New Overtime Compensation Laws Go Into Effect in California

California Labor Code section 510 requires the payment of overtime to non-exempt employees who work for more than 8 hours per day or 40 hours a week. Under Labor Code section 515, a fixed salary paid to a non-exempt employee only compensates that employee for non-overtime hours. Recently, the legislature
passed and Governor Brown signed a new subdivision (d)(2) to section 515, providing that "payment of fixed salary to a non-exempt employee shall be deemed to provide compensation only for the employee's regular, non-overtime hours, notwithstanding any private agreement to the contrary." This subsection was added specifically to overturn the recent court decision in Arechige v Delores Press, Inc. (2011), in which the court held that that explicit, written mutual wage agreement waiving an employee's right to overtime compensation may be valid.

This means that an employer and employee can no longer enter into such an agreement, circumventing overtime laws, and even if the employee agrees to work for an employer and not be compensated for overtime hours worked, failure to pay overtime due will still be a labor code violation, exposing the employer to liability for past unpaid wages, penalties and possibly attorneys fees, if the case goes to a labor board hearing or court.