Why Paidsley works the way it does

Most of what surprises people in Paidsley is not a software decision. It is California law, which is stricter than federal law in almost every direction that matters to an hourly workforce. This page explains the rules and what the software does about each one, so you can tell a correct number from a suspicious one.

Everything starts with the workday and the workweek

California pays overtime by the day, not just the week. That makes the boundary between one day and the next a number that costs money, so it has to be exact.

A workday is a fixed 24-hour period. A workweek is seven consecutive 24-hour periods starting on the same day and time each week. Once set, they stay put — an employer cannot move the boundary around to avoid overtime.

Paidsley: every punch is stored as an exact moment in time, then converted to your company's timezone to decide which workday and workweek it belongs to. A shift ending at 11:30 PM belongs to the day it started in your local clock. Change your workweek start day and every overtime calculation moves with it, which is why it is the first thing to get right.

Overtime: daily, weekly, and the seventh day

Under Labor Code § 510, overtime is owed for:

• More than 8 hours in a workday — one and a half times the regular rate
• More than 12 hours in a workday — double the regular rate
• More than 40 hours in a workweek — one and a half times the regular rate
• The seventh consecutive day worked in one workweek — one and a half times for the first 8 hours, double time beyond 8

Daily and weekly overtime are not added together for the same hours; the rules are applied so an hour is only counted once.

Paidsley: all four are calculated per workweek from the actual punches. The seventh-day rule is the one most often missed by hand, because it depends on the whole week rather than the day in front of you.

The regular rate is not the hourly rate

This is the single most misunderstood number in California payroll. Overtime is paid on the regular rate of pay, which is not simply someone's hourly wage. It is a weighted average that includes most other compensation earned in that workweek.

If someone works two different rates in a week, their regular rate is the weighted average of the two — not whichever rate they happened to be on when the overtime hour occurred.

Non-discretionary bonuses and commissions also go into it, and how depends on the type:

• A flat-sum bonus — a fixed amount that does not rise with hours worked, such as an attendance bonus — is divided by the non-overtime hours only. That is the rule from Alvarado v. Dart Container Corp. of California (2018) 4 Cal.5th 542, and it produces a higher overtime premium than the federal method.
• A commission or production bonus, which does rise with output, is divided by all hours worked.

Getting this backwards underpays people, and it is a common source of back-wage claims against small employers.

Paidsley: the regular rate is computed per workweek from the rates actually in effect at each punch, and commissions and bonuses are folded in using the correct divisor for their type. When a commission is paid after the fact for work already done, Paidsley calculates the extra overtime owed on it and shows it as retro overtime rather than quietly ignoring it.

Meal periods, and when they can be waived

An employee who works more than 5 hours is entitled to an unpaid 30-minute meal period, which must begin before the end of the fifth hour of work.

An employee who works more than 10 hours is entitled to a second 30-minute meal period, beginning before the end of the tenth hour.

This is where agreements matter, and it is the question we are asked most:

• The first meal period may be waived by mutual consent — but only when the total hours worked that day are no more than six.
• The second meal period may be waived by mutual consent — but only when the total is no more than twelve, and only if the first meal period was not waived.

Those are the only ordinary waivers. There is no such thing as a blanket, permanent waiver of meal periods for a full-length shift.

Separately, an on-duty meal period — paid, and taken while still working — is allowed only where the nature of the work genuinely prevents being relieved of all duty, and only under a written agreement that the employee can revoke in writing at any time.

There is also a crucial distinction from Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004. An employer must provide the meal period — relieve the employee of all duty and give up control over how they spend it — but is not required to police that no work is done. If a break is genuinely made available and the employee freely chooses to work through it, no premium is owed. If it was never really available, one is.

Paidsley: meal timing is tracked to the minute against the fifth and tenth hour. If your policy permits waivers on qualifying short shifts, turn on the meal waiver rule in Settings and Paidsley stops treating those shifts as violations. Because the Brinker distinction turns on what was offered rather than what was taken, Paidsley records the employee's own attestation about the break rather than inferring it from the punches.

