Sins of Wages
Both employers and employees need to review their wage statements for the new year, because California has amended Labor Code 226 to identify nine types of information that has to be on each wage statement:
(1) gross wages earned,
(2) total hours worked by the employee, except for any employee whose compensation is solely based on a salary and who is exempt from payment of overtime under subdivision (a) of Section 515 or any applicable order of the Industrial Welfare Commission,
(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, provided that all deductions made on written orders of the employee may be aggregated and shown as one item,
(5) net wages earned,
(6) the inclusive dates of the period for which the employee is paid,
(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, if the employer is a farm labor contractor, as defined in subdivision (b) of Section 1682, the name and address of the legal entity that secured the services of 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.
The most common mistake seems to be not including the name of the legal entity: “Bob’s Hardware” is not the name of the legal entity, if that is merely the tradename, and the business is actually “Robert Smith Hardware, Inc.”
There is a real price to pay if the wage statements are incorrect: the greater of actual damages or $50 for the initial pay period, per employee, and $100 per employee for each later pay period, up to a total of $4000 per employee. The Legislature has put some real bite into this, because lawyers who sue on behalf of the employees are entitled to an award of costs and reasonable attorneys’ fees – which could be $300-$500 per hour. These attorneys are always very thorough, and bill lots of hours.
Every employer should review the wage statement being issued to employees this month, to make sure it complies with current law. The payroll provider should be aware of these changes but if not, changes need to be made quickly.