New “Cure Window” Opens for Some California Paystub Violations
Here’s (a little) respite for California employers: A 33 day “cure period” that will allow you a window of time to correct some of the most common wage statement / paystub violations. This is new training for all California practices, regardless of your number of employees.
Issuing all employees with a detailed wage statement or paystub along with every paycheck has long been a requirement in California. As you probably know, all of the following is mandated information within these statements:
- The employee’s name, along with (only) the last four digits of their social security or another employee ID number
- The employee’s gross wages
- The employee’s total hours worked (nonexempt employees)
- The employee’s hourly rate of pay. If more than one, then all hourly rates that applied and how many hours were worked at each rate.
- If paid on a piece-rate basis, the number of piece-rate units earned and applicable rate
- Any and all deductions from pay
- Net wages earned by the employee
- The correct dates of the pay period
- The employer’s legal name and address
- The up-to-date amount of paid sick leave they have available (the most recent requirement)
There are a few other stipulations for certain types of employers, but for most healthcare practices, that’s it, and that’s plenty.
Here’s the problem: It’s easy to make wage statement errors without even knowing you are making them, and failing to provide accurate information exposes an employer to penalties of up to $4,000 per employee. And that isn’t even counting the extra penalties you may have to face because of PAGA, California’s Labor Code Private Attorneys General Act. Whereas paystub violations would otherwise usually be investigated by the Labor and Workforce Development Agency (LWDA), PAGA actually empowered employees to sue you directly for penalties. Worse, such a suit is a “representative action,” meaning that if there are indeed errors that affect multiple employees, employers wind up liable for as much as $200 per employee, every pay period…PLUS attorneys’ fees.
As you can imagine, PAGA made California employers into big juicy legal targets over every single tiny paystub error—even errors that don’t injure employees in the slightest, like if you are accidentally using your DBA on paystubs instead of the legal name of the employing entity, or forgot to fix your address zip code when you moved the practice six months ago. This practically invites frivolous lawsuits from both employees and plaintiff’s attorneys, and has flooded the courts with many claims whose only basis was a tiny technical error.
At this stage, many practice owners have come to think of PAGA as a four-letter word. So where’s the respite I promised you in the title of this article?
Race for the PAGA cure
As of October, 2015, legislation has been passed that will provide California employers with a 33-day “cure” period for two of the most common paystub violations: inaccuracies in the employer’s name and address, and the inclusive dates of the pay period. Assembly Bill 1506 gives employers a 33-day window, starting from the date a PAGA letter is postmarked, to cure name and address violations.
What counts as a cure? In addition to fixing the error, you must be able to prove that you have provided itemized wage statements containing all required and correct information for every pay period, going back three years. You must then advise the employee (or their representative) and the LWDA that the violation has been corrected, and provide details of the actions you took to fix the problem. All of this must be completed within the 33-day window, and if it isn’t, employees may proceed to take you merrily to court.
And, by the way, like all miracle cures, the magic doesn’t work twice. Within a 12-month period, you can only take advantage of ONE cure opportunity per violation that you’ve been notified of. Because of this limitation, if you are made aware of any inaccuracies, make sure to correct them for all employees at once, both current and former.
Not a cure-all, but a cure-some
For any remaining violations you might accidentally commit, I’m sorry to say, the disease remains chronic—or, expensive, at any rate. So even if you’re pretty sure everything’s accurate, I suggest you take this opportunity to review your paystubs and ensure that you’re including all required information correctly.
Have a question? Start with your payroll company, accountant, or CPA—whoever runs your payroll should already have performed this checkup. But keep in mind, they are not typically going to realize if you moved and your address is now different. Call them ASAP and ask them to help you through the audit. If you need to self-report, that should be included in your fees.
Members of CEDR’s Solution Center already know you can contact us for more help. Not a member? Click here to learn more about what we do and why CEDR members are always informed. And if you’re a healthcare practice owner or manager and have more questions about your many, many responsibilities as a California employer, give us a call at 866-414-6056 or email firstname.lastname@example.org.
AB-1506 and the cure window it opens up doesn’t drastically change the legal environment you have to work within, and it doesn’t make your lives suddenly easy and worry-free. And I can’t help thinking that it would be nice if employers had the chance to fix other often-unintentional errors or violations, on paystubs or elsewhere, before penalties could be assessed! But for once at least CA legislators have taken a small step in the right direction—so I guess that counts as progress for today.
Friendly Disclaimer: This information is general in nature, and is not intended to replace good counsel about a specific issue with either your attorney or your favorite HR expert.