On April 18, 2012, a California Assembly panel advanced a bill that would exclude overtime hours from the fixed salary of a nonexempt employee, notwithstanding an “explicit mutual wage agreement” to the contrary. Assemblyman Tom Ammiano (http://asmdc.org/members/a13/) drafted the bill, A.B. 2103 (text available at http://www.leginfo.ca.gov/pub/11-12/bill/asm/ab_2101-2150/ab_2103_bill_20120410_amended_asm_v97.html), in response to a February 2011 California Court of Appeal decision that held that a fixed salary could cover both regular time and overtime (over eight hours per day or 40 hours per week). See Arechiga v. Dolores Press, Inc., 192 Cal. App. 4th 567 (2011). The analysis by the Assembly Committee on Labor and Employment, which has reviewed and approved the bill specifically declared the Legislature’s intent to overturn Arechiga. (The bill analysis is available at http://www.leginfo.ca.gov/pub/11-12/bill/asm/ab_2101-2150/ab_2103_cfa_20120416_140625_asm_comm.html.)
The bill analysis described Arechiga:
In the Arechiga case, a janitor and his employer agreed that payment of a fixed salary of $880 a week would provide compensation for 66 hours of work each week. The Court of Appeal held that this method of payment comported with California overtime law, and that no additional overtime compensation was owed. The Court rejected the employee’s contention that existing Labor Code Section 515(d) prohibits any sort of agreement that would allow a fixed salary to serve as a non-exempt employee’s compensation for anything more than a 40 hour workweek.
The bill must get through more readings in the state Assembly and time in Assembly committees, and ultimately the California Senate, before it becomes law.