Authored by Kevin Abbott
Missing PayStubs May Cost California Employers a Fortune
For almost all of us, when it comes to payday all that matters is the amount. That amount becomes a mortgage payment, food, gas, or a vacation. Most of us hardly pay attention to the stub that comes with the paycheck; indeed, if we use direct deposit, we may never see it all.
That paystub might not matter much to employees, but it can be a very big deal to California employers. California Labor Code Section 226(a) provides that the employers must provide that paystub. The same section also provides a very specific list of what information that paystub must contain. Those required elements are:
- The total gross wages earned that pay period.
- The 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.
- Net wages earned.
- The first and late dates of the pay period.
- The employee’s name and last four digits of his or her security number (or employee identification number).
- The name and address of the legal entity that is the employer.
- All applicable hourly rates in effect during the pay period and the corresponding number of hours worked at eachhourly rate by the employee.
The penalties for missing even one of these elements add up quickly, especially when an employee hires an attorney and alleges civil penalties for every violation for every employee under California’s Private Attorney General Act (“PAGA”). Under PAGA, a single employee can seek penalties on behalf of all of their co-employees. For violations of Section 226(a), that can mean a penalty of $100 per employee per pay period for incomplete statements. If an employer fails to give any paystub, that penalty increases to $250 for the first violation and $1,000 for subsequent violations. The Labor Code also authorizes an award of attorney fees for the employee.
When you start adding penalties for each employee on each pay period for multiple years, and then add attorney fees, the totals can become catastrophic. If your company is sued for a Section 226(a) violation, or any Labor Code claim, you will need experienced counsel to mitigate the potential damage. An even better path is to ensure compliance before a lawsuit happens. A thorough review of a company’s employment and payroll practices could be a lifesaver.