Dental and Medical Counsel Blog

Correcting Wage Statements: How New California Law Helps You To Avoid Litigation

February 19, 2016
New California Law Helps You To Avoid Litigation

As an employer, there is perhaps nothing more stressful than facing potential litigation. Regardless of whether the conflict relates to an issue with a patient, an employee, or even a regulatory agency, and regardless of whether you are truly at fault, the bottom line is that the best approach to litigation is to avoid it in the first place.

Fortunately, a new law in California is helping employers to do just that when it comes to correcting employee wage statements. Assembly Bill 1506 (AB 1506) was signed by Governor Jerry Brown on October 2, 2015 and took effect immediately. The law is an amendment to the California Private Attorneys General Act (PAGA), and it provides employers with 33 days in which to "cure" certain commonly litigated defects in employee wage statements. This amendment provides employers with the opportunity to be proactive and to avoid litigation by correcting erroneous employee wage statements quickly, an action which benefits employers and employees alike. Note, however, that the cure provisions are limited in scope, applying only to two sections of the California Labor Code: (1) Section 226(a)(6), a provision which requires employers to specify the inclusive dates of the period for which the employee is paid; and (2) Section 226(a)(8), requiring employers to state the name and address of the employer’s "legal entity.”

Narrow or not, the change is a big one for employers: while the PAGA has always contained cure provisions, prior to the October 2, 2015 amendment, the cure provisions of PAGA did not extend to wage statement defects. Under the new law, an employee is not permitted to bring a civil action against the employer under the PAGA for failing to provide its employees with wage statements which list the inclusive dates of the pay period and the name and address of the legal entity that is the employer without first providing the employer with the opportunity to provide corrected statements.

Employers have 33 days from the postmark date of the notice received from the employee alleging the impropriety of his/her wage statements to remedy the statement issue. And in order to prevent the employee from bringing a civil action, the employer must provide the complaining employee with an itemized wage statement which is fully for the three-year period prior to the date of the employee's written notice. Once the employer has provided these compliant statements to the employee, the employer must give written notice by certified mail to the employee at issue (or his/her representative), as well as to the California Labor & Workforce Development Agency (LWDA). That notice must state that the alleged violation has been cured and describe the actions taken by the employer to achieve compliance. And while these steps may seem onerous, the payoff is well worth it: the employee will not be permitted to commence a civil action against the employer pursuant to section 2699 of PAGA.

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