Labor Code Section 226 makes California employers liable for penalties if they issue inadequate wage statements that cause ‘injury.” Courts generally have denied penalty claims where hypertechnical violations did not cause real harm. Unsatisfied with this result, employee advocates lobbied for a 2012 amendment. Senate Bill 1255, effective January 1, 2013, amends Section 226(e) to deem “injury” to occur when the wage statement is imperfect and an employee can’t quickly use the statement to derive such items as the wage rates and number of hours worked.

When statutes get amended, it’s often a big deal. What about this amendment? Not so much.

Does the definition really change the law? We think not.

  • In our view, SB 1255’s new definition for deemed “injury” does not materially change the law on itemized wage statements. The leading cases, published in 2011 and 2010, established that “mathematical injuries” do not support Section 226 claims and that penalty claims should fail where an employee can derive the needed information with a little math. SB 1255 did not overrule these cases. Of course, if the Legislature were to define injuries so that harmless itemized wage statement deficiencies led to civil penalties, we here at CalPecs would be blogging about the serious constitutional issues that such draconian measures would raise.

But can’t plaintiffs use other sections to seek penalties for wage-statement imperfections even in the absence of injury? We think not.

  • Creative plaintiffs’ counsel have sought wage-statement windfalls by using California’s PAGA statute to claim penalties under Labor Code section 226.3, which establishes a civil penalty for certain violations of Section 226. But, as to wage statements, Section 226.3 applies only to a complete failure to provide a wage-deduction statement. Section 226, by contrast, specifically addresses both complete failures to provide itemized wage statements, Lab. Code § 226(e)(2)(A), and provision of inaccurate or deficient statements, Lab. Code § 226(e)(2)(B).

In sum, the benighted view of some trial courts notwithstanding, Section 226.3 claims properly are limited to the complete failure to provide a wage deduction statement.

But doesn’t PAGA still provide additional penalties for inadequate wage statements, even in the absence of injury? Again, we think not.

  • Employee advocates who realize that Section 226.3 is not a means to seek penalties for injury-free wage-statement violations have pursued the alternative of seeking PAGA penalties under Labor Code section 2699(f). These claims, too, should fail. While PAGA does create penalties where a Labor Code provision is silent on the matter of penalty, PAGA does not create penalties for any “provision[] … for which a civil penalty is specifically provided.” By our view, Section 226(e) already specifies a penalty for Section 226(a) violations creating any injury, and thus already provides a penalty sufficient to meet the PAGA’s aim of deterring Labor Code violations.

Workplace Solutions: The bottom line is that while one may ballyhoo much about the 2013 amendment defining wage-statement injuries, the practical effect of the amendment may be nil, other than to clarify existing case law to the effect that “mathematical injuries” and other trivial effects of an imperfect wage statement do not enhance an employee’s ability to collect penalties for “gotcha” violations of Section 226.