In California, employers are required to provide employees with a wage statement (pay stub) every pay period. The Labor Code has a rather persnickety laundry list of requirements for what must be included on a pay stub, codified at Labor Code section 226(a). Each pay stub is required to contain the following information:
- gross wages earned;
- total hours worked by the employee;
- the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis;
- all deductions, provided that all deductions made on written orders of the employee may be aggregated and shown as one item;
- net wages earned;
- the inclusive dates of the period for which the employee is paid;
- the name of the employee and only the last four digits of his or her social security number or an employee identification number other than a social security number;
- the name and address of the legal entity that is the employer and, if the employer is a farm labor contractor, as defined in subdivision (b) of Section 1682, the name and address of the legal entity that secured the services of the employer; and
- all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee and, if the employer is a temporary services employer as defined in Section 201.3, the rate of pay and the total hours worked for each temporary services assignment.
A violation of any one of the nine provisions above carries strict liability- meaning the employer faces liability even through an unintentional or inadvertent error on a pay stub. Each violation carries a penalty of $50 per employee for the initial pay period in which a violation occurs and $100 per employee for each violation in a subsequent pay period, with a maximum of $4,000 per employee, plus attorney’s fees and costs.
Even seemingly minor deficiencies trigger liability. For example, the Labor Code requires the legal name and address of the employer to appear on the pay stub. If an employer’s legal name is “ABC Widget Company, Inc.” but the business puts “ABC Widget Co.” on the pay stub, the business has violated Labor Code section 226 and has exposure for each pay stub on which the defect appears. Similarly, the employer must include its complete address on the pay stub- something as simple as an omitted city or zip code constitutes a violation. For those employers who receive their mail at a post office box, rather than at a physical address, a recent court decision held that a PO Box address is compliant with section 226. However, that case is currently up on appeal, so the law is not settled.
The upside is that certain violations can be proactively cured, eliminating any liability. If you have any questions about the pay stubs you provide your employees, or would like them reviewed for code compliance, please contact the Holden Law Group at (530) 888-0901.