What are the legal limits on overtime for construction labor in California vs. Texas?

Defining Overtime in Construction: Core Concepts and Thresholds

In construction, overtime isn’t just an accounting line item—it’s a fundamental driver of project cost, crew morale, and legal liability. The core concept is deceptively simple: employees must be paid a premium (typically 1.5x their regular rate) for hours worked beyond a standard threshold. Yet, the real-world application hinges on a critical, often misunderstood distinction: daily versus weekly overtime triggers.

Why this distinction matters: Most industries operate on a pure weekly standard (overtime after 40 hours in a workweek). Construction, however, is ruled by the clock and the calendar. Projects face weather delays, concrete pours that can’t stop, and tight deadlines. This leads to irregular, concentrated work hours that make the daily vs. weekly question a multi-thousand dollar decision per crew. Misapplying the threshold isn’t just a payroll error; it’s a wage violation that accrues penalties and interest from the first mispaid hour.

How it works with concrete examples:

• Weekly Overtime (Federal/FLSA Standard): An employee works 9 hours on Monday, 9 on Tuesday, 9 on Wednesday, and 9 on Thursday (36 hours total). They work 8 hours on Friday, bringing their weekly total to 44 hours. Under a pure weekly standard, only the 4 hours over 40 are paid at 1.5x. The four 9-hour days alone trigger no premium.
• Daily Overtime (CA Standard): The same schedule in California would result in premium pay for each of the four 9-hour days (1 hour of daily OT each day), plus the 4 hours of weekly OT on Friday. This is because CA law mandates overtime for hours worked over 8 in a single workday, independent of the weekly total.

What 99% of articles miss: The operational impact of these thresholds on common construction schedules like the “4/10” (four 10-hour days). Under a weekly standard, a 4/10 schedule involves zero overtime—a huge efficiency gain. Under a daily standard like California’s, it involves 8 hours of overtime pay (2 hours of OT per day for 4 days). This isn’t a minor accounting difference; it fundamentally alters the economics of project scheduling and bidding. Contractors building a detailed construction business plan must model labor costs using the correct threshold, or their entire financial projection is flawed.

California’s Daily Overtime Rules (8/40) and the 12-Hour Threshold

California’s overtime regime is a layered, sequential calculation that functions more like a progressive tax bracket than a simple premium. The common shorthand “8/40” is just the entry point. The real complexity—and financial risk—lies in the cascading triggers for double-time and the unique “seventh consecutive day” rule.

Why the sequencing matters: California’s Industrial Welfare Commission Orders mandate a specific order of calculation that payroll systems must follow: regular time first, then daily overtime (1.5x), then weekly overtime (1.5x), then double time (2x). Getting this sequence wrong, or applying weekly overtime before daily, is a common audit failure that leads to systemic underpayment.

How it works with a real payroll scenario: Imagine a crew on a critical highway project in Los Angeles. Their workweek runs Sunday to Saturday.

Day	Hours Worked	California Overtime Calculation
Sun	10	8 reg, 2 OT (1.5x)
Mon	10	8 reg, 2 OT (1.5x)
Tue	10	8 reg, 2 OT (1.5x)
Wed	12	8 reg, 2 OT (1.5x), 2 DT (2x)*
Thu	8	8 reg
Fri	8	8 reg
Sat (7th Consecutive Day)	9	8 OT (1.5x)**, 1 DT (2x)***

*Double time triggered for hours worked over 12 in a single day.
**First 8 hours on the 7th consecutive day of work are paid at 1.5x, regardless of weekly total.
***Hours over 8 on the 7th consecutive day are paid at 2x.

The weekly total here is 67 hours. A contractor thinking only in terms of weekly overtime (27 hours over 40) would drastically undercalculate the liability, which includes 15 hours of daily OT, 8 hours of 7th-day OT, 3 hours of double time, and then additional weekly OT on hours already counted as daily OT (a complex “pyramiding” calculation).

What 99% of articles miss: The profound interaction between California’s daily rules and prevailing wage overtime calculations. On a state or federal public works project, the contractor must pay the prevailing wage rate for all hours, and then add the overtime premium on top based on the CA daily/weekly triggers. This often means calculating overtime using a “regular rate” that is itself a blended rate of multiple prevailing wage classifications, a task far beyond basic payroll software. Furthermore, the financial impact of the 7th-day rule makes scheduling a 6-day workweek a starkly different cost proposition than pushing into a 7th day, a nuance rarely discussed in project scheduling meetings.

