What You Need to Know About California Labor Code 226
Under California Labor Code 226, an employer is required to provide a written wage statement to their employees, either as a detachable piece of the check, draft, or voucher for paying their wages. Here’s everything you need to know about California Labor Code 226: essential elements of a wage statement.
Elements to Include in a Wage Statement
California Labor Code 226 requires employers to provide each of their employees with a wage statement each time they are paid. Wage statements are itemized lists that include the total wages the employee has earned, their total hours worked, and their number of piece-rate units earned, which is defined as the work paid based on the number of units an employee produces. If the employee is paid on a piece-rate basis, the piece-rate should be listed as well. An example of a piece-rate employee is someone in the medical field who works on a per-patient basis.
Furthermore, all deductions made on written orders of the employee are to be included. Any deductions from payment of wages need to be recorded in ink, or some other permanent form of writing, dated in a month/date/year format, and paired with a copy of the wage statement and a record of deductions. These documents will either be held by the employer for at least three years or held at some centralized location in California.
Also found in the wage statement are the employee’s net wages earned, a record of the period of time/dates that the employee has been paid, and other identifying information regarding the employee (name, last 4 digits of their social security number, or some other form of identification). The name and address of the employer, with specification if the employer is a farm labor contractor, should be included in the wage statement. The name and address of the legal entity responsible for the services of the employer will be included as well. All of the hourly rates offered during the payment period, including those for temporary service assignments, should be provided along with the corresponding number of hours each employee worked per hourly rate.
Wage Statement Requirements for Piece-Rate Employees
Effective January 1, 2016, California Labor Code 226, Section 2 requires employers to pay their piece-rate employees during rest and recovery periods or any other nonproductive time, separate from their piece-rate compensation. Employers are not allowed to consider compensation for rest and recovery periods as a part of their employee’s piece-rate compensation; both rates must be separate. However, it is important to note that this rate of compensation will be higher than minimum wage and employee’s average hourly rate, which is determined by dividing the total compensation available for the workweek, not including any rest and recovery days, by the total number of hours that the employee worked during that week.
It is also important to note that although an employee’s hourly rate of compensation for rest and recovery days is separate from their piece-rate compensation averaged over the workweek, both of these hourly rates must be the same. Ultimately, the employee’s compensation for rest and recovery periods must reflect the piece-rate hourly rate they have earned during the workweek.
In wage statements for piece-rate employees, employers are responsible for recording the total number of hours paid for rest and recovery or nonproductive time periods, the rate of compensation during these periods, and the total gross wages before deductions and taxes.
Wage Statement Requirements for Paid Sick Leave
Labor Code Section 246(h) makes it mandatory for employers to inform their employees of the paid sick leave they have every pay period. Employers have the option of providing this balance on a wage statement or on a separate document at the time the employee is paid. If employers offer paid sick leave through their paid time-off (PTO) policy, a PTO balance must be provided. A PTO balance outlines all of the sick leave, vacation, or personal days an employee has taken, for their reference. If an employer offers unlimited paid sick leave, they can indicate this on the wage statement by writing “unlimited.”
Related: Sick Leave Laws in California: What You Need to Know
Are there any measures in place for employers to ensure the accuracy of the wage statements that they write?
From a procedural standpoint, employers should provide a physical copy of their pay stub even if electronic means of payment are used. It is required for employers to include all necessary components in each wage statement. It is their responsibility to review these statements for accuracy and completion. If an employer fails to do so, California law imposes penalties. For example, per Labor Code 226.3, failure to give an employee a wage statement can result in the employer being fined a $250 fine for the first offense and $1000 per employee for any further violations. If an employer provides an inaccurate wage statement, they can face up to a $4000 fine per employee.
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