California employers must provide detailed, accurate wage statements or face penalties under Labor Code 226 and the Private Attorneys General Act. Employees can seek civil penalties for pay stub violations, with employers required to maintain proper records and correct certain issues.
By Brad Nakase, Attorney
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Employers are required by California Labor Code 226 to give workers an accurate categorized wage statement either every two weeks or every pay period. This statement must contain the following details:
According to Labor Code 226, any employee who does not receive a valid income statement is entitled to a $50 penalty on the first violation of the pay stub rule and a $100 penalty on the next violation, with the maximum offense being $4000. Any court costs and reasonable legal costs that may occur should an employee have to file a civil claim in order to recover these financial damages should also be paid by the employer.
Employers must also maintain copies of a worker’s correct itemized statement with deductions for a minimum of three years. Additionally, they have to give current and former workers 21 days to view these documents upon request. An employer may be subject to a $750 legal penalty if they do not promptly deliver these records to both current and past employees.
California Labor Code 226 states that an employer must provide their staff member with an accurate, detailed statement in writing, either semimonthly or right at the time of every wage payment. This statement can be included as a separate document if the employee’s wages are paid by cash or personal check, or it can be included as a detachable portion of the draft, check, or voucher. It must include:
(1) gross pay; (2) total hours performed; (3) piece-rate units earned (number) and the relevant piece rate if the worker is paid on a piece-rate basis; (4) every deduction, provided that every deductions made on the worker’s written orders may be combined and displayed as a single item; (5) net earnings received; (6) the inclusive periods of the period for which the worker receives payment; (7) the name of the worker, and just the final four digits of their social security number or non-social security employee identification number;
(8) The address and name of the business that is the employer, as well as the name & address of the business that hired the employer if the business is a farm worker contractor as that term is defined in Section 1682, subdivision (b); (9) every one of the hourly rates that were in effect during the period of pay and the number of hours that the worker worked at each hourly rate.
Under Labor Code 226, employers are required to keep copies of their employees’ pay statements & records of deductions on file for a minimum of three years at the workplace or in a central repository in California. A “copy” can be a duplicate of the detailed statement that was given to the worker or a digitally produced record that precisely displays all of the data needed to comply with Labor Code 226. Employers have 21 days following the date of the acceptable request to produce copies of salary statements to workers upon written or verbal request.
Furthermore, companies shouldn’t depend on their payroll provider to keep copies of their workers’ pay statements. First, it is the employer’s responsibility to keep these statements on file, and many payroll agencies are unable to do so for the duration of time mandated by California law. Second, accessing the payroll data from the previous payroll business could be challenging if the employer switches payroll providers.
Employers may give digital wage statements, according to the California Labor Commissioner, as long as every worker has the option of opting for a printed paycheck stub or record and as long the employees who receive electronic wage statements can readily access the data and transform the digital statements into physical copies at no cost to them. In addition to including the same necessary information as a paper wage statement, digital wage statements must include the appropriate measures to guarantee the privacy of employees’ private information.
According to Labor Code 226, employers may be held liable if they neglect to give accurate wage statements. The California PAGA (Private Attorneys General Act) allows employees to file representative actions to recover fines on behalf of themselves and all other affected employees, in addition to filing private lawsuits to recover fines for non-compliant salary statements for themselves.
A California law known as the Private Attorney General Act gives employees the right to sue their employers for specific labor infractions, including Labor Code 226. As “private attorneys general,” employees have the same legal authority to enforce civil penalties as a governmental agency. A civil lawsuit brought by an irate employee on their own behalf as well as in the name of other irate employees can collect civil fines under PAGA.
The procedure and attainable penalties for a PAGA claim differ from those for a typical lawsuit since it is a form of representative claim.
Prior to bringing a PAGA lawsuit, a worker must first send a written notice of the claimed Labor Code infractions to the employer via certified mail and online to the LWDA (Labor and Workforce Development Agency). This notice is known as the “PAGA notice.” At the very least, the PAGA file with the California Labor & Workforce Development Agency must contain a list of the harmed employees, the basic details of the employer’s breach or infractions, and which labor regulations in California have been broken.
The failure to record the start and end dates of the period of pay and the failure to include the address and name of the employer’s legal entity are two types of wage statement breaches for which employers have the option to “cure” in order to prevent a PAGA procedure (and thus prevent the levy of PAGA penalties).
Employers are required to treat wage statement infractions within 33 days of receiving the PAGA notice. They must notify the employee in writing via certified mail as well as by filing with the LWDA that the claimed violation was successfully cured, along with an explanation of the action performed.
Wage statement infractions can only be deemed resolved if it can be demonstrated that the employer gave each resentful employee a completely conforming wage statement for every pay period within the three years prior to the worker’s notice of the infraction. An employer may only correct the same infractions once during a 12-month period if the claimed Labor Code violations are related to wage statement standards.
An employee cannot file a PAGA suit regarding these wage statement breaches, and PAGA fines are not recoverable according to those Labor Code sections if an employer resolves these deficiencies. The employer is deemed to be in line with the Labor Code.
Determining whether wage statement irregularities may be promptly remedied is essential for employers who receive a PAGA notice indicating such violations. Employers can escape liability and possible fines of tens or even thousands of dollars if they can correct the violations.
Within twenty-one days after receiving an in-person or written request, an employer is required by Labor Code 226 to give former and present workers the opportunity to view or obtain a copy of every single payroll record (although employers may impose reproduction fees for the copy). Through the Labor Commissioner, the employee can get a $750 fine from the company if the request is not fulfilled within the allotted period. Recovering the fine through a civil lawsuit is not an individual right of action.
Employees who prevail in a PAGA claim action are eligible to receive civil fines. Nonetheless, the State of California receives the majority of the fines obtained in a PAGA case. Recovering compensation is not the same as this. Unpaid wages are the main focus of a worker’s recovery in a standard wage & hour lawsuit. Workers are only entitled to civil fines pursuant to the Private Attorney General Act when they file a claim. They are unable to get paid back for lost income.
Seventy-five percent of the civil fines collected in a PAGA action are returned to the State of California. Only twenty-five percent of the civil fines may be recovered by the harmed employees. Recovering reasonable legal expenses and charges is another right of prevailing workers in a PAGA case.
Additionally, when pursuing civil penalties, a PAGA plaintiff worker does not have to demonstrate harm or employer intention. An employee may file a PAGA claim, for instance, if their employer failed to include their name and the final four digits of their employee identification number or social security number on their pay stub. Since PAGA “deputizes” staff members to pursue recovery on behalf of both the state as well as the public, this claim permits penalties of one hundred dollars for the initial infraction and $200 for every subsequent Labor Code violation where a civil fine is not expressly provided.
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