Employers Get Some Relief from Wage and Hour Penalties

By Deborah Petito |

Any employer who has been sued for wage and hour violations knows that the acronym “PAGA” stands for California’s Private Attorney General Act.  It allows employees to bring wage and hour claims against an employer on behalf of all employees and collect 25% of the penalties that would go to the State if the State had brought the claim.  While the State is supposed to get the remaining 75%, in my experience, such an allocation is rarely made.

Wage and Hour Penalties

There are endless penalties for various wage and hour violations including the following:

  1. $50 for the first pay period and $100 for every subsequent pay period up to $4,000 per employee where the employee either does not receive a wage statement with their pay checks (these may be made available electronically if the employee has access to a computer) or receives a wage statement that does not contain the required information.
  2. Up to thirty days of wages (that is 30 x 8 hours x the employee’s hourly rate) if the employee is not paid either on a given payroll date or when the employee resigns or is terminated. This penalty can run from the date of any inaccurate pay stub.

There are other penalties that are included in PAGA and not listed above.

Amendment to PAGA

PAGA claims were becoming extremely expensive for employers even when the violations were very minor.  Last year, the California State Legislature amended PAGA to provide limited relief for two very minor violations that can result in huge penalties.  Effective October 2, 2015, an employer has 33 days to correct the following two specific violations:

  1. Failure to provide employees with an itemized wage statement that includes the beginning and ending dates of the pay period; and
  2. Failure to provide employees with an itemized wage statement that includes the name and address of the legal entity which is the employer.

This change will not eliminate PAGA claims, but it can reduce the amount of penalties at issue, namely the potential for up to $4,000 in penalties per employee for a wage statement violation.  Employers need to keep their eyes open for letters that employees are required to send to the State and the employer before a PAGA claim is filed.  PAGA letters will contain a laundry list of wage and hour violations.  If the letter contains an allegation that the dates of the pay period and/or the employer’s legal name are not included on the wage statement, employers should immediately make those corrections and notify the State and the employee’s attorney that the corrections were made.  The employer must also provide a copy of the corrected wage statement to the employee(s).  This will, at a minimum, eliminate some of the penalties that an employee may claim as part of a larger wage and hour case and put the employee’s attorney on notice that the employer is attentive and responsive to wage and hour claims.

Thank you for joining us on ClarkTalk!  We look forward to seeing you again on this forum.  Please note that the views expressed in the above blog post do not constitute legal advice and are not intended to substitute the need for an attorney to represent your interests relating to the subject matter covered by the blog.  You should certainly consult legal counsel of your choice when considering this or any other employment issue.  If you wish to consult with the author of this post or another attorney at Clark & Trevithick, please contact Debbie Petito dpetito@clarktrev.com or Leonard Brazil lbrazil@clarktrev.com by email at or telephonically by calling the author at (213) 629-5700.

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