BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 404|
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THIRD READING
Bill No: SB 404
Author: Benoit (R)
Amended: 5/19/09
Vote: 21
SENATE LABOR & INDUST. RELATIONS COMMITTEE : 5-0, 5/13/09
AYES: DeSaulnier, Ducheny, Hollingsworth, Leno, Yee
NO VOTE RECORDED: Wyland
SUBJECT : Employment: information for employees
SOURCE : California Employment Law Council
DIGEST : This bill clarifies that an employers obligation
to provide wage information when paying an employee may be
satisfied by putting the information on a detachable part
or a separate page from the check.
ANALYSIS : Existing law, Section 226 of the Labor Code,
requires every employer, semimonthly or at the time of each
payment of wages, to give each of his/her employees, either
as a detachable part of the check, draft, or voucher paying
the employee's wages, or separately when wages are paid by
personal check or cash, an accurate itemized statement in
writing showing, among other things:
1. Gross wages earned.
2. Total hours worked by the employee, except for any
employee whose compensation is solely based on a salary
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and who is exempt from payment of overtime under Section
515(a) or any applicable order of the Industrial Welfare
Commission (IWC).
Section 515(a) of the Labor Code provides that the IWC
may establish exemptions from the requirement that an
overtime rate of compensation be paid for executive,
administrative, and professional employees, provided
that the employee is primarily engaged in the duties
that meet the test of the exemption, customarily and
regularly exercises discretion and independent judgment
in performing those duties, and earns a monthly salary
equivalent to no less than two times the state minimum
wage for full-time employment.
This bill:
1. Deletes language specifying that an employer, at the
time he/she pays an employee, may provide the attendant
required information on a page separate from the
instrument of payment only when wages are paid by
personal check or cash. Henceforth, an employer would
be allowed, at the time of each payment of wages, to
provide the required information either as a detachable
part of the check in accordance with existing law, or
the employer would be allowed, at his/her option, to
provide the required information to the employee on a
separate page.
2. Deletes language that exempts employers from the
requirement that they provide the information on total
hours worked on the statement accompanying paychecks for
those employees whose compensation is solely based on a
salary and who are exempt from the payment of overtime
under Section 515(a) of the Labor Code or any applicable
order of the IWC. The language remaining specifies that
the release from the requirement to provide information
on total hours worked applies simply to any employee
whose compensation is solely based on a salary and who
is exempt from the payment of overtime under Section
515(a) of the Labor Code or any applicable order of the
IWC. Thus, the exemption applies to any employee
covered by Section 515 of the Labor Code or an IWC
order, including those so covered who are not salaried.
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FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 5/19/09)
California Employment Law Council (source)
Rancho Mirage Chamber of Commerce
OPPOSITION : (Verified 5/19/09)
American Federation of State, County and Municipal
Employees
California Labor Federation
California Nurses Association/National Nurses Organizing
Committee
California Rural Legal Assistance Foundation
United Nurses Association of California/Union of Health
Care Professionals
ARGUMENTS IN SUPPORT : The author and sponsor note that
Section 226(a) of the Labor Code appears to limit most
employers to the sole option of "detachable" pay stubs when
providing earnings statements to employees. A plain
reading of Section 226(a) seems to permit a separate,
non-detached pay stub only in situations where the employer
utilizes either a personal check or cash as the means of
delivering the employee's wages. Employers do not believe
that this was the intent of this section and are asking for
the simple clarification that employers have the option of
providing a separate pay itemization when providing wages
in a legal fashion. The way to solve this problem is to
amend the current law to ensure that employers are able to
use either a detachable or a separate page as an itemized
pay stub.
Supporters note that employers do not have to list total
hours worked on most exempt employee pay stubs. However,
due to the awkward fashion that Section 226 of the Labor
Code is currently written, some employers must supply the
total hours worked for certain exempt workers that are not
salaried due to other Labor Code requirements or IWC Wage
Orders such as outside salespersons or certain motor
carrier safety exemptions. Because of this confusion,
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employers have faced lawsuits and significant fines for
violating Section 226 of the Labor Code. As a way to end
the confusion and avoid unnecessary fines or litigation,
employers believe that Section 226 should be clarified to
apply to all exempt workers.
ARGUMENTS IN OPPOSITION : Opponents of this bill point
out the overtime exemptions are largely based on the time a
worker spends doing certain tasks. These tasks may vary
from week to week, so that a worker is at times eligible
and at other times ineligible for overtime pay. It is
important to track those hours to ensure that a worker is
paid at the overtime rate for the hours during which he/she
is qualified for overtime. In addition, the
misclassification of workers as exempt is a commonplace way
to cheat workers out of basic labor protections. If hours
are not tracked, workers who are misclassified will have no
way to document the wages they are owed.
AGB:mw 5/19/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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