California Labor Code 514 exempts employees covered by a collective bargaining agreement (CBA) from the state’s overtime pay laws. But the CBA must be valid, spell out working conditions and required working hours, and provide a regular rate of pay of at least 130% of California’s minimum wage.
The full text of the statute reads as follows:
514. Sections 510 and 511 do not apply to an employee covered by a valid collective bargaining agreement if the agreement expressly provides for the wages, hours of work, and working conditions of the employees, and if the agreement provides premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage.
In California, non-exempt employees are entitled to 1.5 times their hourly wage for working more than eight hours a workday and double their hourly wage for working more than 12 hours a workday. But these overtime (OT) wage and hour guarantees do not apply to employees who are covered by a current and valid collective bargaining agreement (CBA).
In order for a CBA to be valid – and to therefore release the employer from having to pay standard OT rates – the agreement must:
- explicitly set forth the employees’ wages, the hours they are expected to work, and their working conditions;
- provide that employees will receive higher pay (“premium pay”) for working more than the required number of hours; and
- guarantee employees a regular rate of pay that is at least 30% more than California minimum wage.1
As of 2022, California’s minimum hourly wage is $14.00 for employers with 25 or fewer employees or $15.00 for employers with 26 or more employees. Therefore, the minimum hourly wage that CBA-covered employees can receive would be:
- $18.20 (30% more than $14.00) if the employer has 25 or fewer employees; or
- $19.50 (30% more than $15.00) if the employer has 26 or more employees.2
CBAs typically include provisions on rest breaks, meal breaks, vacation time, and other leave.3 And some CBAs require employees with wage and hour disputes to submit to arbitration instead of filing a lawsuit.
- Labor Code 514 – Exempt Employees. Vranish v. Exxon Mobil Corp. (Cal. App. 2d Dist., 2014), 223 Cal. App. 4th 103, 166 Cal. Rptr. 3d 845.
- Minimum Wage, California Department of Industrial Relations.
- Flowers v. Los Angeles County Metropolitan Transportation Authority (Cal. App. 2d Dist., 2015), 243 Cal. App. 4th 66, 196 Cal. Rptr. 3d 352.