California Labor Code 226 requires employers to give workers wage statements with every paycheck. These statements must include several details, including gross and net pay amounts, hours worked, deductions, and information about the employer itself. Section 226(e) says that if an employer does not give its workers these statements, or gives them incorrect or incomplete statements, the employee can recover the greater of actual damages or $50 for the initial pay period and $100 for each violation in a subsequent pay period, up to a total penalty of $4000, in addition to costs and reasonable attorney fees.
Last year, in Price v. Starbucks Corp. (2011) 192 Cal. App. 4th, 1136, the court held a worker is not injured just because one of the nine items required on a wage statement is missing. Rather, the worker must show an actual harm coming from the missing information. The court rejected arguments that the lack of full information caused “confusion and possible underpayment of wages.” This ruling severely undercut employees’ ability to challenge incomplete wage statements, since it is hard to show an actual harm beyond the lack of information itself. This in turn makes it far more difficult for section 226 to be properly enforced.
In response, the California Employment Lawyers Association recently worked to introduce Senate Bill 1255. This proposed law would change Labor Code section 226 to say an employer’s failure to provide accurate and complete information itself causes harm to its workers. Further, the bill adds that employees are harmed if they cannot “promptly and easily determine” the amount of gross and net wages in that check, how those amounts were reached, what deductions the employer took out, and the name and address of the employer. “Promptly and easily determine” means without referring to any other document or information. So, this proposed bill will effectively overturn the ruling in Price, and allow employees to again make out a violation of the statute by showing an incomplete or inaccurate wage statement.
We look forward to reporting the outcome of this proposed legislation.