On July 22, California Governor Jerry Brown signed AB 2535 that improves
the definition of which workers need to track their hours and record those
hours on their wage statements. The bill will be effective on January 1, 2017.
Before the signage of this amendment, California Labor Code section 226
made it mandatory for all employee paystubs to include hours worked, except
individuals who are paid “solely” by salary and are “exempt
from payment of overtime” according to Labor Code section 515(a)
or the governing wage order. It also required hours on the paystub for
exempt outside sales individuals and executives who are not exclusively
paid by salary, but instead obtain bonuses and stock options. In most
cases, these employees do not record hours worked and these hours are
not a factor when calculating their wages.
Garnett v. ADT, LLC, F. Supp. 3d 1121 (2015), the district court determined that exemption
in Labor Code section 226 not apply to exempt outside salespersons because
they were paid exclusively by commission (and not salary) and, therefore,
must have their total hours worked included on their paystubs. The Garnett
court stated that “[w]hile the usefulness of reporting total hours
worked for employees paid solely by commission is not entirely clear,
it is nonetheless required by Labor Code Section 226 (a).”
In summary, this amendment clarifies hours
do not need to be reported and recorded for those who are exempt from overtime
and whose pay is not dependent on how many hours worked.
For more information about the new bill and what it means for you, do not
contact Marder Employment Law and speak with our
Hollister employment law attorney today.