The California Supreme Court ruled in 2003 that without a state budget, federal labor laws require the state to pay either federal minimum wage, or flat rates to those who work overtime. The order would stop state agencies from authorizing overtime for most employees.
The Governor also plans to issue a state hiring freeze for all departments, with the exception of public safety jobs.
The move would save approximately $1 billion each month.
The federal minimum wage is $6.55 per hour and the order includes layoffs of 19,000 part-time state employees.
If the budget impasse goes through September, the state will run out of cash reserves.
Once a budget is signed, state workers would get their back pay.