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Paying Attention to Pay Statement Data Requirements Pays Off for Employers

The laws surrounding information employers must include on pay statements is generally well established.  However, that does not mean it’s an area that employers can ignore, as a new wave of wage theft protection laws has added emphasis, and data elements, to pay statements in several states.  These laws have led not only to increased enforcement by agencies in affected states, but also to increases in employee lawsuits against employers who have failed to keep pace.

Two states had pay statement laws go into effect in 2020, as both New Jersey and Virginia added elements required to be displayed.

  • New Jersey SB 1791 (went into effect 5/5/2020): Requires employee pay statements to now also display both gross and net wages for the pay period, the employee rate of pay and number of hours worked during the pay period.
  • Virginia (1/1/2020): Requires the name and address of the employer, number of hours worked during the pay period, employee rate of pay, gross wages earned by the employee during the pay period, and the amount and purpose of any deductions (Va Code 40.1-29).

These two state laws are illustrative of the kind of data required on pay statements.  Some states require more, while others less.  To get a good understanding of where some of the more employee-friendly states may be heading, it’s helpful to look at California law.  California is a great example of a state with robust data requirements that employers can benchmark to build a compliant pay statement across all 50 states.  The state establishes the requirement to provide pay statements in California Labor Code Section 226(a), which states, “An employer, semimonthly or at the time of each payment of wages, shall furnish to his or her employee, either as a detachable part of the check, draft, or voucher paying the employee’s wages, or separately if wages are paid by personal check or cash, an accurate itemized statement …”.   Section 226 goes on to lay out elements provided in each pay statement as follows:

  1. Pay period—the start and end dates of the pay period,
  2. Gross wages earned in the pay period,
  3. Itemized deductions—the statement must display each deduction from gross wage,
  4. Net pay—gross pay after deductions,
  5. Total hours—total hours worked during the pay period,
  6. Applicable hourly rates—all hourly rates in effect, plus hours worked at each rate,
  7. Employer name and address—the employer’s legal name and address must be included,
  8. Employee name and last 4 of SSN or EID number—the full name of the employee and last 4 of the SSN, or the EID must be included,
  9. Accrued paid sick leave—optional, but must be included either on the pay statement OR a separate written statement given the employee on payday.

Getting the data elements correct and displaying all information that is required is of particular importance with the onset of the wage theft protection laws.  Not only is enforcement prevalent, but it can be very costly for employers.  For instance, California law imposes penalties on employers who do not comply with wage statement requirements. Employers who fail to provide an employee with a wage statement, can face a penalty of $250 per employee for the initial violation and $1,000 per employee for subsequent violations (Ca Labor Code Section 226.3). Those who provide an employee with an inaccurate wage statement, can face a penalty of up to $4,000 per employee (Ca Labor Code Section 226(e)).  In addition, attorneys are actively seeking clients on the matter, and employers in violation can be held accountable for court costs and attorney’s fees.

To avoid these and other pitfalls, employers should ensure their pay statements are compliant across all jurisdictions in which they do business and ensure all the data elements required are being populated with the correct information.  Periodic audits of pay statement data and tracking of legislative activity should be included in every employer’s compliance activities.

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