If you are a California Employer you should have a keen understanding of Labor Code Section 226 and what it requires to be included on your paystubs.
California law requires 9 specific items to be included on every paystub for every employee for every pay period- no exceptions.
The items are:
- gross wages earned (before any deductions)
- total hours worked by the employees- unless the employee is a salaried employee exempt from overtime
- if the employee is paid on a piece-rate basis, then the number of piece-rate units earned and the piece-rate
- all deductions taken such taxes, healthcare, etc.
- net wages earned (after all deductions)
- the inclusive dates of the period for which the employee is paid
- the name of employee and last four digits of the employees social security number or employee identification number
- the name and address of the legal entity that is the employer
- the applicable hourly rates in effect during that pay period and the corresponding number of hours worked at each hourly rate. Think 40 hours rate and then overtime rate hours and maybe even double time hours
Copies of the above need to be printed in ink or other indelible form, properly dated, showing month, year and a copy of the statement or record should be kept for 3 years at the place of employment or at a central location within the State of California.
Oops! What if you have not been complying with this Labor Code Section? Unfortunately, failure to comply with each and every requirement of this Labor Code Section 226 is a misdemeanor. The Employer is liable for $50 for the first violation, and $100 per pay period for each violation thereafter up to a total of $4,000. While on an individual claim it may not seem to be a steep fine, if you made the same mistake on all 50 employees’ stubs for a number of pay periods you may have a liability of up to $4,000 per employee!!
This is one of the many reasons that processing your own payroll and can be tricky. Outsourced services help protect the employer from violations such as this.