Pay Stub Violations In California: What Employers Need To Watch Out For

In this article, you will discover:

• The legally required information on California pay stubs
• How payroll errors lead to pay stub violations
• Penalties for incorrect or missing information on pay stubs

What Legally Required Information Must Appear On California Employee Pay Stubs?

California Labor Code Section 226 itemizes specific requirements that must be on the pay stub. Labor Code Section 246(i) specifies that the amount of paid sick leave available must be included on the pay stub.

The key requirements to include on the pay stub, which must be accurate, are:

1. Gross wages earned
2. The total actual hours worked.
3. All appropriate rates of pay, depending on the hours worked. For example, suppose regular hours worked are at an hourly rate, and there’s additional overtime and double time. In that case, you must show the overtime and double-time hours at the appropriate rate as a separate line item.
4. The employer’s legal name and address. A DBA is insufficient. You can have the DBA in addition to the legal name of the business, but the requirement is that the legal name of the business must also be listed.
5. If the employer pays on a piece-rate basis, the pay stub must show the number of piece units made multiplied by the dollar value per piece.
6. The pay period start date and end date.
7. The last four digits of the employee’s Social Security number or a unique employee identification number.

How Can Payroll Software Errors Lead To Unintentional Pay Stub Violations In California?

The most common administrative errors that lead to itemized wage statement violations include:

• Failure to put the paid sick leave balance on the pay stub
• Failure to accurately capture overtime or double-time hours
• Failure to pay overtime or double time on the correct “regular rate of pay”
• Errors in the accrual of vacation or paid time off
• Failure to accrue vacation or paid time off in proportion to wages earned or hours worked
• Failure to put the legal name of the business on the pay stub

Attorney Scott Shibayama is a seasoned lawyer based in Roseville, CA, who has helped numerous clients just like you navigate the complexities of employment law. With decades of experience, he is prepared to assist you in avoiding and addressing pay stub violations so they don't occur or recur.

Still have questions? Ready to get started? Contact Vision Law® today to schedule an initial consultation.

What Are The Penalties For Incorrect Or Missing Information On California Employee Pay stubs?

Penalties are calculated on a per-pay-period, per-employee basis. The first violation in the first pay period would incur a $50 penalty per employee for that first pay stub. For every subsequent violation, a $100 penalty is assessed per pay period per employee, with a maximum penalty of up to $4,000.

Many employers pay employees every two weeks or 26 times a year. If you have 10 employees with a violation in every pay stub for every employee, that comes out to:

• $50 for the first pay period x 10 employees = $500
• $100 for the remaining 25 pay periods x 10 employees = $25,000
• A total $25,500 penalty for one year’s worth of pay stub errors

Luckily, the statute of limitations on a Labor Code Section II-VI pay stub violation claim is one year.
Thus, the plaintiff can only go back one year.

What Is The Proper Legal Way To Handle And Issue Corrected Pay Stubs In California?

Fix the problem in the future. Don’t go back and reissue new pay stubs. The only time you go back and correct pay stubs is if you’re sued on a PAGA (Private Attorney General Act) basis. Under California Law, if you’re sued on a PAGA basis, it means that one aggrieved employee can sue on behalf of their coworkers regarding, for example, pay stub violations.

You can cure some violations by fixing the stub. One specific error you can correct is having the incorrect legal name of the business or the incorrect legal business address on the pay stub.

You can reissue corrected pay stubs during the statute of limitations period and avoid PAGA penalties for having inaccurate wage statements. Otherwise, it typically does not make sense from a cost-benefit perspective to revisit and historically correct pay stubs.

Attorney Scott Shibayama is a seasoned lawyer based in Roseville, CA, who has helped numerous clients just like you navigate the complexities of employment law. With decades of experience, he is prepared to assist you in avoiding and addressing pay stub violations so they don't occur or recur.

Still have questions? Ready to get started? Contact Vision Law® today to schedule an initial consultation.

What Best Practices Help Employers Prevent Repeat California Pay Stub Compliance Violations?

Know the requirements of Labor Code section 226. Read the statute and list the nine requirements that need to be included on the pay stub. Tick off each of the nine items and ensure that they’re listed on the stub and accurately represented. This approach stems from maintaining accurate daily time records and conducting periodic audits, ideally every pay period.

Ensure that the hours worked and recorded on the daily time records match exactly what appears as hours worked on the itemized wage statement, including regular hours worked versus overtime or double-time hours worked.

The other major item that needs to be on the pay stub is California paid sick leave. There are two ways to earn California paid sick leave: through accrual and front-loading.

For the accrual method, employees accrue paid sick leave at the rate of one hour for every 30 hours worked, or .0333 x each hour worked.

You apply that against every hour worked, whether it’s regular, overtime or double-time hours, to calculate the amount of paid sick leave earned for that pay period. During every pay period, you continue calculating the amount of paid sick leave accrued versus the amount used. That is the available paid sick leave balance that must be on the stub.

For front-loading, you simply provide 40 hours of paid sick leave to the employee at the beginning of every 12 month period that you define.

What Is A Surprising But Common Cause Of Pay Stub Violations For California Employers?

Failure to calculate the correct overtime hourly rate can be complicated if an employer pays a non-exempt employee anything in addition to the hourly rate. For example, if the employer pays commissions or bonuses, these wages must be included in the regular rate to calculate overtime.

It’s a complex calculation. You’re not just paying employees time and a half for the hours worked. You have to pay time and a half on the value of the commissions and bonuses earned as well. That’s a common error because many people are unaware of California’s unique law regarding the calculation of the regular rate for overtime purposes.

Other common paystub errors: 1) failing to list the legal business name of the business; 2) failing to properly calculate overtime; and 3) failing to list the paid sick leave balance.

Still Have Questions? Ready To Get Started?

For more information on California pay stub violations, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (855) 534-1490 today.