Under California Labor Code section 226(a), employers are required to provide semi-monthly or at the time of each payment of wages, an itemized statement in writing showing:
- gross wages earned,
- total hours worked by the employee, except as provided in subdivision (j),
- the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis,
- all deductions, provided that all deductions made on written orders of the employee may be aggregated and shown as one item,
- net wages earned,
- the inclusive dates of the period for which the employee is paid,
- the name of the employee and only the last four digits of his or her social security number or an employee identification number other than a social security number,
- the name and address of the legal entity that is the employer,
- all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee and, if the employer is a temporary services employer the rate of pay and the total hours worked for each temporary services assignment.
In Blair v. Dole Food Co., a California Court of Appeal recently addressed a complaint brought by an exempt, salaried employee who alleged that her former employer, Dole Food Co., was in violation by: 1) failing properly to identify employees on their wage statements, and 2) failing to identify an accurate hourly pay rate for exempt employees when those employees were paid accrued vacation wages.
With respect to the first issue, the plaintiff claimed that Dole violated section 226, subdivision (a)(7) by failing to include on its wage statements the last four digits of each employee's social security number or an employee identification number other than the employee's social security number. The wage statements at issue were prepared by Dole’s outside payroll service, and included a unique personal identification number assigned to each of Dole's employees by the payroll service. The Court determined that because there was at least one unique employee/personal ID number assigned to each Dole employee, Dole met its obligations under section 226(a)(7), as long as the number chosen consistently appeared on the employee's wage statement.
The second issue determined by the Court pertained to the employee’s claim that section 226(a) required Dole to state the hourly rate of vacation pay on the wage statements of exempt employees when vacation wages were paid out. The Court noted that section 226 requires wage statement to contain total hours worked, except for any employee whose compensation is solely based on a salary and who is exempt from payment of overtime. As an exempt salaried employee, the plaintiff’s pay stubs listed her gross earnings at her salary rate of $2,500 and stated she worked 80 hours per pay period, even though she was a non-hourly employee.
The Court first noted that section 226(a)(2), expressly relieves employers of the obligation to itemize the number of number of hours worked by exempt employees on a wage statement. Accordingly, if the number of hours worked need not be itemized on an exempt employee's wage statement, the Court found that there is no "applicable hourly rate" for an employer to furnish. Therefore, the Court held that section 226 does not require an employer to identify an hourly rate of vacation and/or paid time off on wage statements for exempt employees when vacation wages are paid. As such, the Court upheld summary judgment on these two issues in favor of the employer.
Although this Court of Appeal decision was not authorized for official publication, and therefore, cannot be cited as binding authority, it does illustrate a common-sense application of the requirements of Labor Code section 226, and is a reminder to employers that section 226 is an active source of employee claims. Employers should also remember that they have the additional obligation to indicate employees’ accrued unused paid sick leave balances on or with their pay stubs. As such, employer should ensure that their paystubs / wage statements comply with all of section 226’s requirements.