On September 8, 2005, Governor Schwarzenegger signed Assembly Bill No. 1093 into law, making it easier for employers to remit payment of final wages to employees upon discharge or termination, and also expanding one of the exemption requirements for employees in the computer software field. AB 1093 will take effect on January 1, 2006.
Section 213 of the California Labor Code permits an employer to deposit wages due into an account in any bank, savings and loan association or credit union of the employee’s choice in California, if the employee voluntarily authorizes such deposit. However, Section 213 also previously provided that, if an employee was discharged or quit, the employee’s authorization was terminated so that the final paycheck could not be distributed by direct deposit.
AB 1093 amends Section 213 to provide employers the flexibility to deposit the final wages owed into the employee’s account. Effective January 1, 2006, Section 213 will provide that “if an employer discharges an employee, or the employee quits, the employer may pay the wages earned and unpaid at the time the employee is discharged or quits by making a deposit authorized pursuant to this subdivision, provided that the employer complies with the provisions of this article relating to the payment of wages upon termination or quitting of employment.”
Section 515.5 of the California Labor Code sets forth the criteria that must be met for an hourly employee in the computer software field to be exempt from California’s overtime requirements. Section 515.5 currently provides that one of the requirements is that the employee’s hourly rate of pay be not less than the then effective hourly rate of pay as established by the Industrial Welfare Commission.
AB 1093 also amends Section 515.5 and expands the hourly rate requirement for exemption. Effective January 1, 2006, this requirement can be satisfied if the employee’s hourly rate of pay is not less than the current hourly rate as adjusted annually by the Industrial Welfare Commission (currently $45.84), or the annualized full-time salary equivalent of that rate, provided that all the other requirements for exemption are met in each workweek the employee receives not less than the current hourly rate set by the Industrial Welfare Commission.