Law Review: Itemize employee wage statements properly or pay penalties
Let’s jump right into the law. Labor Code section 226 requires an employer to furnish to its employee “an accurate itemized statement in writing” showing, among other things, “all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee …” Exactly what that means is the question answered in General Atomics v. The Superior Court of San Diego County, Tracy Green.
EMPLOYEE VS. EMPLOYER
Tracy Green sued her employer, General Atomics, based on its alleged failure to provide accurate, itemized wage statements in compliance with Labor Code 226. She maintained that General Atomics failed to identify the correct rate of pay for overtime wages because her wage statement showed “0.5 times the regular rate of pay rather than 1.5.” In other words, the correct rate was 1.5 times the regular rate of pay, while General Atomics’ wage statements showed only 0.5 times the regular rate.
The trial court ruled for Tracy – General Atomics appealed knowing the ruling in her case would also apply to its other employees.
EMPLOYEE WAGE STATEMENTS
Again, the question in this San Diego case was whether the wage statements comply with Labor Code 226. Tracy Green argued the statements should calculate the hours at straight time at the basic rate, then the overtime hours should be reflected at the 1.5 times rate. Atomics’ wage statement itemized straight time hours including the overtime hours times the basic rate, then the overtime hours at .5 times the basic rate. In the end the total pay was the same under both calculations.
The Court of Appeal ruled for General Atomics concluding that its wage statements complied with Section 226, suggesting either calculation, General Atomics’ or Tracy Green’s version, meet the requirements of the code.
The basis for the ruling was the literal reading of Section 226, plus the purpose of the code was to ensure an employer documents the basis of the employee’s compensation payments so the employee knows whether he/she has been compensated properly.
The Court of Appeal, and I agree, concluded General Atomics’ wage statements clearly showed Tracy Green how her overtime was compensated.
We all benefit with wage statements that comply with the law, thus this fascinating and riveting column.
Jim Porter is an attorney with Porter Simon licensed in California and Nevada, with offices in Truckee and Tahoe City, California, and Reno, Nevada. Jim’s practice areas include: real estate, development, construction, business, HOAs, contracts, personal injury, accidents, mediation and other transactional matters. He may be reached at firstname.lastname@example.org or http://www.portersimon.com
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