We have many wonderful clients who over decades have built thriving businesses from scratch. There is joy in what they do, good managers working insane hours, with many trusted, well-paid employees who have hung-in for years, through good times and otherwise.

Yet, well more than once, we have seen such life work threatened with destruction by “little” mistakes on routine workplace practices that can pose millions in penalties under California’s Private Attorneys General Act (PAGA) (2004).

PAGA is the pinnacle (so far) of this state’s ever-growing mass of workplace regulations.  The law deputizes private-practice lawyers to sue and collect Labor Code penalties ranging from $100 to $10,000 per employee and per occurrence on at least 50 code sections.  Liability generally stems from overlooked technical details, not intentional violations.

For instance, California law requires up to 16 data points on every pay stub (earnings statement).  Even one inadvertent omission or inaccurate entry – repeated across the boards – can pose sky-high PAGA penalties.

The sample above is case in point.  For that company’s hourly workers, the Labor Code required nine specific listings on the stub, including:

(1) Gross wages earned;

(2) Total hours worked;

(3) All deductions, including taxes, disability insurance, and health and welfare payments;

(4) Net wages earned;

(5) Inclusive dates of the pay period;

(6) Employee name plus last four digits only of social security number or an employee identification number;

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

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

(9) Written notice of the amount of available paid sick leave (this last can be in a separate writing provided with the employee’s wage payment).

Their stub looks good, except for one “small” thing.  The one-line (redacted) company name in the upper left has only a single line address below it, listing the employer’s city and zip code with four-digit extension, but not the street name and number. Result: potential violation of point 7.  For an employer with 300 workers paid weekly and at the minimum $100 penalty per occurrence, this would create a possible $2,322,000 PAGA assessment.

There is no escape if a payroll company prepares the stubs. Almost any vendor’s service agreement places liability for non-compliance on employer-subscriber. See, Payday Mayday, Read the Fine Print: Payroll Companies Not Responsible for Employer Compliance (January 24, 2020)

Take-Away:

On the premise that sooner or later every driver gets a speeding ticket, PAGA’s stakes require periodic “friendly” internal audits to confirm or remedy workplace practices for full Labor Code compliance.  Our firm is performing these reviews for clients on an accelerating pace. The cost of prevention over the possible devastation of a PAGA suit is a business-saving investment.

For more information on our help with such audits, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

See also:

• Workplace Roulette, Reducing the Odds of PAGA Purgatory (December 13, 2024);
• Employers Lose Food Fight; Break Premiums Ruled Wages, Must Be Reflected on Pay Stubs (June 3, 2022)
•  California’s Itemized Pay Stub Requirements (March 17, 2016)

Tim Bowles
March 14, 2025