Overtime can be separately displayed on pay stubs

The California Court of Appeal recently ruled that displaying overtime rates separately on employee pay stubs as 0.5 times the regular rate instead of 1.5 times is allowable under California Labor Code 226. The court also outlined examples of what a compliant pay stub may look like, giving employers some much-needed clarity.

Wage statements must display hourly rates

California has very specific requirements for wage statements that employers must follow to ensure compliance with California Labor Code Section 226. Noncompliance can lead to significant penalties. Among the nine specific items that must be included on a wage statement is "all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee."

In this case, Tracy Green sued her employer, General Atomics, asserting a Labor Code Section 226 claim alleging the company failed 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." Moreover, she claimed it failed to identify the correct overtime rate because its wage statements showed 0.5 times the regular rate of pay rather than 1.5.

General Atomics countered that its wage statements were compliant because they showed the applicable hourly rates, the overtime premium rate, and the hours worked at each. It cited a California Division of Labor Standards Enforcement (DLSE) sample wage statement showing the overtime hourly rate as 0.5 times the regular rate as evidence of its compliance.