One thing is for certain, the government (democrat or republican) will continue to add and change laws important to business owners. Here is just one more about your paycheck stubs and what information is required to be there.  The summary below, was provided by my ProVisors colleague, Katherine A. Hren, a partner with BRG&S, LLP.

My Insperity client’s have nothing to worry about since we’ll ensure you are completely compliant with the new law.

One of the many new bills signed by the Governor last month affords employers a short window of time to correct two common pay stub violations without incurring liability. The new law was passed as “urgency legislation,” which means it went into effect immediately.

What is the Existing Law?
Existing law requires every employer to provide employees with wage statements (pay stubs) containing nine specifically-enumerated items (listed below). If an employer fails to provide a compliant pay stub that has all of the required items, the California Private Attorneys General Act (“PAGA”) gives the employee the right to sue the employer and collect penalties on behalf of all affected present and former employees. That suit can collect penalties for alleged violations going back three years, even if the violation was entirely unintentional.

Procedurally, before commencing suit, an employee (or more typically the employee’s lawyer) must send a letter to the California Labor & Workforce Development Agency (“LWDA”) (with a copy to the employer) letting the state know of the alleged violation(s) and affording the state thirty-three (33) days to decide if it wishes to prosecute the alleged violation. If the LWDA fails to act within that timeframe, which is the case most of the time, then the employee or her lawyer may file a civil lawsuit on behalf of the state, sharing the penalty monies collected with the state.

How Will the Law Change?
Two of the nine items which must be on every pay stub are: (i) the inclusive dates of the pay period (not just the ending date); and (ii) the legal name and address of the employing entity. If either of these are the focus of the LWDA letter, then the new law will enable the employer to fix the violation and cut off the employee’s right to sue. Unfortunately, these are the only two violations that the new law enables the employer to fix without penalty.

Employers have to act quickly, as the new law gives them just 33 days from the employer’s receipt of a copy of the LWDA letter to take corrective action. The 33-day period begins on the day the employer receives a copy of the employee’s letter to the state describing the alleged violations.

Curing the Violation
However, “curing” the violation means more than just fixing the problem so it won’t happen again in the future. In addition, the employer also must go back and issue corrected pay stubs to every current and former employee who received a non-compliant pay stub during the preceding three-year period.  Notably, employers may only avail themselves of this cure provision once in a 12-month period.

Once the violation has been duly corrected, the employer must also send a certified letter to LWDA and the aggrieved employee on whose behalf the original LWDA letter was written advising that the violation has been cured and how.

What This Means for You?
Employers are well advised to review the pay stubs employees are given to insure compliance with the nine required items listed below. This is best done before there is a compliance deadline.

(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 (if applicable) 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 (start and end date);

(7) the name of the employee and only the last four digits of his or her social security number (or you may use an employee identification number other than a social security number);

(8) the name and address of the legal entity that is the employer and, if the employer is a farm labor contractor, as defined in Labor Code § 1682(b), the name and address of the legal entity that secured the services of 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 (if the employer is a temporary services employer as defined in Labor Code §201.3, the rate of pay and the total hours worked for each temporary services assignment).

If the wage statements are not in compliance, they should be corrected immediately.  Additionally, if you receive a copy of a letter to the LWDA setting forth alleged violations, it is critical to act quickly if you wish to take advantage of the cure period.