Legal Question in Business Law in California

Re: overtime compensation policy

Contrary to widely-held belief that employers must pay all wages to employees within a certain time after the end of the pay period, and despite sections of the Labor Code apparently so stating (see, e.g., section 204) there are appellate court decisions in California that say an employer and its employees may contract for a different pay schedule.

For example, there is a Court of Appeal case from about 1921 saying that a sawmill could contract with its employees to pay them when the lumber was sold. The Court said this and similar plans were OK so long as there was a clear agreement between the employer and the employee BEFORE the services were performed.

Employers cannot stretch out pay periods with respect to wages already earned nor change the pay policy for future wages during the contracted term of employment. The only time a bizarre payday schedule can be imposed is (with respect to at-will employees) before they do the work, or (with respect to contract employees) before the contract is initially effective or before any voluntary renewal of the contract.

So, unless the state government has some policy or rule that differs from private industry (and I haven't researched this), it seems legal.

You didn't say whether your position would be non-managerial / non-professional so overtime is mandatory, or whether the overtime is voluntary and in effect a bonus. This might make a difference. Further, you didn't say whether you are subject to a collective-bargaining contract. Finally, it might make a difference if you are a staff member of an elected official as opposed to a "regular" (non-partisan) government worker. Any of these factors might make a difference.

In general, however, it seems probable that your agency's policy, if announced at the beginning of employment, is legal.