Learn California’s Specific Pay Stub Requirements to Avoid Penalties

Attorneys for employees alleging underpayment or other wage irregularities will regularly add a pay stub violation claim to the mix.  By definition, if an employer has erred in wage calculations, it has messed up the earnings statements. California law on the specific information that must be included on a stub is detailed and virtually unforgiving of widespread or long-term mistakes.

Up until July 1, 2015, this state required nine possible items that must be listed. Employers now must include as many as 16 points.  See California’s Itemized Pay Stub Requirements (March, 2016).

A. The First Nine California Pay Stub Requirements: As we reported in “Pay” By The Rules: California Pay Stub Requirements (July, 2009) these items, listed in Labor Code 226(a), are:

(1) Gross wages earned;

(2) Total hours worked (except salaried exempt employees);

(3) Piece rate units and rate, if applicable;

(4) All deductions, including taxes, disability insurance, and health and welfare payments (deductions ordered by the employee may be aggregated and shown as one item);

(5) Net wages earned;

(6) Inclusive dates of the pay period;

(7) Name of the employee plus last four digits only of social security number or an employee identification number;

(8) Name and address of the legal employing entity; and

(9) All applicable hourly rates the employee earned during the pay period and the number of hours worked at each hourly rate.

B. Required Listing of Employee’s Paid Sick Days Benefit: As in California Paid Sick Leave Law (August, 2015), most employers in this state have also been required since July 2015 to include:

(10) Written notice of the amount of available paid sick leave on the employee’s pay stub or a separate writing provided with the employee’s wage payment.

Under revised Labor Code 246(i), an employer who provides unlimited sick leave to its employees (no maximum cap) may now meet this notice requirement by indicating “unlimited” leave on the employee’s itemized wage statement or in a separate writing provided on each designated pay date.

C. Further Required Paystub Listing of Rest and Recovery Pay for Certain Employers: As in Piece Work Compensation Is a Wreck Waiting to Happen (December, 2015), employers utilizing any form of a so-called piece work (production-based) compensation system have been further obligated since January 1, 2016 to pay affected workers separately for rest and recovery time. New Labor Code 226.2(a)(2)(A) now requires such employers to list three additional items on each pay stub:

(11) Total hours of compensable rest and recovery periods in the applicable pay period;

(12) Rate of compensation for such periods; and

(13) Gross wages paid for those rest and recovery periods during that pay period.

Under Labor Code 226.2(a)(2)(B), unless a piece work-paying employer includes an hourly minimum wage base rate in its compensation system, that employer will also have to list yet three more items on each pay stub for affected workers:

(14) Total hours of other compensable nonproductive time in the applicable pay period;

(15) Rate of compensation for such time; and

(16) Gross wages paid for that time during the pay period.

Employer attention to such detail is important. Labor Code 226(e) provides that an employer’s knowing and intentional failure to comply may entitle each worker affected to recover at least $50 for the first violation and a minimum $100 for each subsequent occurrence up to a maximum of $4,000. In the event a company’s non-compliance applies long-term to a large number of employees, the total potential liability could be very significant.

This state’s Labor Commissioner has for many years listed a template pay stub illustrating the placement of the above nine items. See: http://www.dir.ca.gov/dlse/PayStub.pdf. However, the state has not yet offered what it considers acceptable examples of pay stubs containing additional items (10) through (16) above. This lack of government guidance makes it all the more important that affected employers consult with legal counsel to determine how best to bring their pay stub formats into compliance with the above-described new California pay stub requirements.

For further assistance, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin

Updated May 3, 2018