What is Premium Pay?

Premium pay is an employee’s hourly rate (straight time rate) and nondiscretionary wages such as hiring bonuses, performance bonuses, working holidays, overtime pay, missed rest breaks, or missed lunch breaks.

By: Brad Nakase, Attorney

Email | Call (800) 484-4610

In California, premium pay is additional pay owed to an employee that is separate from the regular hourly pay. In California, employers must provide employees rest, meals, and recovery breaks. California employers that fail to provide their employees with uninterrupted rest, meals, or recovery breaks must pay employees premium pay. Premium pay is equal to one additional hour of pay.

In California, premium pay consists of a worker’s hourly rate, or straight time rate, in addition to nondiscretionary wages. These wages include attendance bonuses, incentive bonuses, hiring bonuses, and performance bonuses. Premium pay can therefore alter between pay periods because the worker’s discretionary pay might not always be consistent. Therefore, it is essential that an employee look carefully at their wage statements to make sure that they get their complete (and correct) premium pay for each of their missed break periods.

In this article, our attorney will discuss premium pay for:

1. What does premium pay mean for a job?

2. Rest Period Premium Pay

3. Meal Break Pay Premium

4. Overtime Premium Pay

5. What is straight time vs premium time?

What does premium pay mean for a job?

Under California law, an employer is required to provide rest, meal, and recovery breaks for his or her employees. If an employer does not supply these uninterrupted, code-compliant rest, meal, and recovery breaks, then he or she must give his or her works premium pay, or compensation. This means that if a worker believes they have been denied their rightful break periods in the workplace, they should contact an experienced employment lawyer to recover premium pay.

An employee can get premium pay for any of the following:

Missed rest breaks
Missed meal breaks
Working overtime (8-12 hours)
Working double time (over 12 hours per day or 7 consecutive days)
Missed recovery breaks. Employees working outdoors are entitled to take a recovery break to prevent heat illness by cooling down.
Incentive bonuses (only if company policy allows)
Attendance bonuses (only if company policy allows)
Performance bonuses (only if company policy allows)
Hiring bonuses (only if company policy allows)

Example of Premium Pay for a job. An employee works 10 hours today. 8 of those hours is regular pay. 2 hours is overtime pay which is “premium pay.”

Rest Period Premium Pay

What is a rest period premium pay? Under California Labor Code section 226.7, if an employer does not provide an employee with an uninterrupted rest break, the employer must pay the employee a premium payment of one hour of pay at the employee’s regular hourly rate.

Example for Rest Break Premium Pay. An employee’s hourly rate is $20 per hour. The employee worked four hours and is entitled to a ten-minute break. The employee did not get the rest break. Therefore, the employer owes the employee a premium pay of $20 for the missed rest break. As a result, if the employee worked 5 hours, the employer owes the employee $20 X 5 hours + $20 for missed rest break = $120.

As a result, if a worker is denied a rest break, they may collect an hour of premium pay for that missed break period.

Example for Meal Break Premium Pay. . An employee’s hourly rate is $20 per hour. The employee worked five hours and is entitled to a meal break. The employee did not get the meal break. Therefore, the employer owes the employee a premium pay of $20 for the missed meal break. As a result, if the employee worked 8 hours, the employer owes the employee $20 X 8 hours + $20 for missed rest break = $180.

Employees who work more than 40 hours a week are entitled to a higher pay rate for the additional work. Overtime pay refers to the compensation you receive for working beyond normal working hours. Employers shall compensate employees at the premium rate of 1.5 times the regular rate of pay for hours worked which exceed 40 hours of actual work in a workweek. The formula for calculating overtime premium pay is the nonexempt employee’s regular rate of pay x 1.5 x overtime hours worked.

Have a quick question? We answered nearly 2000 FAQs.

See all blogs: Business | Corporate | Employment

Most recent blogs:

What Is Fair Chance Hiring? Meaning, Benefits, and How It Works for Employers

Fair chance hiring gives candidates with criminal records fair consideration, helping employers access loyal, diverse, and skilled talent. It strengthens compliance, lowers turnover, and helps build high performance teams without compromising workplace safety.

California Labor Code Section 204: Employee Rights When Employers Pay Late

Late wage payments in California can trigger penalties under Labor Code Section 204, protecting employees from repeated payroll delays. Workers have legal options including waiting time penalties, wage claims, and attorney assistance to secure timely pay.

California Equal Pay Act: Differences from Federal Law, Employer Duties, and Employee Protections

California’s Equal Pay Act expands protections beyond federal law, covering pay disparities by sex, race, and ethnicity. Employers must justify wage differences with valid factors; employees gain retaliation safeguards, filing options, and potential damages.

I-9 Compliance: Employer Rules, Penalties, and Best Practices

I-9 compliance helps employers verify work authorization, meet federal rules, and avoid costly fines, penalties, and legal issues. Use proper documentation, audits, E-Verify, and training to maintain compliance and reduce employment verification risks.

California Labor Code: Divisions, Laws, and Employee Rights Overview

California Labor Code overview covering divisions, employee rights, workplace safety, workers’ compensation, and enforcement across key industries. Trace major milestones, landmark cases, and updates that shape employer obligations and protections for California workers today.

Are Non-Solicitation Agreements Enforceable in California? Exceptions and Legal Insights

Non-solicitation agreements in California are mostly unenforceable, except when tied to trade secrets, business sales, or partnership dissolutions. This article outlines key exceptions, legal challenges, and how courts determine when limited restrictions may stand under state law.

