BB&K In The News

BB&K Partner Cynthia Germano writes in the Press-Enterprise about a new law that grants employers a limited opportunity to cure technical violations in wage statements issued to their employees.

By Cynthia Germano

There is finally some good news for employers in the area of wage and hour laws. Amendments to the Labor Code that went into effect on Oct. 2 provide employers with a limited opportunity to cure technical violations in wage statements issued to their employees before they are subjected to costly litigation.

The Private Attorneys General Act (PAGA) of 2004, laid out in Labor Code sections 2698 and 2699, gives private citizens – current and former employees – the right to file lawsuits against employers for Labor Code violations to recover fines that would normally only be available to the state of California.

Specifically, if an employee notifies the California Labor and Workforce Development Agency of alleged Labor Code violations, and the LWDA does not pursue the allegations or issue a citation within a certain time, which it rarely does, the employee can file a lawsuit on his behalf and on behalf of other current and former employees to collect civil penalties. The penalties can range from $100 per employee, per pay period, to $200 per employee, per pay period, in addition to attorneys’ fees. The employees get to keep 25 percent of the penalties they collect and the remaining 75 percent goes to the LWDA.

PAGA lawsuits are often based on alleged violations of Labor Code section 226. That section contains the categories of information that must be included in an itemized wage statement, including the inclusive dates of the period for which the employee is being paid and the name and address of the legal employer. Prior to the amendment, the employer did not have a right to cure any alleged violations of Labor Code section 226 before an employee brought a civil action and sought penalties under the PAGA. As a result, employers were subjected to costly and, many times, frivolous lawsuits for technical violations that did not result in any harm or injury to an employee.

The amendments to the PAGA give employers a chance to avoid such litigation by curing any violations of Labor Code section 226 within a specified time frame after the employers receive notice of the violation. Specifically, employers now have 33 days after receiving notice that their wage statements do not accurately reflect the inclusive dates of the pay period or the name and address of the employer’s legal entity.

Employers can cure any such violations by showing that they have provided a fully compliant, itemized wage statement to each employee who was aggrieved. If the employers make such a showing, employees cannot file civil lawsuits or seek penalties under the PAGA.

Alternatively, if employers cannot cure such violations within the 33- day time period, the employees still will be able file a civil action and obtain any unpaid wages, penalties and attorney’s fees. The one caveat is that employers can only exercise such right to cure one time in any 12-month period.

In a legislative world where it seems as though employers never get a break, this law provides much needed relief by giving employers the opportunity to correct unintentional and usually harmless errors without having to deal with expensive lawsuits, while still ensuring that employees receive accurate information.

* This article first appeared in The Press-Enterprise on Nov. 1, 2015. Republished with permission.