Understanding the Basics
Under Labor Code Section 226, employees must be given a detachable part of their paycheck or a separate writing showing required information every time they are paid their wages, whether by check, in cash, or otherwise. This information includes the following items:
- Gross wages earned;
- Total hours worked (however, this is not required for salaried exempt employees);
- All deductions (all deductions made on written orders of the employee may be aggregated and shown as one item);
- Net wages earned;
- The dates of the period for which the employee is paid;
- The name of the employee and the last four digits of his or her social security number or an employee identification number;
- The name and address of the legal entity of the employer; and
- All applicable hourly rates in effect during the pay period, and the corresponding number of hours worked at each hourly rate by the employee. If the employee is paid on a piece-rate basis, it must include the number of piece-rate units earned and any applicable piece rate.
Penalties and Additional Requirements
Under Labor Code Section 226 (e)(1), an employee suffering injury as a result of a knowing and intentional failure by an employer to include each of these items on the employee’s paycheck is entitled to 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). An employee is also entitled to an award of costs and reasonable attorney’s fees.
An employee is deemed to suffer injury if the employer fails to provide a wage statement and/or fails to provide accurate and complete information as required, and the employee cannot promptly and easily determine such information, meaning a reasonable person would be able to readily ascertain the information without reference to other documents or information.
Moreover, under Labor Code Section 226 (e)(3), a “knowing and intentional failure” does not include an isolated and unintentional payroll error due to a clerical or inadvertent mistake. In reviewing for compliance with this section, the factfinder may consider as a relevant factor whether the employer, prior to an alleged violation, has adopted and is in compliance with a set of policies, procedures, and practices that fully comply with this section.
Lastly, it is important to note that a copy of an employee’s wage statements and records of deductions must be kept on file by the employer for at least three years at the place of employment or at a central location within the State of California. A “copy” includes a duplicate of the itemized statement provided to an employee or a computer-generated record that accurately shows all of the information required under the Labor Code. Employers must provide copies of wage statements to employees upon written or oral request no later than 21 days from the date of the request.
In sum, it is imperative that employers are aware of the various ways employees must be paid their final paycheck to avoid substantial financial liability.
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This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.