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Electronic Wage Statements — The Next Trap for Employers?

Labor & Employment   |   Wage and Hour   |   November 9, 2017
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An employer dodged a bullet before a California jury this week. But the fact that a class was certified and went to a jury suggests that the plaintiff’s bar is increasingly focused on the adequacy of electronic wage statements.

Claims for inaccurate wage statements, paper or electronic, have steadily increased and are now routinely asserted in wage and hour cases. Many employers have learned the hard way that states such as California have legislated very strict requirements governing the wage statements’ contents. These relate not just to the particular payment, but to a host of other data. Failure to follow regulations could mean substantial penalties, creating a hornets’ nest for unprepared businesses. For example, California requires the statement to have the name and legal address of the entity that is the employer, the start and end dates of the pay period, and the last four digits of the social security number (not the whole number). Miss any of these and you may face penalties for each errant pay stub.

This week, in a California federal court, employees attempted to take the issue a step further, complaining not about the wage statements’ content — which they conceded was accurate — but merely about the way the wage statements were printed and delivered. Guillen v. Dollar Tree Stores Inc., case number 2:15-cv-03813, (U.S. District Court for the Central District of California).

Dollar Tree’s retail store employees who are paid by direct deposit or pay cards do not routinely receive hard copies of their wage statements. Instead, they can print their wage statements from the cash registers in the stores where they work. A Dollar Tree employee in California filed a class action, claiming that this method of generating the wage statements was not easily accessible in accordance with state law. Among other things, the employee complained that the wage statements were printed on receipt paper and that employees had to print them in the presence of co-workers and customers.

The judge certified a class of over 5,000 California employees and allowed the matter to proceed to a jury trial this week. The jury returned a verdict for the employer and found the wage statements met California’s requirements. Though the employer won this round, it had to incur substantial costs to do so. Even winning has its price. And wage statements nevertheless remain a trap for the unwary that can result in millions of dollars in penalties for even an apparently minor inaccuracy.

Some key takeaways on avoiding employer liability from the Dollar Tree case:

  • Ensure that wage statements contain all required content. Employers have been tripped up over small things, such as not including both the beginning and ending dates of the pay period. Here, the employees were forced to concede that Dollar Tree’s wage statements contained all of the necessary information. Review each state’s requirements and even local requirements to avoid a misstep. And periodically update the review as laws constantly change.
  • Give employees options for receiving wage payments and statements. Employers in California cannot mandate that employees be paid by direct deposit. Employees must have the option of being paid with a physical check, which in turn would have a hard copy of the wage statement attached. Dollar Tree gave employees this option. In addition, employees could request a printed wage statement from Dollar Tree, even if they were paid by direct deposit. Regardless of the method chosen, there was no cost to the employees. These options helped refute the claim that employees were somehow disadvantaged by having their wage statements printed on receipt paper, since they had the opportunity to obtain a more traditional hard copy.

Bottom Line: Keeping on top of the numerous and technical wage statement requirements can help employers avoid millions of dollars in penalties for inaccurate statements. Outside payroll companies do not automatically follow these requirements, so employers must proactively confirm that their statements are in compliance.


©2019 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.

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