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MARCH 2005
DETAILED WAGE STATEMENT REQUIRED TO AVOID PENALTIES
In this climate of“sue your boss”, employees are using every opportunity to find a claim to file against their
employers. A popular claim is violation of Labor Code §226 for failure to provide a complete statement of wages
at the time that wages are paid - i.e. a proper paycheck stub.
At the time wages are paid, employers must provide each employee an itemized statement , in writing, that contains
the following information:
Gross wages earned;
Total hours worked (except salaried exempt employees);
Piece rate units and rate if applicable;
All deductions, including taxes, disability insurance, and health and welfare payments
(deductions ordered by the employee may be aggregated and shown as one item);
Net wages earned;
The inclusive dates of the pay period;
Name of the employee and Social Security number (SSN), except that, by January 1, 2008,
all employees will be required to print no more than the last 4 digits of and employee’s
Social Security number on check stubs or similar documents, or to substitute some other
identifying number;
Name and address of the employer (legal entity);
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
Piece rate units and applicable piece rate, if the employee is paid on a piece rate basis.
Any failure to provide this information entitles each employee to recover all actual damages or up to $50.00 for
the initial pay period in which a violation occurs and $100.00 per employee per pay period for each violation in
a subsequent pay period, up to a total of $4,000.00, plus cost and reasonable attorney’s fees. The attorneys fees
and costs usually far exceed the amount of the “actual damages” or the $4,000.00 cap.
If an employer does not provide the required wage statements to the employee in writing, or fails to keep records
on the above wage information for the required three years, employers can be held liable and subject to civil
penalties of $250.00 per employee per violation for the first violation and $1,000.00 per employee for each
subsequent violation.
If a clerical error is made or an inadvertent mistake is made on an employee’s pay stub, the Labor Commissioner
has discretionary power not to penalize the employer - but only for one instance of an error - any subsequent
“errors” will be difficult to establish as inadvertent.
If Cash is paid for wages earned, employer must keep an indelible record of these payments for at least three years.
Also, remember that employers must make all payroll records and supporting documentation available for
inspection and copying by the employee within 21 days of a request. Failure to meet the request within the time
required will result in a $750.00 fine for which there is no defense. Employers are cautioned to review their payroll
records, their wage statements and confirm that they are in compliance.
PROPOSED RULES SIMPLIFY AND CLARIFY MEAL AND REST PERIOD OBJECTIONS
Another common claim in recent litigation includes claims for failure to provide the legally required rest breaks
or duty free meal periods. The penalties for such violations can add up to substantial sums of money in addition
to the attorneys fees and costs that can be recovered by an employee. A proposal is pending before the Industrial
Welfare Commission to change these rigid rules.
Old Rules Denied Flexibility
The old rules required employers to provide non exempt employees an unpaid 30-minute off-duty meal period to
be completed by the 5th hour of work, unless six hours of work would complete the employee’s work day. In
addition, employers are required to provide employees at least two 10-minute rest periods in the typical eight-hour
workday(one for each 4 hours of work).
The old rules prohibited the employee from waiving or working through a meal period and prohibited combining
meal and rest breaks. The old rules did not allow for flexibility of the time for the meal period either. Employers
were considered in violation of the law when an employee who had been provided with the opportunity to have an
off-duty meal period failed to use some or all of the meal periods provided (i.e., 27 minutes instead of 30 minutes),
performed any work during the meal period (even answering one phone call) and failed to takes either or both or
the rest breaks.
New Rules Clear and Simple
Under the proposed rules, employers must meet the following steps in order to fully comply with the Labor Code
requirements for meal and rest breaks
The employer must make the meal period available to the worker.
The employer must afford the worker the time to take the meal period.
The employer must have the correct IWC wage order posted in its workplace.
The employer must keep accurate time records for all covered workers of meal breaks
The proposed rules also provide that, in addition to following all of the steps listed above, the employer also may
provide written notice to employees of their meal period rights and obtain a signed acknowledgment that the notice
has been received and understood as additional evidence of compliance.
