September 24, 2020
In California, employers must provide itemized wage statements every pay period that include specific information: (1) gross wages earned; (2) total hours worked by the employee; (3) the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis; (4) all deductions, provided that all deductions made on written orders of the employee may be aggregated and shown as one item; (5) net wages earned; (6) the inclusive dates of the period for which the employee is paid; (7) the name of the employee and only the last four digits of the employee’s social security number or an employee identification number other than a social security number; (8) the name and address of the legal entity that is the employer; and (9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee. [Lab. Code § 226(a).]
Failure to provide proper wage statements can result in liability for employers. In addition to employees bringing individual lawsuits to recover penalties for non-compliant wage statements for the employees themselves, they can also bring a representative action to recover penalties for any and all other aggrieved employees, under the California Private Attorneys General Act (“PAGA”).
Under PAGA, civil penalties may be recovered through a civil action brought by an aggrieved employee on the employee’s own behalf and on behalf of other aggrieved employees. [Lab. Code §§ 2698, et seq.] PAGA essentially allows a private right of action for individuals to prosecute Labor Code violations as a proxy for the state, with the employee bringing the suit keeping 25% of any civil penalties collected (and the other 75% going to the state).
PAGA penalties can be staggering, since PAGA provides for penalties per employee per pay period in which a violation occurs. For large employers and/or for continuing violations, these penalties can quickly add up.
Before filing a PAGA lawsuit, an employee must first file a written notice of the alleged Labor Code violations, both online with the Labor and Workforce Development Agency (“LWDA”) and by certified mail to the employer (the “PAGA notice”). [Lab. Code § 2699.3(a)(1)(A).]
Luckily, an employer has the opportunity to “cure” certain Labor Code violations in order to preclude a PAGA action (and thereby avoid the imposition of PAGA penalties), including two kinds of wage statement violations — the failure to include the start and end date of the pay period and the failure to provide the name and address of the employing legal entity. [Lab. Code §§ 2699.3(c)(2)(A), 2699.5, 226(a)(6), (8).]
An employer has 33 days after receiving the PAGA notice to cure the violations, and must give written notice by certified mail to the employee and by online filing with the LWDA within the 33-day period that the alleged violation has been cured, including a description of the action taken. [Lab. Code § 2699.3(c)(2)(A).]
Wage statement violations will be considered cured only upon a showing that the employer has provided a fully-compliant wage statement to each aggrieved employee for each pay period for the three-year period before the date of the employee’s notice of the violation. [Lab. Code § 2699(d).] Where the alleged Labor Code violations relate to wage statement requirements, an employer has the right to cure the same violations only once in a 12-month period. [Lab. Code § 2699.3(c)(2)(B)(ii).]
If an employer cures these violations, it is considered in compliance with the Labor Code and the employee is made whole. [Lab. Code § 2699(d).] This means an employee cannot bring a PAGA suit for these wage statement violations, and PAGA penalties are not recoverable under those Labor Code sections.
If an employer receives a PAGA notice alleging wage statement violations, it is therefore imperative to determine if these violations can be cured, and quickly. If an employer can cure the violations, it can avoid liability and potentially tens or even hundreds of thousands of dollars in penalties.
For more information on PAGA, please see our articles:
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This article is based on the law as of the date posted at the top of the article. This article does not constitute the provision of legal advice, and does not by itself create an attorney-client relationship with Eskridge Law.