Employers in California are required to provide employees with an itemized wage statement, also known as a pay stub. In California there are very specific requirements under the applicable wage orders and labor code that set forth what every pay stub must include. Failing to issue an accurate and California compliant wage statement can result in substantial penalties. In that regard, paystub violations are a target claim for savvy Plaintiff’s attorneys’ who bring Private Attorney General Act (PAGA) claims on behalf of all employees affected, resulting in potential six figure exposure. Violations will occur for among other reasons, whenever an employee is not paid at least minimum wage, or not paid overtime, or otherwise when employees are not paid all wages owed. Therefore, it’s important to understand what must be included in paystubs and to periodically review them to ensure they are accurate and reflect all required information.
Pay Checks: Timing and other Preliminary Considerations
Whenever an employer pays its employee wages, it must issue a company check and provide a document (paystub or wage statement) that sets forth several different types of information. If wages are paid by direct deposit then a document must be provided or be available on line for the employee to review that meets all the paystub requirements set forth below. Moreover, note that employees are to be paid twice a month. Labor code section 204 requires that wages earned between the 1st and 15th day of any calendar month must be paid no later than the 26th of the month during which the labor is performed. Wages earned between the 16th and the end of the month must be paid by the 10th of the following month.
Pay Stubs Required Details
Under California law, paystubs must include all of the following information if applicable:
- Dates. The wage statement must describe the range of dates that it covers, and must list the date that it was issued.
- Gross Pay. An employee’s gross pay is the total amount of the employee’s wages before any deductions are made. It includes all pay that California law defines as a wage. Wages are defined in Labor Code Section 200 as “all amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation.”
- Total Hours. Employers must list the total number of hours the employee worked. This information is not required, however, if the employee’s compensation is based solely on a salary and the employee is considered “exempt” under California law.
- Hourly Rates. All applicable hourly rates in effect during the pay period must be listed on the wage statement. If the employee worked at varying hourly rates during the pay period (as in the case of a recent raise), the corresponding number of hours worked at each hourly rate must also be included.
- Deductions. All deductions must be separately itemized on an employee’s pay stub. We’ll take a closer look at common deductions later.
- Net Pay. An employee’s net pay is the employee’s gross pay, minus all applicable deductions. In essence, it is the amount of the employee’s take-home pay.
- Applicable hourly rates. Employers must set forth all applicable hourly rates in effect during the pay period and corresponding number of hours worked at each hourly rate by the employee, including overtime rate.
- Personal Information. The pay stub must contain certain information personally identifying the employee, including the name of the employee and the last four digits of his or her social security number. If the employee does not have a social security number, the pay stub must include the last four digits of the employee’s other identification number.
- Employer’s Information. The employer’s name and address must be listed on the pay stub. If the employer is a farm labor contractor, the wage statement must also provide the name and address of the legal entity that secured the services of the employer.
Requirements for Employees Who Perform Piece Rate work
Some employees are paid by the job, by the task, or by the number of pieces they work on or produce. These types of workers are called piece-rate employees. When employees are paid on a piece rate basis, the pay stub must separately include the following information:
(1) The number of piece-rate units earned;
(2) The applicable piece rate.
(3) Piece-rate employees are also entitled to a separate accounting of their pay for time spent doing things unrelated to their primary production duties. This includes rest periods (which must be based upon the average hourly rate for the week in question) and nonproductive time spent other than performing the piece-rate work for which they are otherwise compensated.
(Note that for employees who are paid by piece rate, for rest period pay, employers must pay each rest period at the average rate of pay for the week in question (not pay period) after taking into account all wages earned.
Paystubs Must Set Forth Paid Sick Leave and Covid Leave Totals
Employers must show on a pay stub—or a document issued the same day as a paycheck—how many days of California (or other specific municipality required) paid sick leave an employee has available. Additionally, if applicable, where an employee is entitled to paid Covid Sick leave, the pay stub must provide the amount taken and remaining available leave. Click here for our recent post regarding California’s Covid Sick Leave requirement.
Employers are advised to review their paystubs and consult with experienced employment counsel to ensure that their paystubs are in compliance with California law. If you have any questions regarding your company’s paystubs or general questions about your pay stub obligations, contact our employment attorney Scott Liner at [email protected] or call 310.545.7700.