The rules also clarify that the amount owed an employee for a missed meal or rest period is a “penalty” and not a
“wage”. This reduces the statute of limitations to one year , as opposed to three years applicable to wage claims
which reduces the amount of potential liability.
New Rules Provide Needed Flexibility to Workers
The proposed permanent regulation also provides workers with additional flexibility by clarifying that:
• Workers working less than six hours in a day can mutually agree with their employer to
waive the meal period.
• Workers working between six and ten hours in a day will be able to take their meal period
at a time after the sixth hour, as long as the employer ensures that the worker had time
available and the opportunity to eat before the end of the sixth hour.
• Workers working between 10 and 12 hours may mutually agree with their employer to
waive the second meal period if the worker took the first meal period.
• Meal breaks can be taken at any point from the beginning of the fifth hour of work to the
end of the sixth hour of work.
If employer comply with the proposed new rules at this time, even though they are still proposed, the Labor
Commissioner’s office has indicated that such action will be considered “compliance” with the regulations.
Employers are urged to undertake a review of the meal and rest break policies and procedures to ensure they are
in compliance to avoid any claims and penalties.
WHEN ARE EMPLOYERS REQUIRED TO PAY FOR TRAVEL TIME?
General Rules for Daily Commute Time
Travel Time continues to be an area of concern and confusion for many employers. In general, the rule is that an
employer does not have to pay an employee for the normal commute to work because this time is not considered
“hours worked” under the various wage orders. However, employers must pay workers for time they are required
to spend traveling to and from work if the employee is subject to the control of the employer during this time, even
if the employees are not working. (If an employer requires an employee to use company provided transportation
to and from a job site - this would be employer controlled time.)
When is Travel Time Paid and How to Pay It
Most travel time on the job is considered “hours worked” so any time spent traveling will be computed into an
employee’s daily hours worked, which may require the payment of overtime for certain hours. To avoid having
to pay substantial overtime an employer may establish a different pay rate for travel time, instead of the regular rate
of pay.
The following conditions must exist for the different travel pay rate to apply:
The travel rate cannot be less than minium wage.
The employee must be informed about the different pay rate in advance.
The employee must be reimbursed for all out-of-pocket travel expenses.
Travel time outside of an 8 hour day or a 40 week must be counted as “work time” for
overtime purposes. Overtime is based on an employee’s “regular rate of pay”. In
California, when two rates of pay are paid during a workweek, the method to determine
the “regular rate of pay” for overtime calculation is based upon the weighted average of
all hourly rates paid. To establish this rate, add all hours worked in the week and divided
that number into total compensation for the week.
Overnight Travel Rate
Employees often travel out-of-town for business, including overnight stays. Employers must pay for the
employee’s time getting to and from the business location. Time spent driving or flying, traveling to and from the
out-of-town event and waiting to purchase tickets, check baggage and board are considered compensable hours
worked. Time spent sleeping or engaging in personal activities is not paid time.
If an employee travels for his/her home to the airport, and the travel is the same, or substantially the same as, the
distance and time between home and work, travel times does not begin until the employee reaches the airport.
INJURY AND ILLNESS POSTING REMINDER
Starting February 1 and ending April 30, employers must post the CAL/OSHA Form 300A in a
conspicuous place or places where notices to employees customarily are posted.
The requirement is applicable to employers with 11 or more employees, excluding some low-hazard
establishments in the retail, services, finance and real estate sectors.
Employers with no injuries of illness for 2004 should post the 300A with zeros through the total lines.
Employers must mail or otherwise provide an annual summary to employees who do not report at least
weekly to a location where the summary is posted.
The summary includes information on types of injuries and illnesses that occurred during the previous
year and their extent and outcome. The 300A is intended to alert workers of possible hazards and also
includes the annual average number of employees and hours worked, to facilitate calculating injury and
illness rates.
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Wages, Travel Pay & Meals |
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This information is intended to provide guidance in the area of employment law and is provided as a service of the Firm. While every effort
has been made to ensure the accuracy of the information contained in this bulletin, it is not intended to serve as "legal advice". If additional
information or assistance is needed on any of the topics contained in this informational package or any other matter, please feel free to
contact Cynthia Elkins for further information. All rights reserved. ©2005.
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