California’s Payroll Records Requirements

Wage-related lawsuits are a booming California industry.  An employer’s “ounce of prevention” must include continual creation and maintenance of complete and accurate pay records.  Even if a former worker’s allegations are groundless, deficient recordkeeping leaves a company wide open to wage “theft” claims – e.g., off-the-clock unpaid work hours; meal period deprivation – that can be very difficult to disprove.

For each employee, Labor Code 1174 and section 7 of all California wage orders direct employers to securely maintain these records at a central location for at least four years:

● Full name, home address, occupation and social security number;

● Birth date, if under 18 years, and designation as a minor;

● Time records showing when the employee begins and ends each work period;

● Meal periods, split shift intervals and total daily hours worked. “Meal periods during which operations cease and authorized rest periods need not be recorded”;

● Total wages paid each payroll period, including value of board, lodging, or other compensation actually furnished to the employee;

● Total hours worked in the payroll period and applicable rates of pay; and

● When a piece rate or incentive plan is in operation, piece rates or an explanation of the incentive plan formula shall be provided to employees. Employers must maintain an accurate production record supporting any employee piece pay.

All required records “shall be in the English language and in ink or other indelible form, properly dated, showing month, day and year.” An employee’s records shall be available for inspection by the employee upon reasonable request.

Penalties for failure to keep and provide accurate and complete payroll records include, but are not limited to, $50 initial violation per employee, per pay period and $100 each subsequent violation to $4,000 maximum/employee (Labor Code 226(e)(1)) and another $250 initial violation per employee, $1,000 subsequent violation per employee (Labor Code 226.3).

Additional references: U.S. Department of Labor Fact Sheet #21: Recordkeeping Requirements under the Fair Labor Standards Act (FLSA); California Division of Labor Standards Enforcement (DLSE) Enforcement Policies and Interpretations Manual, August, 2019, section 4 “Time Record Requirements”; and Employment Development Department (EDD) 2020 California Employer’s Guide, p. 78, “Recordkeeping.”

Take Away:  Taking the time and care to compile and preserve complete work time and pay records for every employee isn’t just a good idea, it’s a vital aspect of business survival 101.

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

See also,

• Keeping Time – California’s Standards for Tracking Workplace Hours (April 1, 2022)
• Paperless Paystubs – Do They Comply with California Wage Statement Laws?(February 28, 2018)
• Correct Pay Stubs Save Bucks – Learn California’s Specific Pay Stubs Requirements to Avoid Penalties (May 3, 2018)
• Payroll Records-Keeping 101 (May 11, 2016)

Tim Bowles
August 12, 2022