The California Labor Code is very specific regarding the information to be included on an employee's pay stub or wage statement.
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Wage and Hour Update:
Employer Beats Hypertechnical Wage Statement
Class Action
By Christopher W. Olmsted
The California Labor Code is very specific about what information must be included on an employee’s wage statement (paystub). Employee-side attorneys often sue employers over technical violations. For example, an employer is required to list the “total hours worked” during the pay period—but is it sufficient to list the total regular hours and the total overtime hours, or must the employer also list the total combined hours? Such issues are grist for the employment law litigation mill. A California court recently addressed this issue in a case titled Morgan v. United Retail.
Lawyers Seek A Payday Off Of Employee Paystubs
Mr. Morgan was employed by United Retail as a non-exempt co-manager from about October to November 2005. During this time, United Retail issued to each non-exempt California employee a weekly itemized wage statement that included information regarding the employee’s hours worked, wages earned, rates of pay, deductions from pay, and other similar topics.
For employees who did not work any overtime hours during the pay period, their wage statements listed the total regular hours worked by the employee, which equaled the total number of hours worked.
For employees who worked overtime hours during the pay period, their wage statements separately listed the total regular hours worked and the total overtime hours worked by the employee. However, the statements did not add the regular and overtime hours together and list the sum of those hours in a separate line.
Morgan filed a class action complaint against United Retail for violation of various wage and hour laws, including a statutory claim for violation of section 226. Morgan alleged that United Retail’s wage statements failed to comply with the requirements of section 226 because the statements showed regular hours and overtime hours worked, but did not add the two together to show the total hours worked by the employee.
The trial court rejected the claim, granting a motion for summary judgment in favor of the employer. The trial court concluded that all hours worked were reflected on the wage statement, and that the employer was not required to add up regular and overtime hours because the total hours worked was obvious to any employee.
The employees appealed.
California Wage Statement Requirements
California Labor Code Section 226(a) sets forth the specific information that must be included in the wage statements:
“Every employer shall, semimonthly or at the time of each payment of wages, furnish each of his or her employees, either as a detachable part of the check, draft, or voucher paying the employee's wages, or separately when wages are paid by personal check or cash, an accurate itemized statement in writing showing
(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
(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
(8) the name and address of the legal entity that is 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.
Appellate Court Approves of Wage Statement
The appellate court determined that United Retail’s wage statements met the statutory requirement by listing the precise, actual number of hours worked by the employee at each hourly rate of pay in effect during the pay period.
“The wage statements did not leave it to the employee to add up the daily hours shown on the time cards or other records to determine the total hours worked,” noted the court. “The wage statements accurately listed the total number of regular hours and the total number of overtime hours worked by the employee during the pay period, and that the employee could determine the sum of all hours worked without referring to time records or other documents. The employee could simply add together the total regular hours figure and the total overtime hours figure shown on the wage statement to arrive at the sum of hours worked. There is nothing in the plain language of section 226 to support Morgan’s argument that wage statements which accurately list the total regular hours and overtime hours worked during the pay period must also contain a separate category with the sum of those two figures.”
Practical Tips:
Although this court ruled that the employer need not list the sum total of regular and overtime hours, it is not a bad idea to include the information anyway. That way there is no room for confusion.
This case should prompt employers to take a look at their employee wage stubs. Employers should confirm they are in compliance with each of the nine requirements listed above.
Related Article:
Wage & Hour Update Appellate Court Rules No Punitive Damages For California Wage & Hour Violations
Download entire August 2010 Legal Update in PDF format.
This article is intended as a brief overview of the law and are not intended to substitute as legal advice. Any questions or concerns regarding any statute or case law should be addressed to a licensed attorney. Copyright © 2010 by Barker Olmsted & Barnier, APLC. San Diego, California. All rights reserved.
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