Texas Approach: FLSA-Only Compliance and the Weekly 40-Hour Standard

Texas operates under a principle of regulatory minimalism for private-sector overtime: if the federal Fair Labor Standards Act (FLSA) doesn’t require it, Texas generally doesn’t either. This creates a starkly simpler, but not without nuance, landscape for construction employers.

Why “FLSA-only” is a strategic advantage (and a trap): For purely private commercial or residential projects, Texas’s adherence solely to the FLSA’s weekly 40-hour threshold offers significant flexibility. It enables efficient 4/10 schedules, allows for long single-day pushes (e.g., a 14-hour day to beat a weather front) without daily overtime penalty, and simplifies payroll administration. This lower regulatory burden is a tangible competitive cost advantage when bidding against contractors from states with daily overtime rules. It’s a key operational factor to model in a residential construction business plan for a Texas market.

How it works in practice: Using the same crew schedule from the California example in Texas yields a completely different cost structure. The 10-hour days on Sunday through Wednesday incur no daily overtime. Only the total hours over 40 for the week (27 hours) are paid at 1.5x. There is no state-mandated double time or special premium for working a 7th consecutive day. This simplicity, however, makes meticulous construction cash flow management even more critical, as the overtime liability, while simpler, can still be substantial and must be accurately forecasted.

What 99% of articles miss: The phrase “TX FLSA-only compliance” is dangerously incomplete. It applies only to non-public works projects. The moment a Texas construction project involves federal funding (or state funding subject to prevailing wage laws), the Davis-Bacon and Related Acts apply. These federal prevailing wage laws have their own overtime trigger: time-and-a-half for all hours over 40 in a workweek. Crucially, on these projects, Texas’s lack of daily overtime is irrelevant; the federal weekly standard is the floor. However, the real complexity is that the Davis-Bacon “prevailing wage” includes fringe benefits, and the overtime premium must be calculated on the basic hourly rate plus the fringe rate, not just the cash wage. A contractor who applies their standard Texas private-payroll logic to a federally-funded project will violate both wage and fringe benefit requirements. This is the hidden compliance layer: a Texas-based contractor may need to run two parallel payroll systems—one for private work and one for public work. Understanding this dichotomy is essential for any firm looking at government construction contracts.

Meal and Rest Breaks: When a Pause Becomes a Payroll Crisis

Why this matters: In construction, break violations aren’t just administrative errors—they’re systemic financial liabilities. California’s strict, prescriptive rules create a predictable minefield for wage claims, while Texas’s reliance on federal standards creates a different risk: operational ambiguity that can lead to fatigue-related safety incidents and employee dissatisfaction. The root cause is a fundamental philosophical difference: California views breaks as an inviolable worker right, while Texas defers to federal minimums, treating them more as an operational guideline.

How it works in real life: California’s Industrial Welfare Commission Wage Orders mandate:

• Meal Breaks: A 30-minute, duty-free break must be provided before the end of the 5th hour of work. A second 30-minute break is required before the end of the 10th hour if the shift exceeds 10 hours.
• Rest Breaks: A paid 10-minute net rest break for every 4 hours worked (or major fraction thereof).
• Penalty: Missing a required break triggers one extra hour of pay at the employee’s regular rate for each violation. This “premium pay” is a wage, not a penalty, meaning it factors into the regular rate for overtime calculations.

On a construction site, this demands military-like scheduling. If a concrete pour can’t be paused at the 4-hour and 55-minute mark, the company faces automatic penalty pay. The “on-duty” meal break exception is nearly impossible to use legally in construction, as it requires the employee to be relieved of all duty and the employer to demonstrate an “operational necessity” that makes relief impossible—a high bar to clear.

In Texas, there is no state law mandating meal or rest breaks for adults. The rulebook is the federal Fair Labor Standards Act (FLSA), which does not require breaks at all. However, if an employer chooses to offer short breaks (typically 5-20 minutes), the FLSA considers them compensable hours worked. A bona fide meal period (generally 30 minutes or more) is not work time if the employee is completely relieved of duty. The operational impact is less about penalty pay and more about the hidden cost of inconsistent practices: crews without predictable relief are prone to burnout, mistakes, and turnover.

