When employers fail to pay their employees overtime wages for working over 8hours in a workday or 40 hours in a workweek, the California economy suffers for the following reasons:
1. Less Jobs
When employers are following overtime laws, more jobs exist because instead of paying a single employee to work 12 hours in a day the employer is likely to hire two employees to work 6 hours each. For example, assume E makes $10/hr. If he works 12 hours he makes $80 for the first 8 hours and $60 for hours 8-12 (1.5x regular $10/hr rate). That is a grand total of $140 for 12 hours.
On the other hand, if two employees work 6 hours each, the employer only has to pay $120 for the 12 hours of labor, rather than $140 as per the example above.
2. Unfair competition
How can I company that follows overtime laws compete with one that does not? It is Understood!
to a t-shirt company that gets the shirts for 5$/shirt trying to compete with one that gets the shirts for $1/shirt.