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New California Law Allows Employers to Cure Two Wage Statement Violations Within Limited Period

10/13/2015 Articles

Governor Jerry Brown has signed into law AB 1506, a bill that will allow employers to cure two types of technical itemized wage-statement violations to avoid the risk of costly Private Attorneys General Act (“PAGA”) suits. This law, which takes effect immediately, will benefit employers who take appropriate and timely steps to cure such technical violations. 

The PAGA authorizes an aggrieved employee to bring a civil action to recover specified civil penalties that would otherwise be assessed and collected by the Labor and Workforce Development Agency (LWDA) on behalf of the employee and other current or former employees for the violation of various Labor Code provisions. The PAGA gives the employer the right to cure certain violations before the employee may bring a civil action.

Before AB 1506, alleged violations of Labor Code § 226(a)—mandating the content of payroll statements—were enumerated among the violations lacking opportunity to cure. AB 1506 amends the PAGA so that employers may cure two specific wage statement violations: (1) not including the pay period dates as required by Section 226(a)(6), and (2) not including the correct name and address of the employer as required by Section 226(a)(8). The bill leaves violations of the other seven Section 226(a) requirements (e.g., inclusion of hours worked, applicable hourly rates, net and gross wages, deductions) as not subject to cure. 

Employers may now cure these two violations within 33 days after the employee sends written notice of the alleged violations to the LWDA and employer. Violations are only considered cured upon a showing that the employer has provided a fully compliant, itemized wage statement to each aggrieved employee for each pay period for the three-year period prior to the date of the written notice. The bill limits the employer’s right to cure alleged violations to once in a 12-month period. That 12-month limitation parallels the 12-month statute of limitations period for PAGA actions generally.

The legislative summary cites the bill’s author and proponents as explaining, “[T]his reform would provide the appropriate balance of allowing an employer to correct unintentional errors for minor violations without the threat of a multi-million dollar lawsuit that could put the employer out of business, while still protecting the employee’s ability to obtain accurate information.”

Employers who receive PAGA notices from current or prospective litigants should inspect the notice for wage statement claims based on either a failure to include the pay period dates or the name and address of the employer. If any allegations are based on either of those violations, employers should immediately review their wage statement practices for all employees and take appropriate steps to cure any violations within 33 days.

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