A. Under California Labor Code §204(b)(1) employers must pay overtime wages no later than the payday for the next regular period following the payroll period in which the overtime wages were earned. The Labor Code §204(b)(2) specifies that employers are in compliance with the law if employees’ overtime hours are recorded as a correction on the itemized statement for the next regular pay period and include the dates of the pay period for which the correction is being made.
Thus, the policy you propose would be lawful as long as employees receive their overtime compensation by the next regular pay period. However, although your practice might meet the statutory obligations of California law, it’s generally ill advised to manipulate payment to make employees comply with company policies.
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