California Passes New Regulations on Paystubs

What’s the deal with paystubs? Most employees don’t even look at their paystubs. Existing law in California requires every employer, twice a month or at the time of each payment of wages, to furnish each employee an accurate itemized statement (paystub) in writing showing certain information.

This information includes, among other things, the name of the employee and the last 4 digits of his or her social security number, the gross wages earned, all deductions, net wages earned, the dates of the period for which the employee is paid, and the name and address of the employer. Existing law provides that an employee suffering injury as a result of a knowing and intentional failure by an employer to comply with this requirement is entitled to recover the greater of all actual damages or a specified sum, not exceeding an aggregate penalty of $4,000, and is entitled to an award of costs and reasonable attorney’s fees.

The “injury” required to trigger the penalty has just changed. California just amended its paystub statute (Labor Code § 226) with a new law (SB-1255 which Governor Brown signed into law on September 30th, 2012). The changes go into effect on January 1, 2013.

This new law provides that an employee is deemed to suffer injury for purposes of the penalty if the employer fails to provide a wage statement. The bill would also provide that an employee is deemed to suffer injury for that penalty if the employer fails to provide accurate and complete information, as specified, and the employee cannot promptly and easily determine from the wage statement alone the amount of the gross or net wages paid to the employee during the pay period or other specified information, the deductions the employer made from the gross wages to determine the net wages paid to the employee during the pay period, the name and address of the employer or legal entity that secured the services of the employer, and the name of the employee and only the last 4 digits of his or her social security number.

This new law is good news for employees. If your employer fails to comply with Labor Code 226, then they owe you fifty dollars ($50) for the initial pay period in which a violation occurs and one hundred dollars ($100) per employee for each violation in a subsequent pay period, not to exceed an aggregate penalty of four thousand dollars ($4,000), and is entitled to an award of costs and reasonable attorney’s fees.

I’ve copied the new portions of Labor Code 226 and pasted them below:

(2) (A) An employee is deemed to suffer injury for purposes of this subdivision if the employer fails to provide a wage statement.

(B) An employee is deemed to suffer injury for purposes of this subdivision if the employer fails to provide accurate and complete information as required by any one or more of items (1) to (9), inclusive, of subdivision (a) and the employee cannot promptly and easily determine from the wage statement alone one or more of the following:

(i) The amount of the gross wages or net wages paid to the employee during the pay period or any of the other information required to be provided on the itemized wage statement pursuant to items (2) to (4), inclusive, (6), and (9) of subdivision (a).

(ii) Which deductions the employer made from gross wages to determine the net wages paid to the employee during the pay period. Nothing in this subdivision alters the ability of the employer to aggregate deductions consistent with the requirements of item (4) of subdivision (a).

(iii) The name and address of the employer and, if the employer is a farm labor contractor, as defined in subdivision (b) of Section 1682, the name and address of the legal entity that secured the services of the employer during the pay period.

(iv) The name of the employee and only the last four digits of his or her social security number or an employee identification number other than a social security number.

(C) For purposes of this paragraph, “promptly and easily determine” means a reasonable person would be able to readily ascertain the information without reference to other documents or information.

(3) For purposes of this subdivision, a “knowing and intentional failure” does not include an isolated and unintentional payroll error due to a clerical or inadvertent mistake. In reviewing for compliance with this section, the factfinder may consider as a relevant factor whether the employer, prior to an alleged violation, has adopted and is in compliance with a set of policies, procedures, and practices that fully comply with this section.

I hope this is useful information.

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Branigan Robertson is a California employment lawyer who exclusively represents employees in workplace disputes. He focuses his practice on sexual harassment, wage & hour, wrongful termination, and retaliation. Visit his website at BRobertsonLaw.com or call his office at 949.667.3025.