California Supreme Court Declines To Review Or Depublish Court of Appeal Decision Upholding Explicit Mutual Wage Agreement Doctrine Permitting Non-Exempt Employees To Be Paid A "Salary" If Certain Requirements Are Met

As we previously reported here, on February 7, 2011, in Arechiga v. Dolores Press, Inc., the California Court of Appeal upheld California’s “explicit mutual wage agreement” doctrine. “Under that doctrine,” said the court, “an employer and [non-exempt] employee may lawfully agree to a guaranteed fixed salary so long as the employer pays the employee for all overtime at least one and one-half times the employee’s basic rate” so long as the employer and the employee enter into an agreement specifying: (1) the days the employee will work each workweek, (2) the number of hours the employee will work each workday, (3) the specific amount of the salary the employee is guaranteed to be paid, (4) the employee is informed and agrees to the basic hourly rate of pay upon which the salary will be based, (5) the employee is informed and agrees the agreed-upon salary covers the employees straight-time hours and overtime hours, and (6) the agreement is reached before the work is performed. 

Last week, the California Supreme Court denied requests to review and to depublish the Court of Appeal's decision. This means the Court of Appeal's decision stands and explicit mutual wage agreements meeting the six requirements stated above and otherwise complying with the court's holding in Arechiga v. Kores Press, Inc., remain lawful. We recommend that employers wishing to maintain or adopt such mutual explicit wage agreements consult with experienced employment law counsel. 

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