"Explicit Mutual Wage Doctrine" Barred Janitor's Claim For Additional Unpaid Overtime

Arechiga v. Dolores Press, Inc., 192 Cal. App. 4th 567 (2011)

Carlos Arechiga worked as a janitor for Dolores Press for almost seven years at which time his employment was terminated. Although Arechiga filed a complaint alleging various causes of action, only his claim for violation of the Unfair Competition Law went to trial. Arechiga, a non-exempt employee, claimed the $880 that he received per week was not a salary (as the employer contended) but was the amount he was to be paid for 40 hours of work per week (i.e., $22 per hour) and did not include payment for his regularly scheduled 26 hours of weekly overtime. The employer argued that under California’s “explicit mutual wage agreement” doctrine, an employer and a non-exempt employee may lawfully agree to a guaranteed fixed salary so long as the employer pays the employee for all overtime. The trial court determined that the $880 weekly payment lawfully compensated Arechiga for both his regular and overtime work based on a regular hourly wage of $11.14 and an overtime hourly wage of $16.71. The Court of Appeal affirmed, holding that Labor Code § 515(d) did not “outlaw” explicit mutual wage agreements such as the one proven in this case, rejecting the Labor Commissioner’s contrary interpretation.