In California, your regular rate of pay is generally your total earnings divided by the total number of hours worked in a workweek. It is used to calculate overtime pay for non-exempt workers, which is one-and-a-half times the regular rate of pay.
If an employer under-calculates your regular rate of pay, you can file a complaint with the California Labor Commissioner or file a wage and hour lawsuit against your employer.
Below, our California labor and employment law attorneys discuss the following topics regarding regular rate of pay:
- 1. How is it used?
- 2. Overtime
- 3. Sick Leave
- 4. What is included?
- 5. How To Calculate It
- 6. Can I sue my boss?
- Frequently Asked Questions
- Additional Reading
1. How is it used?
In California, your “regular rate of pay” is used to calculate your overtime pay.1 A slight miscalculation could result in a smaller paycheck. Employers may try to use an incorrect method to calculate it to pay you less for working overtime.
Your regular rate of pay may also be used as the basis for calculating paid sick leave.2
Note that your regular rate of pay includes more than your hourly salary. According to the California Labor Code, “wages” include all amounts you earn for your labor, whether the amount is fixed or ascertained by:
- standard of time,
- task,
- piece,
- commission pay basis, or
- other methods of calculation.3
Under state law, you generally must be paid at least twice a month.
2. Overtime
According to California labor laws, if you are a non-exempt employee and are not part of an alternative workweek schedule, you earn overtime if you work more than:
- 8 hours in a single workday,
- 40 hours in a single workweek, or
- 6 days in a single workweek.4
Overtime hours are generally paid at 1.5 times your regular hourly rate of pay. However, work in excess of 12 hours in a single workday, or in excess of eight hours on the seventh day of a workweek, is paid at double your regular hourly rate of pay (“double time“).5
Under California law, overtime wages are usually 1.5 times straight-time pay.
3. Paid Sick Leave
If you are a non-exempt employee in California, your paid sick leave is calculated in one of the following two ways:
- The same as your regular rate of pay for the workweek in which you use paid sick time, whether or not you actually work overtime in that workweek; or
- Dividing your total wages, not including overtime premium pay, by your total hours worked in the full pay periods of your prior 90 days of employment.
If you are an exempt employee, then your paid sick leave is calculated in the same manner as your employer calculates wages for other forms of paid leave time.6
Exempt employees are “employed in professional, technical, clerical, mechanical, and similar occupations whether paid on a time, piece rate, commission, or other bases.”7 To be an exempt employee in California, you must meet the following requirements:
- Spend more than one-half of your work time performing intellectual, managerial or creative work; and
- Customarily and regularly exercise discretion and independent judgment in performing those job duties; and
- Earn a monthly salary equivalent to at least twice the California minimum wage for full-time employment.8
Regular rate of pay takes into account non-discretionary bonuses but not discretionary bonuses.
4. What is included?
According to the Fair Labor Standards Act (FLSA), your regular rate of pay includes “all remuneration for employment paid to, or on behalf of, you.”9 Therefore, your regular rate of pay includes not only your base pay but also any commissions and shift differentials.10
Piece rates and production/non-discretionary bonuses (but not discretionary bonuses) are also included in determining your regular rate of pay in California.11
However, there are several payments that are generally excluded from determining the “regular rate.” These exclusions include:
- Tips
- Gifts
- Retirement plan contributions
- Payments in the nature of gifts made during holidays
- Split shift pay
- Reporting pay
- Call-back pay
- Premium pay for meal or rest breaks you were deprived of or for excess hours worked
- “Predictability pay” (so long as they are not so regular that they are otherwise prearranged)
- Signing/hiring bonuses unless some or all of it is contingent upon performance or continued employment
- Payments as a reward for service which are not based on hours worked, production, or efficiency
- Reasonable payments for traveling expenses and other reimbursements (though if “reimbursements” are really just increased wages meant for expenses, they may need to be included in the regular rate)
- Contributions irrevocably made by an employer to a trustee or third person as part of a retirement plan or insurance benefit for employees
- Certain value or income derived from employer-provided stock option or stock purchase grants or rights12
Note that if your employer imposes a mandatory service charge and shares it with employees, the employer must include this in your regular rate of pay calculation. This is considered a wage, unlike voluntary tips.
In no case can regular wages be lower than the applicable minimum wage. It is unlawful for an employer in California to pay you less than the minimum wage.13
The following table lists the most important regular rate of pay inclusions and exclusions:
| Payment Type in California | Status in Regular Rate of Pay | Description |
| Hourly Wages | ✅ Included | Base straight-time earnings. |
| Non-Discretionary Bonuses | ✅ Included | Production, attendance, or performance bonuses. |
| Commissions | ✅ Included | Must be allocated back to weeks earned. |
| Mandatory Service Charges | ✅ Included | Unlike voluntary tips, these are wages. |
| Discretionary Bonuses | ❌ Excluded | Holiday gifts not tied to performance. |
| Expense Reimbursements | ❌ Excluded | Must be actual expenses, not “hidden wages.” |
5. How To Calculate It
Your compensation may be based on hourly pay, salary, piece compensation, production bonus, or commission.