Rest periods

Employees are entitled to a paid 10-minute rest period for every 4 hours worked, or major fraction of 4 hours — in practice ten minutes for shifts over 3.5 hours, twenty for over 6, thirty for over 10. Rest periods should fall in the middle of each work period where practical, and they count as hours worked, so they are paid.

Unlike meal periods, rest periods are not waivable by an ordinary agreement. The employer must authorise and permit them. An employee may choose not to take one, but a policy that trades them away does not hold up.

Because rest breaks are paid and usually not clocked, there is often no punch record proving one happened. That is why Paidsley asks the employee to confirm.

Paidsley: the number of rest periods owed is calculated from the hours actually worked, and the employee attests at the end of the shift whether they received them. That attestation is the record you would rely on later.

Premium pay for a missed break

When a required meal or rest period is not provided, Labor Code § 226.7 requires the employer to pay the employee one additional hour of pay for that workday.

Three things about that hour trip people up.

It is one hour per category per day, not per break. Two missed rest breaks in one day is one hour, not two. But a missed meal and a missed rest on the same day is two hours — one for each category.

It is paid at the "regular rate of compensation", which means the full regular rate, not the base hourly wage. In Ferra v. Loews Hollywood Hotel, LLC (2021) 11 Cal.5th 858 the California Supreme Court held that this phrase means the same thing as the "regular rate of pay" used for overtime, so bonuses and commissions are included. Employers who had been paying premiums at base rate were underpaying, and the decision applied retroactively.

It is wages, not a penalty. Naranjo v. Spectrum Security Services, Inc. (2022) 13 Cal.5th 93 settled this. Because premiums are wages, they must appear on the itemised wage statement, and unpaid premiums can trigger waiting-time penalties when someone leaves.

Paidsley: premiums are calculated at the regular rate, not the base rate. They are recorded against the pay period and carried onto the payroll run as their own earning line, so they reach the wage statement as wages. A premium can be marked resolved with a reason, but it cannot be silently deleted — if it could, the record you would need in a dispute would be the one thing missing.

Why Paidsley does not round time

Rounding punch times to the nearest quarter hour used to be common. It is now very hard to defend in California.

In Donohue v. AMN Services, LLC (2021) 11 Cal.5th 58 the Supreme Court held that meal periods may not be rounded, and that time records showing short, late or missed meal breaks raise a rebuttable presumption that the break was not provided — shifting the burden onto the employer to show otherwise.

In Camp v. Home Depot U.S.A., Inc. (2024) 17 Cal.5th 1 the Court went further: where an employer actually captures the exact minutes worked, it must pay for all of that time. Neutral rounding is not a defence when you already know the real number.

Paidsley: punches are recorded to the minute and used as recorded. Because a short or late meal creates a presumption against you, Paidsley surfaces those shifts while you can still ask what happened, rather than months later.

Itemised wage statements and records

Labor Code § 226(a) requires each pay stub to show nine specific items, including gross wages, total hours worked, all applicable hourly rates and the hours worked at each, net wages, the pay period dates, the employee's name and identifiers, and the employer's legal name and address.

Employers must keep payroll records for at least three years, and employees have the right to inspect or copy their own records.

Paidsley: the punch record is append-only. A manager can correct a mistaken punch, but the original stays in the audit trail with the correction linked to it. When someone asks a year later what happened on a particular Tuesday, the answer is still there — including who changed what, and when.

Final pay

An employee who is discharged must be paid all wages due immediately. An employee who quits with at least 72 hours' notice is due at the time of quitting; without notice, within 72 hours.

Missing that deadline can trigger a waiting time penalty under § 203 of up to 30 days of the employee's daily wage. Since Naranjo, unpaid break premiums count toward what was owed — which means one unresolved premium can become a much larger number after someone leaves.

Paidsley: unresolved premiums and unapproved timesheets are visible before you close a pay period, which is the point at which they are still cheap to fix.