California Employers should know that failing to promptly and accurately pay employees for all hours worked can lead to expensive class-action lawsuits. It's essential to also note that employers that don't list certain information on pay statements can find themselves in hot water. One of the most recent ones decided and not mainly known is required Sick Leave balances and usage must be listed on the Pay Stub.
Complying with California's wage statement provisions is a lot more complicated than people probably think. At first glance, the rules may seem small and some may consider overlooking them, but there are legitimate policy reasons behind a lot of them. Justifying ignoring them can create greater issues for any size business. Thinking that the explanation of “I was not aware” will resolve any litigation will not be acceptable.
The purpose is to provide transparency to workers regarding wage calculations and to give employees enough information to verify that they are being properly paid, according to the state Division of Labor Standards Enforcement.
Regardless of the Payroll Service provider, Operating System or Accountant/Bookkeeper the Employer will be held for 100% compliance. Failure to comply can lead to significant per-pay-period penalties. Even the slightest mistake or omission could create thousands of dollars in liability.
That's why employers may want to consider personally verifying using this information or consulting an attorney for review.
What Must Be Listed?
California Labor Code Section 226(a) outlines nine specific items that must be included on a pay statement:
- Gross wages earned.
- The total hours worked by the employee (unless the employee is exempt from overtime).
- The number of piece-rate units earned, if applicable.
- All deductions made from wages.
- Net wages earned.
- The pay period beginning and end dates.
- The employee's name 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.
- All applicable hourly rates in effect during the pay period and the corresponding number of hours the employee worked at each hourly rate.
There is also an element that employers will find in the Healthy Workplace Healthy Family Act. The act entitles most California employees to accrue one hour of paid sick leave for every 30 hours worked, but employers can limit use to 24 hours or three days of accrued leave each year. Employers must show on a pay stub—or a document issued the same day as a paycheck—how many days of sick leave an employee has available.