Non-Exempt Employees Can Agree To A Salary That Includes Overtime


A California appellate court ruled that Labor Code section 515 does not outlaw clear wage agreements that provide for salaries that include fixed amounts of overtime. Arechiga v. Dolores Press, Inc.

This case involved a janitor who sued his former employer, Dolores Press, for additional overtime wages. Arechiga had orally agreed to work eleven hours a day and six days a week for a total of sixty-six hours per week. In addition, the parties had executed a written agreement which provided that "Employee shall be paid a salary/wage of $880.00" weekly. The word "salary" had been circled.

When Dolores Press subsequently terminated Arechiga's employment, he sued, claiming that it owed him unpaid overtime because his weekly salary of $880.00 only compensated him for a regular workweek of forty hours at a base rate of $22.00 per hour. Arechiga therefore argued that he was entitled to unpaid overtime of 26 hours at the overtime premium rate for each workweek during the statutory period.

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