The California Labor Code and Orders issued by the Industrial Wage Commission require employers to provide employees with nine items of information every pay period, and impose penalties on employers for failing to do so.
The Nine items Wage Statements Must Contain
Labor code section 226(a) requires that employers provide each of the following items of information to their employees every pay period and at least twice a month:
(1) The gross wages earned by the employee during the pay period;
(2) The total hours the employee worked during the pay period (except for “exempt” employees who are paid a salary and who are not entitled to overtime compensation);
(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 from the employee’s gross wages;
(5) The net wages earned by the employee;
(6) The dates of the pay period for which the employee is being paid;
(7) The name and address of the employee and the last four digits of his social security number;
(8) The name and address of the employer; and
(9) The hourly rates in effect during the pay period, and the number of hours worked at each pay rate during the pay period.
What Wage Statement Records Must the Employer Keep?
Labor Code section 226(b) requires the employer to keep records of wage statements for at least three years. It also provides that current and former employees have a right to inspect and copy the wage statements, upon their request, and the employer must provide these records within 21 days of the request.
What Penalties Apply for Failure of an Employer to Keep and Provide Accurate and Complete Wage Statements?
Labor Code section 226(e)(1) provides that any employee who suffers injury as a result of a knowing and intentional failure by the employer to comply with his obligation to provide all of the above information is entitled to recover the greater of his actual damages or $50 for the first violation by the employer, and $100 for each subsequent violation, not to exceed an aggregate of $4000. The employee/former employee is also entitled to recover his costs and reasonable attorney’s fees incurred in seeking these penalties.
The Requirement that the Employee “Suffer Injury”
The requirement that the employee “suffer injury” in order to obtain these penalty(s) is easily met. For instance, an employee is deemed to “suffer injury” if the employer fails to provide a wage statement, which will likely always be the case if the employer incorrectly classifies an employee as an independent contractor. Even if the employer properly classifies the worker as an employee and always provides the employee with a wage statement, the employee has “suffered injury” if the wage statement does not provide accurate and complete information with respect to any of the nine required items, and the employee cannot promptly and easily determine from the wage statement alone any of the required information, with the exception of net wages earned. Labor Code Section 226(e)(2). This will likely occur if the employee is entitled to overtime pay, but does not receive it, or is entitled to overtime pay in an amount in excess of what he is paid. Any such failure constitutes a failure to provide a statement of “gross wages earned” in violation of Section 226(a)(1).
The Employer’s Violation Must be “Knowing and Intentional”
However, for the employer to be liable for a violation of Section 226, his failure to provide any of the information required by Section 226(a) must be “knowing and intentional.” An employer’s failure may not be “knowing and intentional” if no complaints have previously been made to the employer that his wage statements violate the law. However, if anyone notifies the employer that his wage statements fail to accurately reflects all of the nine essential items, any subsequent violation will be considered “knowing and intentional.”
Most importantly for the employer, Section 226(e)(1), provides for the double penalty of $100 for each subsequent violation “per employee.” That means that the employer can be found liable for every deficient wage statement given to every employee.
For further information on California’s wage and hours laws, contact the Law Office of William J. Tucker.