What Is a Day Rate and Why Is It Sometimes Problematic?

A day rate is a flat pay scheme where you are paid a set amount for the day rather than hourly pay or an annual salary. For example, you might work as a sous chef in a restaurant kitchen for $160 per day, with your days being 8 hours each.

That’s 20 bucks an hour. Sounds like a good deal, right?

In this instance, yes…but unfortunately, this is not always the case. Your total day rate divided by the number of hours you work must equal at least the minimum wage. In California in 2024, that’s at least $16.00 an hour for nonexempt employees. (Some communities and industries have set even higher minimum wage thresholds.)

So, if your day rate is only $100 and you’re working 8-hour days, you’re already not making the state’s required minimum wage. You’re making $12.50 per hour. That’s against the law.

Then there’s the issue of overtime. Even if your day rate just squeaks in under the minimum wage requirement, what happens if you work extra hours? Say, in the first case above, a large party comes in late and the restaurant owner decides to stay open to serve them. You wind up working 11 hours that day instead of 8. You must be paid overtime for those hours above your regular 8 (see below), or your employer has broken the law.

Many employers have recently been cited, fined, sued, and even shut down over day rate wage infractions in California because of these situations. They’re taking advantage of employees, often leveraging their power to terminate employment or create immigration problems in order to keep them working for below the state-mandated rate. Although this is particularly common in the food and hospitality sector, it occurs in other industries as well.

Industries and Professions Where Day Rates Are Common

Day rates are not only frequently used by restaurant employers, they’re common in the entertainment industry too — often known as “calls,” where the worker is quoted a flat rate for a shoot over a given number of hours, e.g., “500/10” or $500 for 10 hours of work.

Other places where you’ll find day rates used include:

• Oil and gas industry - field specialists, field operators, pipeline inspectors, top drive technicians, service supervisors, field coordinators, tool pushers, pumpers, lease operators, mud engineers, field engineers, and completions consultants or supervisors
• Construction industry - especially for construction workers employed on a project basis vs. long-term employment
• Private security and military contracting - long-term protection details in particular
• Inspectors - for welding, tanks, safety, electrical and instrumentation, NACE coating, vending, tie-in, directional drilling, and utilities
• Drilling consultation
• Water truck driving
• Project management

Additionally, day rates are becoming more common for white-collar professionals and consultants who work as freelancers or independent contractors. This includes accountants, content creators, virtual assistants, and tech professionals.

In some cases, using a day rate simply makes payroll and budgeting easier. But as mentioned above, some less scrupulous employers use this pay schedule in an attempt to circumvent minimum wage and overtime laws.

What Is California Law for Overtime Pay?

Before we dive into calculating overtime pay when you’re on a day rate, let’s first review California’s laws for overtime requirements.

Unless your union has negotiated a different pay schedule, you are entitled to the following overtime pay in California:

• 1½ times your regular rate of pay for more than 8 hours in a workday, up to 12 hours in a workday
• 1½ times your regular rate of pay for the first 8 hours worked on the 7th consecutive day of work in a workweek
• 2 times your regular rate of pay for all hours worked over 12 hours in any workday
• 2 times your regular rate of pay for more than 8 hours worked on the 7th consecutive day of work in a workweek

How Is Overtime Calculated When You Are Paid a Day Rate?

Now, let’s go back to our early hypothetical scenario where a restaurant kitchen worker is paid $160 for 8 hours of scheduled work but winds up working 11 hours instead. How would you calculate the overtime rate?

1. Divide $160 by 8. That equals $20.00. That’s your baseline hourly rate for that shift.
2. Multiply $20.00 by 1.5 (1½ times your baseline hourly rate). You get $30.00 per hour. That’s your overtime rate. At three extra hours, you would get an additional $90.00 ($30.00 times 3).
3. Last, add your day rate to your calculated overtime pay. Your total paycheck for the extra-long shift would therefore be $160 plus $90.00 or $250.

What if you work more than 12 hours? The hours between 8 and 12 are paid at 1.5 times your hourly rate, calculated as above. Anything over 12 hours, though, is paid double time or 2 times your hourly rate.

What If Your Employer Is Not Paying You Overtime?

Intentionally not paying overtime is considered a form of wage theft in California. If you’re not being paid overtime but have a good relationship with your employer, you could talk to them first. Some employers don’t know how to calculate overtime from a day rate, and you can show them how to avoid penalties and fines by changing their practice.

However, if your employer is deliberately denying you overtime pay, you are entitled to take next steps. You may wish to file a claim with the state. They will investigate and hold the employer accountable if they are indeed found guilty of withholding overtime pay.

The problem most folks run into when dealing with state bureaucracy is the time factor. The people responsible for investigating wage claims get bogged down and backed up. Meanwhile, you’re still not getting your overtime pay, and you have your own financial obligations to take care of.

That’s why some people in the Los Angeles area turn to an employment attorney like Employee Law Group. How can we help? We can:

• Assist with state paperwork if you wish to file a formal claim so you know everything is completed properly and turned in within the shortest window possible
• Advise you on how to document a wage claim of your employer not paying overtime and how to protect evidence of wrongdoing
• Evaluate whether other workplace infractions are taking place, such as discrimination or 1099 misclassification
• Send a letter to your employer requesting you be paid all overtime owed and proper overtime in the future, outlining possible consequences if this is not done
• Represent you in court if you decide to pursue a lawsuit, including filing official documents and litigating the case

If you are being denied overtime you have rightfully earned, you don’t have to just put up with it. Your initial consultation with Employee Law Group is completely free of charge, so you can decide what to do next. Call us at 310-407-7358, or get in touch online to let us know how we can assist you.