Do your employee wage statements comply with the law? Here are the nine categories of information you must include to avoid liability.
[This guest post was provided by Douglas J. Farmer, Attorney, Ogletree Deakins, P.C., San Francisco. He can be contacted at email@example.com]
Do Your Employee Wage Statements Comply With the Law? Here Are the Nine Categories of Information You Must Include to Avoid Liability
California Labor Code Section 226(a) requires employers to include nine (9) categories of information in wage statements given to employees. The rules apply whether the wage statement is distributed electronically or in hard copy. Failure to meet the precise requirements of Section 226 can result in penalties of $50 per employee per pay period for an initial violation, and $100 for each subsequent violation, up to a total of $4000 per employee.
Payroll services like ADP and Paychex take no responsibility for ensuring that your wage statements are legally compliant in California. If you have gotten it wrong on one wage statement, chances are that all of your wage statements (for all employees) are also in violation.
California businesses can protect themselves against these risks by checking their employee wage statements against the checklist of the nine required categories below.
Checklist for Nine Required Items on Employee Wage Statements
The following categories of information must be precisely identified on each employee wage statement:
- Gross wages earned;
- Total hours worked by the employee, except for employees exempt from overtime laws. Note that total hours “worked” is not total hours “paid.” Accordingly, holiday pay, paid sick days, paid vacation days, etc. may not be included;
- The number of piece-rate units earned and any applicable piece rate (for employees paid on a piece-rate only);
- All deductions (deductions made on written orders of the employee may be aggregated and shown as one item);
- Net wages earned;
- The inclusive dates of the period for which the employee is paid. Simply including the end date of the pay period is ordinarily not sufficient;
- The name of the employee and his or her social security number (however, as of January 1, 2008, only the last four digits of the employee’s Social Security number, or an employee identification number other than a Social Security number may be shown);
- The name and address of the legal entity that is the employer. For many employers, this is easier said than done. Although not required, employers should review the name of their business on file with the California Secretary of State to ensure the name on the wage statement is not inconsistent. Branded or truncated business names that are not the legal name of the entity may be insufficient. The name of a subsidiary that performs payroll and benefits services but does not employ the employee could also be insufficient.
- All applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each rate. This can be tricky for non-exempt employees, who are frequently paid using a number of different rates of pay (e.g., regular rate, time and a half, double time, and unique rates for special projects). Temporary services employers must identify the rate of pay for each temporary services assignment and the total hours worked for each legal entity (i.e., assignment).
Other Required Wage Statement Information
California Labor Code section 246(h), California’s paid sick leave law, requires employers to show a paid sick leave or PTO balance on their wage statements (or other writing furnished to the employee at the time wages are paid). Employers paying employees in whole or in part by way of a “piece-rate” must also comply with the wage statement requirements of Labor Code section 226.2.
For additional information on California wage statements requirements, see, D. Farmer, California Employment Law: The Complete Survival Guide to Doing Business in California, available for purchase at www.EmploymentLawPublishers.com.
Douglas J. Farmer is an Attorney at Ogletree Deakins, P.C., in San Francisco. He can be contacted at firstname.lastname@example.org
Payroll Management Best Practices and California Labor Law
As a business owner, or HR or payroll manager, you are responsible for payroll compliance and knowing CA labor law where it applies to your business. Fortunately,you have a number of options for your payroll functions. Software that can be installed in-house, or cloud-based programs offer a good alternative.
But if you really want to take full advantage of the benefits available to you, outsourcing to a provider like Accuchex can still be the best decision.
If you are currently looking to invest in outsourcing, download our free resource, the Payroll Outsourcing Guide, to help you make an informed decision. Or call Accuchex Payroll Management Services at 877-422-2824.