LEGAL NEWS How a Typo Can Be Costly


Have You Checked Your Paystubs Lately? Slew of Cases Focused on Minor Errors Can Cost Employers Millions


By Danielle Hultenius Moore and Collin D. Cook, Fisher & Phillips LLP


I


magine being sued by all of your employees for the past four years because your paystubs have an extra


comma in your company’s name, the zip code is missing from your address, or the paystub gives the pay period end date but not the beginning date. Tese hyper-technical errors are


the focus of the new “claim du jour” in California, often seeking millions of dollars in damages. Tese cases are particularly offensive because employees are generally not harmed by these minor errors. Instead, these cases seem to only penalize good employers for innocent mistakes. Regardless of the offensive nature of these claims, the recent spike in class actions has reinforced the need for you to pay close attention to the specific itemized wage statement (paystub) requirements in California Labor Code section 226(a). While it seems elementary that


you must follow wage and hour law, compliance is often taken for granted. Companies frequently commit unintentional violations of this paystub law due to a misunderstanding of the technical requirements, leading to significant liability under the Labor Code and Private Attorney General Act of 2004 (“PAGA”). For instance, companies have recently faced lawsuits alleging they missed a space in the company’s name, or omitted “Inc.” from the end of their name.


What You Need to Know - The Labor Code’s Requirements


Labor Code section 226(a) requires


you to furnish your employees with “an accurate itemized statement in writing,” that includes the following nine categories of information: (1)


20 March/April 2016


gross wages earned; (2) total hours worked, except for exempt employees who are paid on a salary basis; (3) the number of piece-rate units earned and the 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 period for which the employee is paid (not just the ending date); (7) the employee’s name and identification number, or the last four digits of the employee’s 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 rate by the employee. Additionally, California’s Healthy


Workplaces, Healthy Families Act of 2014, commonly known as California’s new Paid Sick Leave Law, requires you to provide employees with their available amount of paid sick leave either on the employee’s paystub or in a separate writing at the time the wages are paid.


Penalties for Non-Compliance If Section 226 is violated, an


employee is entitled to recover $50 for the initial violation, and the employer must pay $100 per employee for each subsequent violation, up to a maximum of $4,000 per employee, plus any attorneys’ fees and costs. Tese penalties can have devastatingly expensive consequences. For example, a concrete company that paid its approx- imately 250 workers on a weekly basis recently faced potential liability of one million dollars for violations for the remainder of the year. Te initial viola- tions only cost the company $12,500, but the subsequent violations increased the total by an additional $987,500.


In addition, Section 226.3 states


that the Labor Commissioner can impose additional “civil penalties” of $250 per employee per violation (i.e., per pay period) as an initial citation and $1,000 per employee per violation for any subsequent citations. And, an employee may also file an action to recover civil penalties for these viola- tions under the PAGA. In other words, the concrete company faced liability of several million dollars in alleged penalties and attorneys’ fees when all was said and done.


No Harm, No Foul? Not Under This Law


What makes these cases particu-


larly troubling is that employees do not need to show they were actually “harmed” by your errors to win their cases against you. Under Section 226(e), employees can recover these penalties if they suffer an “injury” as a result of your “knowing and inten- tional” failure. However, courts in California have interpreted “injury” broadly and have stated that an employee will be found to have “suffered an injury” if you simply fail to provide accurate and complete infor- mation as required by Section 226. In other words, the employee


doesn’t need to be actually harmed by the technical violation for them to recover substantial amounts from you.


New Law Provides Partial Opportunity to “Cure”


In response to the spike in Section Continued on page 21


California Constructor


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