©2023 Seyfarth Shaw LLP www.seyfarth.com 2023 Cal-Peculiarities | 373 16.3.3 The “injury” requirement Often meaningless requirement of “injury.” Wage-statement violations can result in employer liability in the amount of actual damages or a penalty of $50 per employee for the initial pay period in which a violation occurs and $100 per employee for each further pay period in which a violation occurs, up to a maximum of $4,000, plus costs and attorney fees.30 These penalties accrue only if the employee has suffered an “injury” as a result of the employer’s knowing and intentional failure to comply with the wage statement statute.31 The “injury” requirement once meant that trivial imperfections did not create monetary employer liability. One Court of Appeal decision concluded that deprivation of information on a wage statement “standing alone is not a cognizable injury.”32 An employee had alleged that his wage statements failed to include the total hours worked, the net wages earned, and all applicable hourly rates of pay.33 Although the employee claimed that absence of this information on his wage statement “caused confusion and possible underpayment of wages due” and resulted in a “mathematical injury” requiring reconstruction of time and pay records, the Court concluded that the absence of information, standing alone, was not a cognizable injury, as it did not result in the type of injury that required “computations to analyze whether the wages paid in fact compensated [the employee] for all hours worked.”34 But then the California Legislature broadened the definition of what constitutes a wage-statement injury. The Labor Code now deems an injury to occur if the employer (a) fails to provide a wage statement or (b) fails to provide accurate and complete information and the employee cannot “promptly and easily” determine, from the wage statement alone, items such as (1) gross wages earned during the pay period, (2) total hours worked, except for employees who are exempt from the payment of overtime under the administrative, professional, or executive exemptions, (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 deductions, (5) net wages earned during the pay period, (6) the inclusive dates of the pay period, (7) the employee’s name and the last four digits (only) of the employee’s social security number or the employee’s identification number, (8) the employer’s name and address, (9) the hourly rates and corresponding hours worked at each rate (and, if the employer is a temporary services employer, the rate of pay and the total hours worked for each temporary services assignment).35 The Legislature clarified that a “knowing and intentional failure” does not include an isolated and unintentional payroll error due to a clerical or inadvertent mistake.36 16.3.4 Hypertechnical violations are still violations Substantial compliance with wage-itemization requirements is not necessarily a defense. The Court of Appeal has quoted with approval a DLSE opinion that “failure to list the precise number of hours worked during the pay period conflicts with the express language of the statute and stands in the way of the statutory purpose.” “If it is left to the employee to add up the daily hours shown on the time cards or other records so that the employee must perform arithmetical computations to determine the total hours worked during the pay period, the requirements of Section 226 would not be met.”37 The numerous picayune wage-statement requirements have created lucrative paydays for opportunistic plaintiffs’ counsel eager to play “gotcha” at an employer’s expense. Among the alleged hyper-technical violations causing employers to spend heavily to defend themselves—and sometimes causing them to incur huge penalties—are: Neglecting to total all hours worked, even though the wage statement lists all the various types of hours individually. Accidentally showing net wages as “zero” where an employee is paid by direct deposit. Omitting either the start or end date of the regular pay period.
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