As many employers know, violations of California's wage statement requirements can be costly. On October 2, 2015, Governor Jerry Brown signed AB 1506 which will afford employers limited relief from penalties for certain hyper-technical wage statement violations.
Labor Code section 226 requires employers to include the following information on an employee's wage statement: (1) gross wages earned; (2) total hours worked (not required for salaried exempt employees); (3) the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece rate basis; (4) all deductions; (5) net wages earned; (6) the inclusive dates of the pay period; (7) the name of the employee and the last four digits of his or her social security number or an employee identification number other than a social security number; (8) the name and address of the legal entity that is the employer; and (9) all applicable hourly rates in effect during the pay period, and the corresponding number of hours worked at each hourly rate by the employee.
Failing to comply with Labor Code section 226, even small hyper-technical violations, can result in significant monetary penalties under both Labor Code section 226 and the Private Attorneys General Act ("PAGA"). Under Labor Code section 226, violations can result in penalties of an employee's actual damages or $50 for the initial pay period of the violation and $100 per employee for violations in each subsequent pay period, up to $4,000. Under PAGA, employees can file lawsuits alleging Labor Code violations on behalf of all "aggrieved employees." Employees filing such representative actions can recover $100 per each aggrieved employee per pay period for any initial Labor Code violations and $200 per each aggrieved employee per each subsequent violation. Non-compliant wage statements are an easy target for PAGA lawsuits and employers often have no defense to the alleged violations.
AB 1506 provides some limited relief for employers. The bill amends PAGA to allow employers the opportunity to cure two kinds of wage statement violations. Before an employee can file a lawsuit under PAGA, he or she must provide written notice to both the employer and the Labor Workforce Development Agency detailing specific violations under the Labor Code. Now, upon receiving this notice, an employer has 33 calendar days from the notice's postmark date to cure any violations involving a failure to provide the inclusive dates of the pay period or the name and address of the legal entity that is the employer. If the employer fails to do so within those 33 days, the employee may commence a civil action under PAGA.
While this new law may be helpful for some employers, it will not completely immune them from exposure for PAGA claims based on wage statement violations. First, the new law does not affect or diminish penalties for violations of Labor Code section 226. Second, the opportunity to cure only applies to PAGA claims and the two specific kinds of violations listed above (failure to provide proper information about pay period dates and the legal name of the employer). It does not provide any relief for other wage statement violations. PAGA lawsuits often allege multiple deficiencies with wage statements. The new law would not provide any defense or opportunity to cure for other technical violations and employers may still be subject to significant penalties.
AB 1506 is unlikely to curb PAGA litigation. Employers, however, may be able to reduce their own exposure for lawsuits based on hyper-technical Labor Code violations by conducting a self-audit of their wage statements and immediately correcting any deficiencies.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
