Finally, Some Good Wage and Hour News for California Employers from a California Appellate Court

An appellate court in California has just issued a ruling related to wage and hour law that should be of interest (and a relief) to all employees in the state.

By way of background, Labor Code § 226 sets forth nine categories of information that must be included in wage statements. With that being said, it was broadly held last week in General Atomics v. Superior Court that an employer will not be in violation of section 226 when its wage statements allow employees to readily determine whether their wages were correctly calculated.

In the case, Tracy Green sued her employer, General Atomics, based on its alleged failure to provide accurate, itemized wage statements showing “all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee,” as is required by the Labor Code. More specifically, Green’s two causes of action (a putative class action and a representative action under the Labor Code Private Attorneys General Act) contended that General Atomics violated section 226, by providing wage statements that did not identify the correct rate of pay for overtime wages. Getting into the weeds, Green maintained that the correct rate was 1.5 times (1.5x) the regular rate of pay, and the wage statements provided by General Atomics showed only 0.5 times (0.5x) the regular rate.

The lower court agreed with Green’s position, though that was not the case on appeal. The higher court made clear that showing the 1.5x overtime rate would be impractical or cause confusion when an employee (like Green) earns multiple standard hourly rates during a single pay period. Consequently, it was decided on appeal that General Atomics’ wage statements complied with the Labor Code because they showed the total hours worked, with their standard rate or rates, and the overtime hours worked, with their additional premium rate.

As otherwise stated, the appellate court found that while other formats may also be acceptable, given the complexities of determining overtime compensation in various contexts, the format adopted by General Atomics adequately conveyed the information required by statute. And with that, the takeaway for employers is simply this: courts will not be dogmatic about Labor Code rules and will not find section 226 violations where pay stubs provide the information necessary for employees to check the accuracy of wages paid.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.