In House - The FindLaw Corporate Counsel Blog

Pay Stub Compliance in the Digital Age for California Businesses

For in-house counsel, playing the devil's advocate is definitely not a game.

With apologies to Keanu Reeves, it's not even a movie. And you definitely don't have to like him.

But the devil's advocate can help you avoid pitfalls that will drag your company through hell. We're talking about that no-good plaintiffs' counsel who wants to sue for wage violations hidden in pay stubs.

Paychecks

When you think like the opposition, it helps you see the problems in your own position. In the digital age when many employees are paid electronically, a digital paycheck could become a problem.

California, for example, has Labor Code Section 226(a). It requires employers to list specific items on pay stubs, along with the Healthy Workplace Healthy Family Act paid-sick-leave accruals.

Christopher Ahearn, an attorney with Fisher Phillips in Irvine, says the state's Industrial Relations Division of Labor Standards Enforcement offers guidelines for paperless payments. The guidelines are not binding, he says, but they lay out factors a judge or jury could consider in deciding a wage case.

He said most wage-and-hour class actions include a claim for pay statement errors, which can add significant penalties for employers even if the actual wage claim is low.

Pay Stubs

Commenting for SHRM, Ahearn gave tips about how employers can protect against pay stub problems.

  • Give employees unrestricted access to their wage statements
  • Offer the option of having statements delivered in a paper format,
  • Implement security measures to protect employee information

The labor code says employers must retain wage records for three years, but Ahearn recommends keeping them four years because the statute of limitations on wage claims is four years. Also, the records should be saved in their original format.

"Care needs to be taken when providing copies of wage documents to ensure that the copies are exact duplicates of what the employee actually received during the pay period," he said.

That's because a good, no-good plaintiff's attorney could use inconsistent records against you.

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