California employers must navigate a labyrinth of regulation that strongly favors employees. Among these is a list of strict California pay stub requirements. Although the requirements are not particularly difficult, they are numerous and particular, and lack of compliance – even in small ways – can be very costly. The best course to avoiding penalties for California wage statement errors is finding the right professional to help you stay on the narrow path.
California Wage Statement Errors are Easy, But So Is Compliance
The California Labor Code imposes strict requirements on employers to include specific information on every employee’s pay stub. If an employer’s standardized wage statements do not include all of the required information, they must include the missing information on a separate document distributed to the employee with the pay stub.
Payroll services, accounting offices, and human resources professionals may offer services helping employers with California pay stub requirements, but these professionals are not always equipped to understand the legal nuances created by court cases and agency regulations. Employers are best served by an experienced California wage and hour attorney dedicated to serving the needs and protecting the interests of the state’s employers.
The Short Story on California Pay Stub Requirements
California Labor Code § 226(a) lists information that employers must include on every employee’s itemized wage statement each pay period:
- Gross wages earned
- Number of hours worked (except for exempt employees)
- Number of piece-rate units earned and rate, if applicable
- Deductions from gross wages
- Net wages
- Dates of the pay period
- Employee’s name, address and last four Social Security number digits or employee’s identification number
- The name and address of the legal entity that is the employer
- All applicable hourly rate(s)
In addition, state law provides that employees earn paid sick leave, either by accrual or “up front.” The wage statement or another document submitted with the employee’s pay must include the employee’s accrued leave time.
Gray Areas in California Pay Stub Requirements
The statutory requirements for employee wage statements may seem straightforward, but the size of the California employment bar and the frequency of wage and hour claims belie this assumption. For example, California AB5, sometimes called the “gig worker bill,” became effective January 1, 2020, and it was expanded by AB2257 effective September 4, 2020. An attempt to establish an objective test for determining whether a worker is an employee or an independent contractor, legal challenges to the law in its first year and new legislation carving out job category exemptions have created a moving target.
Wage statement errors may arise when an employer erroneously classifies an employee as an independent contractor and, as a result, does not provide the worker the statutorily mandated wage statement. However, the gig-worker-or-employee question is only one gray area employers must navigate to meet California pay stub requirements. Changes in California Labor Code or regulations may alter, even slightly, the requirements for employee pay stubs.
An employer has enough Labor Code requirements to understand and follow while also effectively managing its business operations. Tracking changes in the Labor Code and its regulations, and understanding how those changes impact the employer’s obligations, is a full-time job, even for employment lawyers.
The Price of Penalties for Pay Stub Errors
Labor Code § 226 lists the penalties employers face for California wage statement errors. An employee injured by wage statement errors can recover actual damages or $50, whichever is greater, for the error in the initial pay period it appeared and $100 for each subsequent violation, to a maximum of $4,000 per employee. Moreover, pay stub violations can result in additional significant penalties under the Private Attorneys General Act (“PAGA”). The penalty amount under PAGA is $100 for each employee per pay period for the initial violation and $200 per employee, per pay period, for each subsequent violation.
The format of wage statements is usually standardized across employees, which means an error on one employee’s wage is likely to be on many – if not all – wage statements for that pay period, resulting in numerous pay stub violations and penalties. As a result, longstanding errors, or even short-term errors affecting a large number of employees, can be quite costly and increased further by the employee’s right to costs and attorney’s fees.
An Experienced California Wage and Hour Attorney is the Key to Preventing California Wage Statement Errors
The surest way to preventing California wage statement errors is by working with an experienced wage and hour attorney. A lawyer whose practice is dedicated to employer-focused employment law, especially in wage and hour matters, is an employer’s best resource for achieving and maintaining compliance with California labor laws and avoiding unnecessary pay stub violations and penalties associated with noncompliance.
The Law Offices of Susan A. Rodriguez, APC have more than 30 years of experience assisting California employers in wage and hour, class action, PAGA, and other employment-related matters. To learn how Susan A. Rodriguez and her team can help you avoid wage statement errors or manage other employment-related matters, call (213) 943-1323 today or complete our online contact form.
Posted by Susan A. Rodriguez, Esq.
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