California Expands the Exception to Listing “Hours Worked” on Pay Stubs

California Labor Code Section 226 requires employers to provide workers with strictly defined statements (i.e. pay stubs) either semimonthly or with each paycheck. See, California’s Itemized Pay Stub Requirements, Ignoring the Needed Details Poses Trap for Unwary Employers (March, 2016).

While section 226 generally requires each pay stub to include the employee’s total hours worked during that pay period, employers have been permitted to omit this information for certain salaried exempt-from-overtime workers under various statutes and Industrial Welfare Commission Wage Orders.

However, employers have long understood this ability to omit “total hours worked” from the pay stubs of any type of lawfully exempt-from-overtime employee whether or not paid by salary. In a rare development in favor of employers, the California Legislature has now ratified this widespread practice through new Labor Code 226(j). Effective July 22, 2016, this subsection comprehensively lists specific categories of overtime exemption which do not require listing total hours worked on the pay stubs.

They include:

• Salaried persons employed in an executive, administrative, or professional capacity;
• Outside salespersons;
• Computer software professionals paid on a salaried basis under Labor Code section 515.5; and
• Individuals who are the parent, spouse, child, or legally adopted child of the employer.

Although amended Labor Code 226 removes any uncertainty on the pay stub requirements for such workers, California employers are of course responsible for accurately classifying as exempt only those employees who are eligible. See, for example:

• California’s Exemptions from Overtime Pay (January 2012)
• The California Administrative Exemption (November, 2009)
• The California Executive Exemption (November, 2009)
• Commissioned Sales Personnel and Overtime Pay. Must Employers Pay Premiums for Extra Hours Worked? (October, 2012)
• Wake-Up Call on Inside Salespersons. California Supreme Court Narrows Eligibility for the Commissioned Sales Person (July, 2014)
• California Labor Laws 2015: New Requirement for Computer Professional Overtime Exemption. (January, 2015)

For more information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth

August 31, 2016