Hourly Pay Workers
If you are paid on an hourly basis in California, your regular rate of pay is the same as your hourly pay rate.14
Example: Elena works as a part-time legal secretary, working about 30-hours per week. Her regular pay rate calculation is $20 per hour. Elena’s employer asks her to work late one night to prepare for a trial. Elena ends up working for 11 hours on that day. Overtime for the extra 3 hours of work will be calculated at one and one-half (1 ½) times Elena’s regular pay of $20 per hour.
When you work at more than one hourly rate in one workweek, your regular rate of pay is simply the weighted average of both rates.
Note that your regular pay rate also includes non-discretionary bonuses.15
Example: Charlie works 40 hours a week at $16.90 an hour. He also makes an extra $40 a week for reaching a production goal – called a “non-discretionary bonus”. Therefore, his regular rate of pay is $17.90 an hour: $16.90 an hour base pay plus $1 an hour for the non-discretionary bonus ($40 divided by 40 hours worked).
If you are a non-exempt employee, also note that employers must pay an extra hour of wages, called a “premium payment,” when they fail to provide you:
- an unpaid 30-minute meal break for every five hours of work,
- a paid 10-minute rest break for every four hours of work, or
- a recovery period.16
Before 2021, employers calculated premium payments as equal to your base wage, not including any non-discretionary bonuses. The California Supreme Court held in Ferra v. Lowes Hollywood Hotel, LLC, that the premium payment must be equal to your regular rate of pay, which includes non-discretionary bonuses.17
Therefore, if Charlie in the above example were made to work through a meal break, his boss would have to pay him a premium equal to his regular rate of pay: $17.90.
Calculating Hourly Value of Flat Sum Bonuses
When you are a non-exempt hourly employee and receive a flat sum bonus, the hourly value of that bonus is calculated by dividing the bonus amount by the total non-overtime hours you worked.
So even if you work overtime in the same pay period that you receive the bonus, those overtime hours do not factor into calculating your bonus’s hourly value.18
Example: James works 40 hours a week and 10 hours overtime. James also receives a flat-sum bonus of $400.
A worker’s regular rate of pay is the hourly wage plus the hourly value of the bonus. James’ hourly value of the bonus is $10 ($400 divided by 40 non-overtime hours worked). James’ boss cannot divide the bonus by 50 (the total number of hours worked) in order to lower the hourly value of the bonus.
For employees paid on an hourly basis, their regular rate of pay is the same as their hourly pay rate
Salaried Workers
If you are salaried in California, your regular rate of pay is calculated according to the following:
Multiply the monthly remuneration by 12 (months) and divide by 52 (weeks) = weekly remuneration. Divide the weekly remuneration by the number of legal maximum regular hours worked = regular hourly rate.19
In most cases, the maximum regular hours is eight hours per workday and 40 hours per workweek. If you have an alternative workweek schedule of four 10-hour days or three 12-hour days, it generally does not affect your regular rate of pay, which would be based on 40 hours per workweek.
Example: Ian works at an insurance company as a salaried, non-exempt employee. Ian is paid an annual salary of $50,000, with a production lump sum bonus of $2,000. Ian’s employer has Ian come in to work extra hours on the weekend because a local farmer made an insurance claim after a barn was burned down.
Ian’s pay is calculated based on the following: Annual salary $50,000 plus production bonus of $2,000 = $52,000 annual remuneration. $52,000 divided by 52 (weeks) = $1,000 weekly remuneration. Weekly remuneration $1,000 divided by 40 (legal maximum regular hours per week) = $25 regular hourly rate.
Any overtime worked by Ian over his standard 40-hour workweek will be calculated at one and one-half (1 ½) times Ian’s regular $25 hourly wage
Commission Workers
If you are a commission worker in California, divide your total earnings for the week (including earnings during overtime hours) by the total hours worked during the week, including the overtime hours.20 Since commission pay is unpredictable, employers may have to make premium payments in two chunks: The first chunk would be equal to your base pay, and the second would be a “true-up” payment after the commission is calculated.
You must allocate the commission back over the specific workweeks in which it was earned, recalculate the regular rate for those past weeks, and then pay the difference in overtime/premiums. You cannot just lump the commission into the week it is paid.
Production Bonus Workers
If you are a production bonus worker in California, your regular rate of pay is calculated by dividing your total compensation for the workweek, including the bonus, by the total number of hours worked during that week.
Piece Workers
If you are a piece rate worker, your regular rate of pay is calculated by adding together the total earnings from the workweek from piece rates and all other sources, then divided by the number of hours worked in the week for which compensation was paid.