What 99% of articles miss: The true cost in California isn’t just the penalty hour—it’s the compounding effect on overtime calculations. That penalty hour increases the “regular rate” of pay for the week, which in turn increases the overtime premium owed. A single missed break penalty can ripple through an entire payroll. In Texas, the missed insight is that while no state penalty exists, failing to provide reasonable breaks can be evidence in a broader wage claim (e.g., for off-the-clock work) or a safety violation investigation. Furthermore, large general contractors working on major projects often impose stricter break standards in their site safety plans to mitigate liability, creating a de facto standard that surpasses Texas law.

Actionable Protocol Comparison

Requirement	California	Texas (FLSA Standard)
Meal Break Trigger	Before end of 5th hour (1st break); before end of 10th hour (2nd break)	No state trigger. Employer discretion if offered.
Meal Break Duration	30 minutes, duty-free	Typically 30 mins to be non-compensable.
Rest Break Requirement	10 mins per 4 hours, paid, net rest	No federal or state requirement.
Penalty for Missed Break	1 hour premium pay per violation	No statutory penalty. Break time under 20 mins must be paid.
Critical Site Supervision Need	Proactive clock-watching & forced relief scheduling.	Clear, enforced policy to ensure paid short breaks are recorded and meal periods are truly duty-free.

Prevailing Wage Projects: When Federal Rules Override the State Playbook

Why this matters: For public works and federally funded projects, a separate set of rules—the Davis-Bacon Act and related statutes—layers on top of state law. This creates a hybrid compliance regime that most contractors discover only during a payroll audit. The systemic effect is a massive compliance blind spot: a company proficient in Texas FLSA-only compliance can be utterly unprepared for the daily overtime mandates of a federal project in Houston.

How it works in real life: The Davis-Bacon Act requires contractors on covered federal projects to pay laborers and mechanics the local “prevailing wage” (including fringe benefits). Crucially, the Contract Work Hours and Safety Standards Act (CWHSSA) applies alongside it, mandating overtime at 1.5x the basic hourly rate plus fringe benefits for all hours worked over 40 in a workweek and for all hours over 8 in a single day.

This daily overtime requirement is the game-changer, especially in Texas:

• In California: State law already mandates daily OT after 8 hours. On a Davis-Bacon project, the federal rule aligns, but the calculation basis differs. You must pay the higher of the two rates. The “prevailing wage” determination includes a specific hourly wage and fringe benefit amount. Overtime is calculated at 1.5x the basic rate, but the fringes must still be paid for overtime hours.
• In Texas: State law has no daily OT rule. But on a covered federal project, CWHSSA imposes one. This means a Texas contractor used to tracking only weekly hours over 40 must now implement daily tracking for that project. The overtime premium is calculated on the Davis-Bacon determined rates, not the employee’s normal pay rate.

What 99% of articles miss: The most counterintuitive truth is that the federal daily overtime rule on Davis-Bacon projects can override less favorable state rules. For example, while California has a daily OT rule, its calculation method might differ from the federal method. The contractor must pay the provision (federal or state) that yields the higher overtime premium for the employee. Furthermore, the fringe benefit portion of the prevailing wage must be paid for all hours worked, including overtime hours, either as cash or as a bona fide benefit contribution. Misunderstanding this leads to catastrophic underpayment. For a deep dive into these requirements, see our guide on Davis-Bacon prevailing wage compliance.

Sample Calculation: Federal Project in Austin, TX

Scenario: Laborer works 10 hours on Monday, 8 hours Tuesday-Friday (total 42 hours) on a federal Davis-Bacon project. The determined prevailing wage is $22/hr basic + $8/hr fringe.

1. Daily Overtime (CWHSSA): Monday has 2 daily OT hours (10 – 8).
   • Daily OT Premium: 2 hours x 0.5 x $22 = $22 (The “half-time” premium is on the basic rate only).
2. Weekly Overtime (FLSA/CWHSSA): 2 weekly OT hours (42 – 40).
   • Weekly OT Premium: 2 hours x 0.5 x $22 = $22.
3. Total Pay:
   • Straight Time (42 hrs x $22): $924
   • Fringe Pay (42 hrs x $8): $336 (must be paid for all hours)
   • Daily OT Premium: $22
   • Weekly OT Premium: $22
   • Total: $1,304

Notice the worker earns a premium for the same 2 hours twice—once for daily OT and once for weekly OT. This “pyramiding” is required under CWHSSA and is a critical, often-missed calculation. For help structuring bids that account for these complex costs, review our commercial construction business plan example.

