In this day of automatic deposits, payroll companies, and computerized timekeeping programs, it can sometimes be difficult to remember the importance the law places on providing your employees with paystubs with every paycheck. However, a simple oversight like failing to provide paystubs to each employee can cost your company huge amounts of money. Don’t give your employees or a sharp employee-side attorney leverage over your business- make sure your paystubs are compliant and get them to your employees each and every time they are paid!
A proper paystub must provide: 1) the employee’s gross wages earned; 2) the total hours worked by the employee (unless the employee is a salaried employee properly exempted from overtime provisions, but be careful on this- when in doubt, provide the information); 3) the number of piece-rate units earned and any applicable piece rate (if the employee is paid on a piece-rate basis; 4) all valid deductions taken from an employee’s paycheck, based on the written authorization of the employee (just because an employee wants something taken out of their paycheck does not necessarily mean it is permitted by law); 5) the employee’s net wages earned; 6) the inclusive dates for which the employee is paid (the applicable pay period); 7) the name of the employee and ONLY the last four digits of his or her social security number or employee identification number; 8) the full name and address of the legal entity that is the employer (with additional requirements for certain farm labor contractors); and 9) all applicable hourly rates during the pay period, along with the number of hours of work allocated to each hourly rate. There are some additional requirements for temporary services employers. Employers are required to maintain this information for no less than 3 years.
Failure to provide all of the necessary information can result in penalties, with minimum penalties of $50 per employee for the first non-compliant paystub and $100 per employee for each subsequent paystub, up to a maximum of $4,000 per employee. Importantly, a complaining employee is also entitled to his or her attorney’s fees and costs. In addition, because employers are required by law to provide paystubs and the information underlying them upon request by an employee, former employee, or the employee’s representative, paystub violations are an easy way for employee attorneys to extract easy money from employers who do not pay attention to detail.
$50 or $100 may not seem like a huge deal, but if you have 10 employees who have received improper paystubs for three years, with 24 to 26 paydays per year, the numbers can add up quickly. And once a good employment attorney gets a foot in the door to easy damages and attorney’s fees, they can cause a lot of additional damage. Do not give them the opportunity. Do not trust that your payroll company is doing everything correctly. Verify that your paystubs contain all the necessary information required by law and make sure they are delivered on time to each employee, every time. If you have any questions, ask us. There are plenty of complicated employment laws for you to follow in California, so do not allow one of the simple ones to trip you up.