In the recent decision Mora v. C.E. Enterprises, Inc. (2025), the California Court of Appeal clarified how “flat rate” or “flag hour” bonuses affect your pay. The court ruled that if an employer pays a guaranteed hourly base wage (above minimum wage) for all hours worked, plus a “flag bonus” for completing tasks quickly, this is considered an “hourly plus bonus” system, not a “piece-rate” system.21
Calculating regular rate of pay depends on what type of worker you are.
6. Can I sue my boss?
You may file a wage theft claim with the Labor Commissioner or file a wage and hour lawsuit against employers for miscalculating your regular rate of pay. These cases often involve failure to calculate overtime pay correctly.
A successful claim against an employer can result in damages for:
- back pay,
- interest, and
- reimbursement of attorney’s fees and court costs.22
You need to know your regular rate of pay to ensure your overtime and sick leave are paid correctly.
Frequently Asked Questions
Is “regular rate of pay” the same as my hourly wage?
No. In California, your hourly wage is just your base pay. Your “regular rate of pay” is a higher number that includes your base pay plus other forms of compensation you earned, such as commissions, piece-work earnings, shift differentials, and non-discretionary bonuses. Overtime is calculated based on this higher “regular rate,” not just your hourly wage.
Do bonuses count towards my overtime rate?
Yes, if the bonus is non-discretionary. This includes bonuses tied to production, attendance, or performance (like a “flag bonus” for mechanics). These must be added to your regular rate calculation. However, discretionary bonuses (like a holiday gift not tied to hours or efficiency) are generally excluded in California.
How is the regular rate calculated for salaried employees in California?
For most salaried non-exempt employees, the regular rate is calculated by dividing your weekly salary equivalent by 40 (the legal maximum regular hours), not by the total hours you actually worked. This results in a higher hourly rate for overtime purposes compared to federal law.
Can I sue if my employer miscalculated my regular rate?
Yes. If your employer failed to include bonuses or commissions in your overtime rate, you have been underpaid. You can file a wage claim with the California Labor Commissioner or a lawsuit to recover unpaid wages, interest, and potentially “waiting time penalties” for every day you were unpaid after leaving the job.
Additional Reading
For more in-depth information, refer to these scholarly articles:
- Regular rate of pay and the FLSA: why the determination of exempt status is not enough – Managerial Law.
- Lean Weeks and Fat Weeks: A Commissioned Employee’s Regular Rate of Overtime Pay – Georgia State University Law Review.
- The Regular Rate of Pay Definition – Its Advantages – Labor Law Journal.
- Labor Law: Fair Labor Standards Act: Determination of “Regular Rate” for Computation of Overtime Pay – Michigan Law Review.
- Overtime Pay under the Fair Labor Standards Act – Vanderbilt Law Review.
Legal References:
- Labor Code 510 LC; see also Final Rule: Regular Rate under the Fair Labor Standards Act, Department of Labor.
- Labor Code 246 LC — Payment of Wages; Paid Sick Days.
- Labor Code 200 LC — (“As used in this article: (a) “Wages” includes all amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation.”)
- Labor Code 510 LC — Day’s work; overtime; commuting time.
- Same.
- Labor Code section 246 LC — Payment of Wages; Paid Sick Days.
- 8 C.C.R 11040 contains provisions on meal and rest periods.
- Labor Code 515 LC — Exemptions from overtime law. See also California Labor Code 1179.
- 29 USC § 207.
- 29 CFR 778.110 (“production bonus”) and 778.111 (“piece-rate”)
- Walling v. Youngerman-Reynolds Hardwood Co. (1945) 65 S.Ct. 1242, 1245. (“The regular rate by its very nature must reflect all payments which the parties have agreed shall be received regularly during the workweek, exclusive of overtime payments. It is not an arbitrary label chosen by the parties; it is an actual fact. Once the parties have decided upon the amount of wages and the mode of payment the determination of the regular rate becomes a matter of mathematical computation, the result of which is unaffected by any designation of a contrary ‘regular rate’ in the contracts.”)
- 29 USC § 207.
- Labor Code 1197 LC — Payment of lower wage than minimum wage.
- 29 CFR 778.110 — Hourly rate employee.
- Ferra v. Lowes Hollywood Hotel, LLC (2021) 11 Cal. 5th 858. Note that this case is retroactive for four years.
- Labor Code 226.7 LC.
- See note 15. Regular rate of pay is synonymous with “regular rate of compensation.”
- Alvarado v. Dart Container Corp of California (2018) 4 Cal. 5th 542, 411 P.3d 528.
- Labor Code 515 LC — Computing Overtime Rate.
- 29 CFR 778.118 — Commission paid on a workweek basis.
- 29 CFR 778.111 — Pieceworker. See also Mora v. C.E. Enterprises, Inc. (2025) ___ Cal.App.5th ___ [Docket No. B337830].
- Labor Code 1194 LC. See the Division of Labor Standards Enforcement (DLSE).