California Itemized Wage Statements: A Little Relief for Employers

As we reported last November, a California court interpreted Labor Code Section 226 as requiring employers to include the total hours worked for commissioned sales staff on their pay stubs. The Legislature recently passed AB 2535, which Gov. Jerry Brown has signed into law, amending Labor Code Section 226. AB 2535 eliminates the requirement for including total hours worked on pay stubs under the following circumstances, among others:

  • If an employee’s compensation is solely based on salary, and the employee is exempt from overtime based on any Industrial Welfare Commission wage order;
  • If the employee is exempt from overtime and minimum wage due to being employed in an executive, administrative, or professional capacity as provided in IWC wage orders;
  • If the employee is an outside salesperson as provided in IWC wage orders; and
  • If the employee is in a position that qualifies for the computer professional exemption as defined in the Labor Code and is paid on a salary basis.

This amendment does make clear that if an employee is exempt from overtime and his or her pay is not determined in any way by hours worked, then there is no need to include total hours worked on the pay stub.

As a reminder, Labor Code Section 226 requires employers to list the following on their wage statements:

1. Gross wages earned;

2. Total hours worked by the employee (except for salaried employees who are exempt from overtime pay);

3. The number of piece-rate units earned (if the employee is paid on a piece-rate basis);

4. All deductions;

5. Net wages earned;

6. The dates of the period for which the employee is paid;

7. The name of the employee and only the last four digits of the employee’s Social Security number;

8. The name and address of the employer (or legal entity that is the employer); and

9. All applicable hourly rates in effect during the pay period and numbers of hours worked at each hourly rate by the employee.

MSEC employs California-licensed attorneys and HR professionals who can assist with your concerns.