• Justin Hein

Common California Paycheck Stub Errors

Failure to comply can lead to significant per-pay-period penalties. Even the slightest mistake or omission could create thousands of dollars in liability.

Errors on paychecks and paycheck stubs are going to happen. For many U.S. employers, it is a cost that they pass on to their employees, believing those errors will not be caught and they will not be forced to correct. Moreover, in the present age of direct deposit, small errors become more of a hassle than they are worth to attempt to get an employer to redress it.

However, California is not like every state. And they have made a conscious decision to ensure that employers cannot pass the buck to their workers. In fact, the requirements for California paychecks and paycheck stubs are hyper-specific and can be the catalyst for a class action or Private Attorney General Act (PAGA) claim.

What Must Be Listed?

California Labor Code, section 226(a) outlines nine specific items that must be included on a pay statement:

  1. Gross wages earned.

  2. The total hours worked by the employee (unless the employee is exempt from overtime).

  3. The number of piece-rate units earned, if applicable.

  4. All deductions made from wages.

  5. Net wages earned.

  6. The pay period beginning and end dates.

  7. The employee's name and only the last four digits of his or her Social Security number (or an employee identification number other than a Social Security number).

  8. The name and address of the legal entity that is the employer.

  9. All applicable hourly rates in effect during the pay period and the corresponding number of hours the employee worked at each hourly rate.

In addition, the California Healthy Workplace Healthy Family Act adds an additional required element:

10. How many days of sick leave an employee has available

Please note - Employers that offer paid time off (PTO) in lieu of paid sick leave must list the amount of accrued PTO on each paycheck stub under California Labor Code Section 246(i). Vacation time, however, in of itself is not required until termination. (See Soto v. Motel 6 Operating LP (2016) 4 Cal.App.5th 385.)

What are the Most Common Mistakes?

The most frequent paycheck stub mistakes include:

  • Neglecting to list the total hours worked in the pay period.

  • Leaving off the start or end date of the pay period.

  • Not having the employer's complete legal name listed (or listing something other than the employer's legal name, such as the name under which it does business).

  • Failing to include the employer's address on the pay stub.

  • Not keeping a copy of the pay stub.

  • Listing overtime compensation, commissions or bonuses in a confusing way that may not fit into the standard payroll template.

  • Not having a place on the wage statement for items like double time and any premiums that an employee was paid for a missed meal or rest period.

  • Assuming a "one-size-fits-all" approach to payroll as a nationwide company.

  • Assuming a third-party payroll service provider will issue California compliant paycheck stubs.

  • Failing to conduct regular audits of payroll and paycheck stub information (i.e. at least once every 3 years).

What Should Employees Always Check?

Notwithstanding the law providing employees with this added protection in California, employees therein should still be mindful of their paychecks and paycheck stubs. Even though discovered errors do give them the right to bring a claim against their employer, errors on paychecks do have more immediate collateral impacts. This could be in errors in tax withholding, child support withholding, maximum/minimum contributions to retirement or flexible health or spending plans, or qualifying for other employment entitlements.

So, here are the questions employees should be answering every time they receive a paycheck and paycheck stub:

  • Were there changes in gross or net pay since the last pay period?

  • Were your wages recorded correctly? (e.g. for hourly workers, were you paid for all hours worked, and for salaried employees, was your salary was recorded correctly for the pay period?)

  • Were taxes withheld, both federal and state?

  • Are your 401(k) (or other retirement account) contributions correct?

  • Are other benefits, such as healthcare, life insurance, disability or commuter benefits being withheld correctly?

Doing this simple, 1-2 minute check each pay day can help save a multi-hour, day, week, or month ordeal down the road.

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