On July 22, 2016, the Governor approved California Assembly Bill 2535 (“AB 2535”), which relates to itemized wage statements (more commonly known as pay stubs). Specifically, AB 2535 revises California Labor Code Section 226. The prior version of Labor Code Section 226 required employers to include on a pay stub total hours worked by the employee unless the employee was paid a salary and exempt from overtime. AB 2535 expands on Labor Code Section 226 and alters reporting requirements by asserting that employers do not need to report total hours worked on a pay stub for employees who are “exempt from the payment of minimum wage and overtime” under specified statutes or any applicable order of the Industrial Welfare Commission.

In sum, AB 2535 adds an additional subsection to Labor Code Section 226, which reads in pertinent part as follows:

“(j) An itemized wage statement furnished by an employer pursuant to subdivision (a) shall not be required to show total hours worked by the employee if any of the following apply:

(1) The employee’s compensation is solely based on salary and the employee is exempt from payment of overtime under subdivision (a) of Section 515 or any applicable order of the Industrial Welfare Commission.

(2) The employee is exempt from the payment of minimum wage and overtime under any of the following:

(A) The exemption for persons employed in an executive, administrative, or professional capacity provided in any applicable order of the Industrial Welfare Commission.

(B) The exemption for outside salespersons provided in any applicable order of the Industrial Welfare Commission.

(C) The overtime exemption for computer software professionals paid on a salaried basis provided in Section 515.5.

(D) The exemption for individuals who are the parent, spouse, child, or legally adopted child of the employer provided in any applicable order of the Industrial Welfare Commission.

(E) The exemption for participants, director, and staff of a live-in alternative to incarceration rehabilitation program with special focus on substance abusers provided in Section 8002 of the Penal Code.

(F) The exemption for any crew member employed on a commercial passenger fishing boat licensed pursuant to Article 5 (commencing with Section 7920) of Chapter 1 of Part 3 of Division 6 of the Fish and Game Code provided in any applicable order of the Industrial Welfare Commission.

(G) The exemption for any individual participating in a national service program provided in any applicable order of the Industrial Welfare Commission.”