California has the most demanding overtime rules in the country for hourly workers, and most people, including some payroll managers, do not fully understand them until they see an unexpected wage claim. The state does not just require overtime after 40 hours per week like the federal government does. California requires overtime after 8 hours in a single workday. That one difference changes the math on every paycheck for any worker who routinely puts in 9, 10, or 12-hour days.
If you have ever handed someone their paycheck and had them ask why their Wednesday check was less than their Monday one even though they worked the same number of hours both weeks, California's daily overtime rule is almost certainly the answer. The California Paycheck Calculator handles all of this automatically, including daily overtime, double time, SDI, and state income tax. This guide explains the calculations behind each number so you can verify them yourself or teach them to anyone you supervise.
California also charges workers a State Disability Insurance (SDI) premium on every paycheck, maintains some of the highest city minimum wages in the country, and applies a progressive state income tax that affects take-home pay differently at $18/hr versus $35/hr. Each of those layers gets its own section below, with real dollar examples at rates hourly workers actually earn.
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