California Labor Code Section 226: Wage Statement Requirements & Penalties

California Labor Code Section 226 sets strict paystub requirements and exposes employers to lawsuits, PAGA penalties, and fees. Review wage statements for all nine items; third party payroll services do not shield companies from compliance mistakes.

Do You Have to Sign a Write-Up at Work? Employee Rights and Employer Policies Explained

Employees often ask if they must sign a workplace write-up, and the answer depends on labor laws and company policies. This guide explains employee rights, employer practices, and options for responding when faced with disciplinary write-ups.

ABC Test California: AB 5 Exceptions, Borello Factors, and Worker Status

AB 5 reshaped California worker classification with the ABC test, Borello factors, and multiple exemptions impacting industries and licensed professionals. This guide covers independent contractor rules, key exceptions, and legal consequences for misclassification under California employment law.

How Long to Keep Employee Files: Record Retention Laws, Timelines, and Best Practices

Keep employee records compliant with federal and state retention laws to protect your business from fines, lawsuits, and compliance issues. Establish clear policies, digitize securely, and retain files for proper timelines to ensure efficiency, privacy, and legal protection.

Separation of Employment: State Notice Requirements, Termination Letters, and Compliance Guide

State separation laws vary, requiring employers to issue termination notices on time to reduce penalties and compliance risk. This guide covers state notice requirements, termination letters, unemployment benefit notifications, and practical steps for multi-state compliance.

Labor Code Section 2810.5: CA Hiring and Wage Notice Guide

California Labor Code Section 2810.5 outlines hiring and wage notice requirements employers must follow to avoid penalties and lawsuits. Employers must provide detailed written notices, comply with minimum wage laws, and use official forms to remain compliant.

California Sick Leave Law 2025: Employee Rights, Accrual Rules, and Local Ordinances

California Sick Leave Law 2025 explains employee rights, accrual rules, and employer duties for paid sick time in California. Local ordinances in Los Angeles, San Francisco, Oakland, Berkeley, and Santa Monica offer additional protections and higher sick leave caps.

What is Comp Time at Work? Definition, Legal Rules, and How it Differs from Overtime

Comp time lets employers offer time off instead of overtime pay, but strict legal rules often limit its use. This guide explains comp time, how it differs from overtime, and the legal risks businesses must review.

California Vacation Law Update 2025: Changes to Paid Leave, PFL Use, and Workplace Policies

California’s 2025 vacation law update adds new protections for employees, impacting paid leave, workplace meetings, and contractor agreements. Employers must adjust to expanded worker rights, anti-discrimination rules, and stricter compliance requirements taking effect January 1, 2025.

California Wage Statement Rules: What Must Be Shown and What to Do If Your Pay Stub Has Errors

California employers must provide accurate pay stubs detailing wages, deductions, hours, and other required information under state labor laws. Employees may seek penalties, back pay, and legal action if wage statements contain errors or missing details.

What Paid Holidays Are Mandatory in California? Employer Requirements, Exemptions, and Federal Worker Pay Rules

California law does not require private employers to provide paid holidays, though many offer them voluntarily for employee satisfaction. Federal employees in California may receive holiday premium pay, depending on eligibility and agency rules.

California Employee Rights: Workplace Discrimination, Wages, and Legal Protections

California employees have rights covering discrimination, wages, and workplace safety under state and federal laws. This guide outlines protections against unfair treatment, retaliation, and wage violations.

SB 616: Key Changes to California Paid Sick Leave Law Every Employer Should Know

California’s SB 616 increases paid sick leave from 24 to 40 hours, requiring policy updates for statewide employer compliance. Employers must adjust accrual, carryover, and usage rules, update handbooks, train staff, and ensure payroll accuracy.

Onboarding Paperwork Checklist: 10 Key Documents Every Employer Needs for New Hires

Onboarding paperwork supports compliance, payroll accuracy, and smooth integration for new hires with important legal, tax, and organizational documents. This checklist outlines 10 vital records employers should provide to support efficiency, clarity, and a positive start for every employee.

Resentment Examples at Work 6 Ways Workplace Tension Takes Hold

Resentment Examples at Work: 5 Ways Workplace Tension Takes Hold

Workplace resentment can silently erode trust, collaboration, and morale, leading to lasting cultural damage if left unchecked. Recognizing resentment examples helps address unresolved conflict, burnout, and broken promises before they harm productivity and team relationships.

How Many Hours Can You Work at 15? State-by-State Guide to Teen Work Limits in the U.S.

Teen work laws set limits on hours for 14- and 15-year-olds, varying by state and job type. Find out work restrictions, permitted jobs, and tips for landing your first position at 14 or 15 in the U.S.

CA Exempt Salary 2025: Minimum Wage and Exemption Updates for California Employers

California's 2025 exempt salary threshold increases to $68,640 annually, with minimum wage rising to $16.50 statewide. New laws also impact sick leave, union exemptions, captive audience meetings, and driver’s license requirements for job postings.

How Long to Keep Payroll Records in California: Employer Rules for 2025

Employers in California must retain payroll and personnel records for up to four years to remain compliant with 2025 regulations. Digital and physical storage methods, I-9 rules, and supervisor training responsibilities are also covered in the updated requirements.

California Fair Chance Act: Updates Employers Need to Know About Criminal History Rules

Employers in California must follow stricter rules on criminal history checks under the updated Fair Chance Act from October 2023. New regulations expand definitions, require tailored evaluations, and mandate written notices before rejecting candidates due to conviction records.

Breaks in California: Detailed Guide to Rest and Meal Break Rules for Employers

California employers must follow detailed rules for rest and meal breaks, including timing, written waivers, and compensation requirements. Improper or missed breaks can result in legal action, wage penalties, and issues related to industry-specific labor standards.