Supervisor Exemptions: The Foreman’s Trap

Why this matters: Misclassification is the single most expensive payroll error. In construction, the line between exempt supervisor and non-exempt working foreman is perpetually blurred. The hidden incentive is cost-saving: classifying a lead as exempt avoids paying overtime. The systemic risk is a class-action lawsuit for back overtime, penalties, and legal fees that can bankrupt a small contractor.

How it works in real life: Exemptions are determined by duties, not job title. The federal FLSA (governing Texas) and the stricter California law both use tests, but California’s are far more rigid.

• Texas/FLSA “Executive Exemption”: The employee must: 1) Be salaried at least $684/week ($35,568/yr); 2) Have a primary duty of managing the enterprise or a recognized department; 3) Customarily direct the work of at least 2 FTEs; and 4) Have authority to hire/fire or have particular weight given to their recommendations.
• California “Executive Exemption”: Much stricter. The employee must: 1) Be salaried at least twice the state minimum wage for full-time work ($66,560 for 2024, increasing annually); 2) Spend more than 50% of their time on exempt duties; 3) Customarily direct 2+ FTEs; 4) Have independent judgment over significant matters; and 5) Primarily engage in exempt work.

The trap is the “primary duty” test. A foreman who spends 60% of the day operating a skid-steer, laying pipe, or framing is not exempt in California, regardless of salary. In Texas, the test is more qualitative, but a foreman who performs the same tasks as the crew 80% of the time would still likely be non-exempt.

What 99% of articles miss: The critical, non-obvious risk in California is the “salary basis” test nuance. For an employee to be exempt, they must receive a full salary for any week in which they perform work, regardless of the quality or quantity of work. Deducting pay for a partial day’s absence for personal reasons violates this test, instantly converting the employee to non-exempt status and making the employer liable for up to four years of back overtime. In construction, where inclement weather or material delays can lead to early dismissals, this is a constant threat. Additionally, the legal consequences of misclassification extend beyond wages; see our analysis of misclassifying employees as 1099 contractors for related risks.

Actionable patterns to avoid the trap:

1. Document the “Exempt” Day: For a true exempt supervisor, document tasks like scheduling, assigning work, inspecting quality, training, conducting safety meetings, and evaluating crew performance. Time spent “hands-on” should be minimal and incidental (e.g., demonstrating a technique).
2. Use a “Working Foreman” Model: Pay a premium hourly rate for the leadership role, but keep the position non-exempt and pay overtime. This is often cleaner and less risky.
3. Audit Salaries Annually in CA: The minimum salary threshold rises with the state minimum wage. An exempt employee falling below the new threshold loses exemption status overnight.

For contractors structuring their teams, understanding the pros and cons of different labor models is essential, as detailed in our guide on subcontractors vs. employees in construction.

Recordkeeping: Where Compliance is Won or Lost in an Audit

Why this matters is simple: your payroll records are your only admissible defense in a wage claim. Inadequate records don’t just fail to prove compliance—they often create a presumption of guilt, shifting the burden of proof onto you. The systemic effect is a hidden cost multiplier: a single recordkeeping violation can unravel your defense on all associated wage claims, turning a minor dispute into a catastrophic penalty assessment.

How it works in real life is a tale of two systems. Federal FLSA rules, which govern Texas, require you to keep accurate records of hours worked each workday and total hours each workweek for at least two years. California’s Industrial Welfare Commission (IWC) Wage Orders mandate far more. You must record the exact time each employee starts and stops each work period, and the exact start and stop of each meal break. This daily granularity is non-negotiable and must be retained for three years. A generic payroll system that only logs weekly totals is a compliance time bomb in California. For prevailing wage projects, the complexity compounds; you must segregate and document hours worked on specific tasks or classifications to justify the correct wage and fringe benefit rates, a process detailed in our guide on prevailing wage laws for contractors.

