LightGabler has recently defended a rash of wage and hour lawsuits focused primarily on employers’ minor failures in issuing legally-compliant paystubs. As a reminder, California Labor Code section 226(a) requires that employers provide specific information on employee paystubs:
Additionally, the new sick leave law requires that, “An employer shall provide an employee with written notice that sets forth the amount of paid sick leave available, or paid time off leave an employer provides in lieu of sick leave, for use on either the employee’s itemized wage statement described in Section 226 or in a separate writing provided on the designated pay date with the employee’s payment of wages. . . .”
What’s the big deal, you might ask? Well, a non-compliant paystub could mean significant penalties and costly lawsuits. Specifically, an employee who receives an incorrect paystub may recover, “the greater of all actual damages or fifty dollars ($50) for the initial pay period in which a violation occurs and one hundred dollars ($100) per employee for each violation in a subsequent pay period, not to exceed an aggregate penalty of four thousand dollars ($4,000), and is entitled to an award of costs and reasonable attorneys’ fees.” Yikes!
As you can see, ensuring compliance with every one of the requirements listed in Section 226 is of paramount importance to keeping your profits in the company coffers and avoiding potential liability, penalties and attorneys’ fees. Failure to do so could bankrupt or significantly harm your company. And, it’s an easy fix! Having a compliant paystub is simply a matter of auditing your current paystub practices against the legal requirements provided above. Check your direct deposit paystubs as well as your paper stubs to ensure that both are compliant, as they may not be identical.
As a related aside – and don’t get too excited just yet – there is pending legislation (AB 1506) working its way through Sacramento that would allow employers the opportunity to “cure” certain violations of Labor Code Section 226(a)(6) before lawsuits can be filed. Of course, we will keep you updated on this bill as we monitor pending employment-related legislation.
If you need assistance to determine whether your current paystubs are compliant, or have questions on any other employment law issues, contact any of our employment attorneys at LightGabler.