New Law Halts Explicit Mutual Wage Agreements

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EmpBlog-10.3.2012-timesheetOn the final days of the California Legislature’s term, Governor Brown quietly signed into law Assembly Bill 2103, a bill which was specifically designed to overturn existing case law which allowed employers to have “explicit mutual wage agreements” with employees.  The case was Arechiga v. Dolores Press, and it held that existing law did not prevent an employer and an employee who is not exempt from overtime from entering into an explicit mutual wage agreement that provided for the payment of base compensation and overtime in fixed salary.  These agreements were designed to simplify and standardize payments to employees with irregular hours.

However, as taxpayers know all too well,  “simplify” and “legislature” are two words that don’t often mix.  AB 2103 amends Labor Code section 515 to provide that payment of a fixed salary to a non-exempt employee shall be deemed to provide compensation only for the employee’s regular, non-overtime hours, notwithstanding any private agreement to the contrary.  For the purpose of computing the overtime rate of compensation required to be paid to a non-exempt, full-time, salaried employee, the employee’s regular hourly rate shall be 1/40th of the employee’s weekly salary.  With certain exceptions, overtime is earned after an employee works 8 hours in a day and 40 hours in a  workweek.

The new law takes effect on January 1, 2013.

This blog is presented under protest by the law firm of Ervin Cohen & Jessup LLP.  It is essentially the random thoughts and opinions of someone who lives in the trenches of the war that often is employment law–he/she may well be a little shell-shocked.  So if you are thinking “woohoo, I just landed some free legal advice that will fix all my problems!”, think again.  This is commentary people, a sketchy overview of some current legal issue with a dose of humor, but commentary nonetheless; as if Dennis Miller were a lawyer…and still mildly amusing.  No legal advice here; you would have to pay real US currency for that (unless you are my mom, and even then there are limits).  But feel free to contact us with your questions and comments—who knows, we might even answer you.  And if you want to spread this stuff around, feel free to do so, but please keep it in its present form (‘cause you can’t mess with this kind of poetry).  Big news: Copyright 2012.  All rights reserved; yep, all of them.

If you have any questions regarding this blog or your life in general, contact Kelly O. Scott, Esq. (who else would you contact?), commander in chief of this blog and Head Honcho (official legal title) of ECJ’s Employment Law Department, at (310) 281-6348 or kscott@ecjlaw.com.

Topics:  Non-Exempt Employees, Unpaid Overtime, Wages

Published In: Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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