Protecting from Your Business – California Paystub Violations

Posted on September 23, 2020

Frequent Pay Stub Mistakes That Cost Your Business California labor code 226(1) is there for a reason. While the policies mean that businesses need to be vigilant about compliance, they were developed to provide absolute transparency. In the end, the wage statement provisions help your company and your employee stay on the same page and have all of the pertinent information necessary.

For HR professionals, wage statement errors can be costly and result in class action suits. Not an ideal situation. So it’s imperative that you understand the code and that you adhere to it.

What is California Labor Code 226(1)?

To avoid making wage statement errors, you need to be perfectly clear on what needs to be included according to the labor code. Not only that, but you also need to maintain compliance, even if you have gone to a paperless, direct deposit system. One common mistake many companies make is that they don’t make the pay stub information easy for employees to access when they opt for direct deposit. An easy way to avoid this error is by delivering paper copies of the pay stub to each employee or making them digitally available and available to print free at work.

The items that all pay stubs must include:

1. The gross wages the employee earned.
2. The new wages the employee earned that pay cycle.
3. The total hours worked during that pay cycle (unless the employee is exempt from overtime or is a salaried employee).
4. All wage deductions.
5. The beginning and end dates of that payment cycle.
6. The employee’s identification, including name and last four digits of Social Security or employee identification number.
7. In certain types of employment, the number of piece rate units earned during that pay cycle.
8. Company name and contact information.
9. All hourly rates during pay cycle listed in an understandable way. For example, an employee might have 40 hours of straight time and 10 hours of overtime. Those pay rates should be listed with the exact hours.
10. A record of remaining sick days or the paid time off the employee has for the current year.

Avoiding Pay Stub Errors

As mentioned above, not making the pay stub available in paper form is one of the more common errors that companies make today. Other errors might include leaving off any of the pertinent information and poor record keeping, such as not keeping a record of each pay stub internally. Your employees are entitled to printed copies of their pay stub at any time, and it’s mandatory to keep records for a minimum of three years.

Companies should audit their process at least once a year to make sure that they have adhered to every part of the code. You might also consider hiring this process out to an experienced payroll company to make sure that all of your record keeping is in compliance.