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California court of appeal clarifies how the overtime rate can be listed on employees’ wage statements

In General Atomics v. Tracy Green, Tracy Green sued her employer, General Atomics, for allegedly failing to provide accurate, itemized wage statements as required by Labor Code section 226. She claimed that General Atomics' wage statements did not correctly identify the rate of pay for overtime wages. General Atomics argued that its wage statements complied with Section 226 by showing the total hours worked at the standard rate and the overtime hours worked with the additional overtime premium rate based on the regular rate of pay. The trial court denied General Atomics' motion for summary adjudication, but the Court of Appeal later held that the trial court erred in this decision. Click here for article.

  • Interlocutory Review: The Fourth District Court of Appeal granted a petition for writ of mandate seeking interlocutory review of the trial court’s denial of summary adjudication in General Atomics v. Tracy Green.

  • Compliance with Section 226: The Court of Appeal determined that General Atomics' wage statements did not violate Section 226. Providing the .5x overtime rate allowed employees to verify that General Atomics had correctly calculated both the statutory regular rate of pay and the employee’s total pay.

  • Weighted Average: The court highlighted that in cases where an employee is paid at multiple rates of pay, the regular rate of pay might be a weighted average of the various rates of pay, justifying the use of .5x overtime rate in wage statements.

  • Employee Verification: Green's interpretation requiring a 1.5x overtime rate would be erroneous in many circumstances, such as when an employee earns multiple standard hourly rates or receives other compensation like commissions.

  • Recommendation: It is advisable for employers to regularly check wage statements to ensure accuracy. General Atomics demonstrates one court-approved method of compliance with Section 226.

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