What 99% of articles miss is the audit trap of “approximated” or “standard” hours. In California, if your records show an employee worked 8.0 hours every single day, an auditor will presume the records are falsified and that meal breaks were not provided, triggering automatic penalties. The only defense is a contemporary, detailed daily log. Furthermore, the U.S. Department of Labor and state agencies are increasingly using digital forensics—examining metadata from time-clock apps, GPS data from company vehicles, and even project management software timestamps—to reconstruct work hours when records are suspect.

Recordkeeping Requirements: California vs. Texas

Requirement	California (IWC Orders)	Texas (FLSA Baseline)
Time Granularity	Daily start/stop times, meal break start/stop.	Total hours per workday and workweek.
Retention Period	3 years for most payroll records.	2 years for basic records; 3 years for payroll, collective agreements.
Meal Break Proof	Positive documentation required (e.g., clock-out records).	Not specified by FLSA; employer policy governs.
Prevailing Wage Logs	Must track hours by work classification/task daily.	Same federal requirement (Davis-Bacon).
Primary Audit Risk	Missing daily logs leading to automatic penalties for missed breaks.	Failure to maintain any records for weekly totals.

Enforcement: Knowing the Watchdogs and Their Patterns

Why this matters extends beyond knowing who to call. Understanding enforcement priorities allows you to conduct targeted internal audits, turning compliance from a reactive cost into a proactive risk-management strategy. The hidden incentive is that agencies often pursue industries with high violation rates—and construction is perpetually on that list.

How it works starts with knowing the agencies. In California, the Division of Labor Standards Enforcement (DLSE) is the primary enforcer. You can find your local DLSE district office. In Texas, the Texas Workforce Commission handles state wage claims, but the federal Wage and Hour Division (WHD) is equally active, especially on prevailing wage jobs. Common violation patterns are distinct. In California, investigators frequently find illegal “averaging” of hours across a two-week pay period to avoid daily overtime, and misapplication of rules for “split shifts” (two separate work periods in a day). In Texas, the most common and costly pitfall is ignoring daily overtime mandates on federal or state prevailing wage projects, mistakenly applying FLSA’s weekly standard instead.

What 99% of articles miss is the trigger mechanism for investigations. It’s rarely random. Besides employee complaints, agencies use data cross-matching. A contractor winning public works bids but reporting low payroll taxes may trigger a Davis-Bacon audit. A spike in workers’ compensation claims at a company can prompt a safety inspection that expands into a wage-and-hour review. Recent enforcement data also shows a sharp focus on the misclassification of field laborers, a topic we explore in depth in our article on the legal consequences of misclassifying 1099 contractors.

Building a Multi-State Compliance Plan: An Actionable Framework

Why this matters is that theoretical knowledge is useless without an operational system. For contractors working in both California and Texas, or bidding on projects in multiple jurisdictions, a unified yet adaptable framework is the only way to manage risk and avoid the catastrophic costs of class-action litigation or debarment from public projects.

How it works requires a procedural blueprint. Start with a project-specific rule audit for every new job. Use this decision tree:

1. Identify the Project Type: Is it private, state public works, or federal (Davis-Bacon)?
2. Map the Location: Which state’s labor laws govern the physical worksite?
3. Determine the Controlling Wage Rate: Does a prevailing wage determination apply? If yes, its daily/weekly overtime rules supersede both state and standard FLSA rules for that project.
4. Classify the Worker: Re-audit classification using both the ABC test (for California) and the economic reality test (for Texas/FLSA). Never assume a supervisor is exempt; they must meet strict duties and salary basis tests.

Integrate this logic into your technology stack. Use payroll software that can be configured for California’s daily logging requirements and can handle the complex, layered calculations of prevailing wage jobs, including overtime on fringe benefits. Your essential financial statements should have clear labor cost allocations by project and jurisdiction.

What 99% of articles miss is the need for a “compliance champion” and documented training. Designate a person (not just a role) responsible for updating the compliance playbook when laws change. Conduct mandatory, documented training for all project managers and supervisors on the unique rules of their active jobs. Finally, build a relationship with legal counsel before an audit. The steps to take when a general contractor files bankruptcy mid-project are complex, but so are the procedures during a government audit. Having a plan and a partner is the ultimate risk mitigation, turning compliance from a cost center into a foundational component of a scalable, profitable business, as outlined in strategies to scale a residential construction business.