construction employers. By understanding the specific requirements of these laws and implementing best practices, construction companies can ensure compliance, avoid costly penalties, and maintain a productive and satisfied workforce.
The construction industry’s dynamic nature demands that employers stay vigilant in their compliance efforts. Regular training, accurate timekeeping, and a thorough understanding of prevailing wage laws are critical components in navigating California’s overtime regulations successfully.
For construction companies looking to streamline their compliance processes, integrating advanced payroll and time-tracking software like hh2 can help ensure that all employees are compensated fairly and in accordance with the law. hh2 uses OT rules automate overtime when it is captured to comply with labor laws eliminating the need to review and edit overtime entries.
By leveraging technology and staying informed, employers can focus on what they do best—building the future while safeguarding their workforce’s rights and well-being.
Book your demo today to see how hh2 simplifies how you manage overtime.