How Do Paga Penalties Apply to Violations of the Paystub Rules under the California Labor Code?

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January 8, 2019

What is PAGA?
PAGA stands for California’s Private Attorneys General Act.  It allows an employee to sue an employer and recover civil penalties for Labor Code violations on behalf of all aggrieved former or current employees or the California Labor Commissioner.  Prior to the enactment of PAGA, only the Labor Commissioner could enforce many provisions of the Labor Code.  PAGA is found at California Labor Code sections 2698 – 2699.6.

A PAGA employee plaintiff can sue for a violation of the Labor Code and collect any penalty the Labor Code provides.  The employee can also seek penalties under PAGA for Labor Code violations that do not carry their own penalties.  If a PAGA plaintiff employee is successful, 75% of any penalty recovered is paid to the Labor and Workforce Development Agency (LWDA), with the remainder going to the PAGA plaintiff employee or distributed among the aggrieved employees.

The Paystub Rules
Labor Code section 226(a) requires employers to provide itemized wage statements to employees containing specific information including gross and net wages earned, total hours worked, authorized deductions, the name and address of the employer, and the name of the employee including the last four numbers of the employee’s social security or an employee identification number, among other items.

An employer who violates the paystub rules must pay an “injured” employee $50 for the initial offense, and $100 for subsequent offenses, not to exceed an aggregate penalty of $4,000.  The employee is also entitled to an award of costs and reasonable attorneys’ fees under this section.  [Lab. Code § 226(e).]  An employee is considered “injured” for purposes of the penalty if the employer knowingly and intentionally failed to comply with the provision.  On the other hand, “an isolated and unintentional payroll error due to a clerical or inadvertent mistake” will not warrant a penalty under Labor Code section 226(e).  [Lab. Code § 226(e)(3).]

Does a PAGA plaintiff employee need to assert injury or employer intent when seeking civil penalties?
The California appellate court in Lopez v. Friant & Associates, LLC answered “no.” In Lopez, plaintiff employee brought a PAGA claim against his employer for violating Labor Code section 226(a).  The employer did not include in the employee’s pay stub the employee’s name and the last four digits of his social security number or employee identification number.  The plaintiff did not pursue the statutory damages provided by Labor Code section 226(e), but instead sought the PAGA default civil penalties which allow for penalties of $100 for the first violation and $200 for each subsequent violation of the Labor Code where a civil penalty is not specifically provided.

The Lopez court ruled that the employee did not have to demonstrate an “injury” or a “knowing and intentional” violation to succeed on his PAGA claim for civil penalties because PAGA “deputizes” employees to seek recovery on behalf of the state and the public, allowing for the recovery of civil penalties.  [Lopez v. Friant & Associates, LLC (2017) 15 Cal.App.5th 773, 780 – 784.]

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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.