Accurate Paychecks Could Have Saved $6 Million

The California Labor Commissioner cited Pacific Health Corporation (PHC), a hospital chain, $524,300 for late payment of wages.  As it turned out, PHC didn't have enough money to pay the checks it issued.  Now that's a hefty fee for late payment of wages.  But that was minimal compared to the citation for the failure to comply with Labor Code section 226.  

The Labor Commissioner cited PHC $6,537,000 for issuing incomplete wage statements in violation of Labor Code section 226. 

So what does the law require?  Paycheck stubs should include gross wages, total hours worked, the number of piece-rate units earned, deductions, net wages, dates covered by the paycheck, the name and partial social of the employee, the name and address of the legal employer, and all applicable hourly rates. 

I have not heard of too many cases where the Labor Commissioner steps in and issues a citation to an employer on a violation of section 226.  However, employees can sue for a violation of Labor Code section 226.  An employee who is injured as a result of a knowing and intentional failure to comply with the law is entitled to recover actual damages, or a violation of $100 per employee per pay period up to $4,000 plus legal fees. 

The law requires that the employee suffer an actual injury as the result of an incomplete wage statement.  (Villacres v. ABM Industries (9th Cir. 2010) 348 Fed.Appx. 626.)  However, injury could consist of nothing more than an employee's difficulty in calculating overtime hours or other wages owed to him/her.  (Yadira v. Fernandez (9th Cir.) 2011 WL 2434043.) 

It is the best policy, and least expensive practice, to review section 226 and make sure your company's wage statements include all of the information requested.  You may not be cited for $6 million.  But you could lose a few dollars and expend a substantial amount in attorneys' fees.