California Wage Statements Not Required to Include Hourly Rates for Prior Pay Periods

In a ruling favorable to California employers, the state's Court of Appeal recently confirmed that employers are not required to include hourly rates for prior pay periods on wage statements. In Meza v. Pacific Bell Telephone Co, the Court agreed with the 9th Circuit's recent ruling in Magadia v. Wal-Mart Associates, Inc., that Labor Code section 226, subdivision (a)(9), which requires the listing of hourly rates on wage statements, did not require the reporting of rates and hours from prior periods in connection with overtime adjustment payments.

The Meza decision arose out of class action lawsuit filed by Dave Meza, a premises technician, against his former employer, Pacific Bell Telephone Co., for various Labor Code violations, including the failure to provide lawful itemized wage statements. Mr. Meza alleged that Pacific Bell violated Labor Code section 226, subdivision (a)(9) by failing to include rates and hours attributable to its overtime "true-up" payments, which were lump sum payments for overtime wages calculated using a complex formula based upon performance bonuses earned in earlier pay periods. The trial court granted summary adjudication in favor of Pacific Bell, ruling that the wage statements complied with Labor Code section 226, subdivision (a)(9). Citing its agreement with the 9th Circuit's recent analysis in Magadia on the same issue, the Court of Appeal upheld the granting of summary adjudication for Pacific Bell finding that hourly rates for the true-up payments were not required to be listed on wage statements.

The Court's ruling is expected to have a significant impact on California employers' ability to negotiate, settle and dismiss currently pending wage statement claims related to failure to list hourly rates for prior pay periods. Moreover, the ruling should act as a deterrent to the filing of any such similar claims going forward.

If you have any questions about your company's compliance, please contact a member of DWT's Employment Services Group.