The California Labor Code contains numerous provisions that an employer needs to comply with in order to avoid legal trouble. One important law is Labor Code section 226.
When an employee is paid, the employee must be furnished with an itemized wage statement. This is true whether the employee receives a paper check or direct deposit. The failure to provide a wage statement is itself a violation of the law. But Labor Code section 226 goes further than that.
Labor Code section 226 specifies exactly what is required to be printed on the itemized wage statement. As of March of 2016, the current requirements for wage statements are as follows:
- gross wages earned
- total hours worked by the employee, except for any employee whose compensation is solely based on a salary and who is exempt from payment of overtime under
- the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis
- all deductions, provided that all deductions made on written orders of the employee may be aggregated and shown as one item
- net wages earned
- the inclusive dates of the period for which the employee is paid
- the name of the employee and only the last four digits of his or her social security number or an employee identification number other than a social security number
- the name and address of the legal entity that is the employer and, if the employer is a farm labor contractor, as defined in subdivision (b) of Section 1682, the name and address of the legal entity that secured the services of the employer
- all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee and, beginning July 1, 2013, if the employer is a temporary services employer as defined in Section 201.3, the rate of pay and the total hours worked for each temporary services assignment.
Labor Code section 226 also requires the following:
The deductions made from payment of wages shall be recorded in ink or other indelible form, properly dated, showing the month, day, and year, and a copy of the statement and the record of the deductions shall 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.
Penalties For Non-Compliance
The penalties for non-compliance with Labor Code section 226 can be severe. Each employee that receives non-compliant wage statements can receive up to $4,000 in statutory damages and award of attorney's fees.
As you can see, the simple failure to review your wage statements can result in significant penalties. Most big-name payroll companies are well-aware of California law. However, if you run your payroll in house or use a CPA or bookkeeper, it makes sense for you to carefully review your compliance with Labor Code section 226 in order to prevent legal trouble.
If you need advice regarding compliance with California's labor laws and regulations, contact Sacramento Attorney Rick Morin at (916) 333-2222.