Philosophical Employment Law Question: If a California employee receives a paycheck that does not contain the pay period dates (or other custodial information), does the employee suffer an injury?
California courts, among the most liberal in the nation, have struggled with this deep philosophical question (not the one about the trees).
Majority View: Most courts have concluded that an employee does not suffer an injury when his or her paystub does not contain information like pay period dates or the employer’s full name and address. These courts require proof of an actual injury to trigger penalties under Labor Code section 226.
Minority View: A smaller number of courts have held that injury occurs automatically if the paystub does not contain every single element that Labor Code section 226 requires.
CA Lawmakers’ View: The division among the courts prompted the Legislature to pass (and the Governor to approve) legislation that amended Labor Code section 226 (effective January 1, 2013) to state that an employee will be deemed to suffer injury if an employer fails to provide a wage statement or accurate and complete information as required by law, and the employee cannot promptly and easily determine from the wage statement alone one or more of the following:
- gross or net wages paid during the pay period,
- total hours worked,
- piece rate units earned and rate,
- dates of pay period,
- hourly rates and corresponding hours worked at each rates,
- the employer’s name and address,
- the employee’s name, and
- the employee’s last 4 digits (only) of his or her social security number or employee identification number.
Silver Lining: The amendments expressly exempts from liability an employer who makes an “isolated and unintentional payroll error due to a clerical or inadvertent mistake.” In what should be a given, Section 226 now expressly authorizes, a judge or jury to consider an employer’s adoption of policies, procedures, and practices that fully comply with Section 226 in determining damages.
The Legislature also clarified that an employer can keep computer files, instead of a duplicate hard-copy, as long as the statement can be printed at the place of employment or at a central location within California. This is good for those employers who keep electronic records, but who were worried that doing so would not comply with record-keeping obligation.
Workplace Solutions: California employers, look at your paystubs and make sure they include all elements listed in Labor Code section 226. If you use a payroll service, make sure the service knows about the new law, and be certain that you have furnished all the information and data to the service needed to satisfy all Section 226’s requirements. Look at both regular payroll period paystubs as well as paystubs issued irregularly, including final paystubs, to make sure all the necessary information is on the paystubs.
Taking these steps and others to ensure that the paystubs are complete – not to mention accurate – could help you avoid or mitigate liability for wage statement claims.