Types of Employee Compensation in California

Instructor: Ian Lord

Ian has an MBA and is a real estate investor, former health professions educator, and Air Force veteran.

In this lesson we will review the different kinds of wages defined by the State of California as well as some of the basic rules regarding how and when these wages are earned.

Types of Employee Compensation

Rob is a retail salesman in a shop specializing in tabletop, card, and board games. Instead of working just for an hourly wage, his employer pays him using a wide variety of employee compensation types. In Rob's case this is because he has been given considerable responsibility for the profit and loss of the store. Employees in California may receive one or more kinds of compensation based on their pay structure or because of state legal requirements. Let's take a look at how California defines various types of employee compensation.

Wages, Commissions & Bonuses

As part of his base pay, or wages, Rob receives $15 per hour. On top of that his employer pays him a commission, which is a percentage of the price of the items he sells. His company also grants bonuses for meeting personal job performance goals. Once Rob earns a commission by making a sale, he is entitled to receive that pay in his next paycheck or upon leaving the company. With a bonus he is not entitled to any money if he leaves the business before the bonus is paid.

Other Types of Compensation

California law requires certain additional forms of compensation in specific situations. For example, if Rob is required to drive to an alternate work site that is farther than his normal work location, he must receive wages for travel time. The exact amount of pay depends on his compensation agreement, but must not be less than the California minimum wage. His employer must also pay any necessary expenses such as gas or tolls. If Rob uses a car and money provided by his employer, he is still entitled to his hourly pay for the time spent in transit.

What if Rob shows up to his normally scheduled shift but is sent home early because his boss has no work for him to do? In that case California requires that Rob be paid for at least half of the hours he was originally scheduled to work. The laws further state that this reporting to work pay must be at least two hours but not more than four hours worth of the employee's regular pay. There are exceptions for situations such as natural disasters, loss of utilities, or a threat against the property.

Sometimes Rob has unusual work scheduling arrangements. Every once in awhile he needs to work what's known as a split shift, where he reports for work for a four-hour shift in the morning but then has to come back later that day to cover another shift. If this happens, California requires that he be paid a premium of one additional hour of his basic wage.

Other times his boss may need him to stay behind at work without any work to do. Employers can keep employees at work on an on call, or standby status, to have workers ready to go at short notice, provided the employee receives the regular wage. In some cases Rob may be able to receive pay for hours spent on call at his home if the terms of the call is significantly restrictive as far as what else he can do or where he can go.

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