All Employers with CA Employees
June 17, 2022
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In Meza v. Pacific Bell, the California Court of Appeal stated that overtime true-up payments relating to a past pay period is not subject to Labor Code § 226(a)(9)’s requirement to list “hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate.” Specifically, Section 226(a)(9) only applies to hourly rates occurring during the pay period for which a paycheck is issued.
There, an employee’s class action claimed various wage and hour violations, including failing to list the pay rate and hours for overtime true-up based on performance bonuses earned in earlier pay periods. California requires that the bonus be included in the regular rate calculation for overtime pay. Because the bonus was earned over the course of an entire month and the bonus amount was not known until the close of that month, there was no way to determine the overtime owed in relation to that bonus on a pay-period by pay-period basis. The payment was typically listed on the first wage statement of the month after the employee earned it, but did not include information in the “rate” and “hour” columns of the wage statement.
The court said that Section 226 only required listing hourly rates “during the pay period,” and it was not “an artificial, after-the-fact rate calculated based on overtime hours and rates from preceding pay periods that did not even exist during the time of the pay period covered by the wage statement.” Specifically, the court said it “cannot read into the statute a requirement that an employer include hours and rates from prior pay periods when the legislature omitted such a requirement.” While this helps clarify the rules around wage statements, the ruling still may be appealed to the state supreme court. Employers should continue to look for updates on this case.
- Evaluate paystub setup for adjustments, if appropriate.
- Have appropriate personnel trained on wage statement requirements.
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