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California Wage Statements – New Reporting Requirements, Increased Exposure for Employers

  • November 6, 2012

Amendments to the California Labor Code impose new wage reporting requirements on “temporary services employers” and allow all employees to recover statutory penalties for violations, even where they suffer no actual loss in wages as a result of a deficiency in a wage statement. 

Wage Statements

Existing California law requires every employer, at the time of each payment of wages, to furnish each employee with an accurate statement in writing showing gross wages, hours worked, deduction and other items.  Cal. Labor Code § 226.  Effective July 1, 2013, the new law, amending Sections 226 and 2810.5 of the California Labor Code, will require temporary services employers to provide the rate of pay and the total hours worked for each temporary services assignment on each wage statement. 

New Requirements for Temporary Staffing Employers

Current California law requires that all employers provide employees, at the time of hiring, a written notice showing their rate of pay and its basis (e.g., hourly, salaried, and commissioned), the regular payday, the employer’s name, address, phone number, and mailing address (if different), and the name, address and phone number of the employer’s workers’ compensation carrier.  Cal. Labor Code § 2810.5.  Employers also must notify employees in writing of any changes to this information within seven days of the change; the changes may be reflected on a timely wage statement.

Effective January 1, 2013, the new law will require temporary services employers to include, in addition, the name, address, and telephone number of the legal entity for whom the employee will work, its mailing address (if different), and “any other information the Labor Commissioner deems material and necessary,” upon hiring and any time that any changes in this information occur.  Given the nature of the temporary services industry, this could occur every pay period. 

Section 2810.5 does not contain a specific enforcement provision, although violations could result in claims under the state’s Private Attorneys General Act (“PAGA”).

Increased Penalties for Non-Compliance

An employee who suffers an injury as a result of an employer’s knowing and intentional failure to comply with Section 226 may recover statutory penalties of up to a maximum penalty of $4,000, injunctive relief, and attorney’s fees and costs.  The new law provides that an employee is “deemed” to suffer injury if the employer either fails to provide a wage statement or provides inaccurate or incomplete information.  The new law further provides that a “knowing and intentional failure” does not include an isolated and unintentional payroll error due to a clerical or inadvertent mistake.  The new law permits, but does not require, a fact finder to consider whether the employer, prior to an alleged violation, has adopted and is following policies, procedures, and practices that comply with the law.

These changes to Section 226 mean that all employees, not just those employed by temporary staffing agencies, may recover statutory penalties if (1) an employer fails to provide a wage statement, or (2) the wage statement is not accurate or complete, and the inaccuracy or incomplete statement is not isolated, unintentional and due to a clerical error or inadvertent mistake.

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For temporary services companies, the changes to California’s wage-reporting laws likely will lead to increased compliance time and expense.  All employers should consider reviewing their payroll processes or work with their payroll processing company to ensure the itemized wage statements provided to California employees comply with state law. Jackson Lewis anticipates that class action litigation will increase, since even technical violations of the statute will entitle employees to recover damages.  Jackson Lewis attorneys are available to answer inquiries regarding this and other workplace developments.

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