July 11, 2019
California employers are required under Labor Code Section 226 to provide employees itemized wage statements along with their paychecks. Although employers are generally aware of this requirement and believe they are in compliance with the law, investigations by the Labor Commissioner often reveal inadvertent mistakes. This is because wage and hour law is constantly evolving. This article provides an overview of Section 226 to help employers assess their basic compliance and avoid penalties and citations.
Contents of the itemized statement. The pay stub, or written statement if wages are paid by personal check or cash, must include: 1) gross wages earned; 2) total hours worked; except for employees whose compensation is solely based on salary and who are exempt from payment of overtime; 3) any applicable piece rates and the number of piece rate units earned; 4) all deductions that have been authorized in writing by the employee; 5) net wages earned; 6) inclusive dates of pay period; 7) name and last four digits of the employer’s social security number; 8) name and address of 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.
Deductions. Before making any deduction from payment of wages, the employer must first obtain written authorization from the employee. Deductions may be aggregated and shown as one item on the statement. The employer must keep a copy of the statement or record of deductions on file for at least three years.
Record inspection. A former employee, as well as a current employee, has the right to inspect or copy his/her records upon reasonable request. Failure by an employer to permit an employee to inspect or receive a copy of their records results in a penalty of $750.
Damages to employee. An employer who intentionally violates Section 226 must pay each employee the greater of: a) their actual damages; or (b) $50 for the initial pay period, plus $100 for each subsequent pay period in which a violation occurs, up to a maximum of $4,000, and the employee is entitled to an award of costs and reasonable attorney’s fees.
Civil penalties. If the Labor Commissioner determines that an employer has violated Section 226.3, a citation may be issued in the amount of $250 per employee per violation. However, the Labor Commissioner has discretion to not penalize an employer for a first violation that was due to a clerical error or inadvertent mistake. Each subsequent citation is issued at $1,000 per employee.
Hearing on citation. An employer may contest a citation by notifying the office of the Labor Commissioner within 15 business days after receipt for an informal hearing. The hearing will be scheduled within 30 days. If the employer does not contest the citation, the fine must be paid to the Labor Commissioner within 15 business days after issuance. If the employer fails to either contest or pay the fine, the superior court will enter a judgment for the state for the amount assessed.
Criminal penalties. An employer, or any other person, who knowingly violates, or aids in the violation, of any provision of Section 226 is guilty of a misdemeanor and shall be fined up to $1,000 or imprisoned for up to a year, or both.
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.