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Calculating Regular Rate of Pay for a Salaried Nonexempt Employee

A paragraph from a recent article in the Los Angeles Times about the “Revenge of the showbiz assistants” prompts a few words of caution. The article quotes a spokeswoman for WME (a talent agency) as saying that “each assistant automatically has 10 hours of overtime allotted into their paycheck each week.” While the details of the payment practice are not explained, the concept may run afoul of California Labor Code section 515, subdivision (d), which requires an employer to calculate the regulate the regular rate of pay for a salaried nonexempt employee as one-fortieth of the employee’s weekly salary, and then states that “[p]ayment of a fixed salary to a nonexempt employee shall be deemed to provide compensation only for the employee’s regular, nonovertime hours, notwithstanding any private agreement to the contrary.”

The legislature adopted the “notwithstanding any private agreement to the contrary” language in 2012 to repudiate the Court of Appeal’s decision in Arechiga v. Dolores Press, Inc. (2011) 192 Cal.App.4th 567. That decision had upheld an “explicit mutual wage agreement,” by which the employer had agreed to pay an employee $880 per week for six 11-hour days of work, based on a regular rate of pay of $11.14. The 2012 amendment makes clear that such agreements are not valid under California law. The amount that an employee is guaranteed to receive each week is divided by 40 to determine the regular rate of pay for overtime purposes, not matter how the employer may have calculated that payment.

 

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