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California court rules employee pay stubs must contain nine items to be legal

NORTHERN CALIFORNIA RECORD

Saturday, December 21, 2024

California court rules employee pay stubs must contain nine items to be legal

Law money 03

SAN DIEGO -- In Lidia Soto v. Motel 6 Operating, L.P the Fourth District Appellate Court sent a clear message to employers, they are not obligated to include the monetary amount of accrued vacation pay on their employee's wage statements.

“This is an important guidance because it makes clear that California Labor Code section 226(a) states very expressly there are nine criteria that need to be included on a wage statement and only those nine are necessary,” explained David Harris, partner, Haight, Brown and Bonesteel in an interview. ”The court's ruling means the letter of the law is what is important and that there is very little room for ambiguity in it.” Harris has over 20 years of experience in the area of employment labor litigation focusing on counseling and defending clients in wrongful discharge, wage and hour, and labor disputes in administrative and state courts.

California Labor Code section 226(a) states that employers are obligated to issue a wage statement that contains nine specific items. These items include, the name and address of the employer, the name of the employee, the last four digits of the employee’s social security number or an employee identification number assigned to the employee by the employer, the pay period the wage statement represents, the number of total hours the employee has worked, the employee's hourly wage, the gross wages the employee has earned, the net wages the employee has earned and any deductions removed from the employee's wages.

In Lidia Soto v. Motel 6 Operating, L.P the plaintiff, Lidia Soto, a Motel 6 employee from June 2012 to January 2015, filed an action in her individual capacity and on behalf of all aggrieved workers under California’s Private Attorneys General Act of 2004 (PAGA). Soto argued because California Labor Code section 226(a) requires an accurate itemized statement of wages the accrued value of an employee's vacation time was required as well.

In the complaint Soto sought statutory penalties and legal fees. Under Labor Code section 226(a) these penalties can reach up to $4,000, while the legal fees do not have a set limit and are instead based on a reasonable standard.

Motel 6 countered the complaint by arguing vacation pay was not included among the items required by California Labor Code section 226(a) and that vacation time did not become part of an employee's wages until the employee was terminated.

The court agreed with Motel 6 and unanimously dismissed Soto's claim. In its ruling the court stated the purpose of 226(a) is to ensure employees are adequately informed of compensation and are not shortchanged by their employers.

The court went on to say because the code only refers to monetary compensation, it can be inferred that the omission of vacation pay from the list of required items was part of the original legislative intent.

After the court's ruling Motel 6 was not required to pay any statutory penalties nor were they required to pay any attorney fees or costs. “The fact that the court came to this decision unanimously gives clarity to this ruling and that is very helpful to employers,” added Harris.

He went to say that while the ruling gives clarity to employers it will not not make life any more difficult for California employees. “The ruling means that unless an item is included in 226(a) it does not need to be listed on their wage statements, which should not cause employees any undue burden,” he added.

Harris continued saying the main lesson for employers is that they should be very careful to include all nine of the items specified by California Labor Code section 226(a) if they wish to avoid penalties. But the ruling also means they should be protected by the law as long they do include every item. “The main take away for employers should be to ensure that they meet all nine of the requirements stated by 226(a) on their wage statements,” said Harris.”As long as they meet those requirements they should be protected from similar actions.”

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