California Labor Code Section 226: Wage Statement Requirements & Penalties

California Labor Code Section 226 sets strict paystub requirements and exposes employers to lawsuits, PAGA penalties, and fees. Review wage statements for all nine items; third party payroll services do not shield companies from compliance mistakes.

By Douglas Wade, Attorney

Email | Call (800) 484-4610

Have a quick question? We answered nearly 2000 FAQs.

Table of Contents

1. Introduction

2. Types of Wage Statement Claims

3. Why Direct Violations Are Hard to Defend

4. Repercussions of wage statements that are not in compliance

5. Reasons why companies shouldn’t rely solely on payroll providers

Introduction

According to the state’s Labor Code section 226, a business is required to provide workers with an “accurate categorized statement in writing” that reflects at least nine clearly defined items either semimonthly or at the time of every wage payment. Often called wage statements or paystubs, these routine additions to nearly every paycheck appear straightforward enough that most workers or even the company may not give them much thought.

A common mistake involves reliance on a third-party payment service that creates wage statements regularly. Avoiding potentially expensive lawsuits for California firms requires careful adherence to Labor Code section 226 regulations, and blaming the payroll company as a defense is ineffective.

In California, claims pursuant to Labor Code section 226 continue to be a popular subject for litigation, both individually and—perhaps more importantly—representatively through class actions or actions brought under the state’s Private Attorneys General Act, where the fines can mount up rapidly.

Types of Wage Statement Claims

These claims usually fall into one of two categories: (1) an indirect case or (2) an immediate wage statement breach. The majority of these cases, at least during the pleading phase, will include both. Liability in a derivative lawsuit is based on the employer’s infraction of wage and hour laws (i.e., failing to pay for every hour worked or paying them at a wrong rate), which results in an inaccurate wage statement that contravenes Labor Code section 226 and is therefore subject to extra penalties. However, being a derivative claim, it also inevitably fails if no premise breaches are discovered.

By conducting internal compliance inspections and avoiding a naïve reliance on payroll providers, the second foundation for a claim pursuant to Labor Code section 226—which is a direct salary statement violation—can be avoided. The wage statement’s failure to meet any or all of the nine requirements outlined in Labor Code section 226 constitutes a direct violation and the grounds for culpability.

Why Direct Violations Are Hard to Defend

An actual breach is low-hanging fruit in a class or PAGA action since wage statements are often formatted the same for all employees. In this situation, it is very difficult to rebut direct wage statement allegations. Given that wage statements often follow the same style for every worker, a facial breach is low lying in a class action or PAGA suit, making it extremely challenging to defeat direct wage statement allegations in this situation.

There is currently disagreement among California courts over the possible influence of management in a PAGA action; nonetheless, since violations may be proven based on the appearance of the documents, which are typically fairly consistent among all employees, this kind of claim typically does not raise manageability concerns. Furthermore, according to subsection (e) of Labor Code section 226, courts have determined that an employee may seek civil fines under PAGA for violating this section without proving harm.

For several reasons, including avoiding expensive litigation, it goes without saying that California companies must ensure that they adhere to Labor Code section 226. To guarantee compliance, California employers must bear the following points in mind.

A wage statement needs to include the following:

In compliance with section 226 of the Labor Code, the following details must be included in the wage statement at the time of payment, either in writing or in an electronic copy:

Gross income received;
Total hours performed by the worker, unless subsection (j) permits an exemption;
If the worker is paid on a piece-rate schedule, the quantity of piece-rate units produced and any relevant piece rate;
All deductions, as long as they are combined and displayed as a single item and are made in response to the employee’s written requests;
Net income received;
Dates that are included in the time frame for which the worker gets compensated;
Only the final four digits of the worker’s social security number or a worker ID number that isn’t a social security number;
Both the employer’s name and address, as well as the address and name of the legal organization that hired the employer if the company is a farm labor contractor; and
With some further requirements for businesses of temporary services, every relevant hourly rate that was in place throughout the pay period, along with the number of hours the worker performed at each rate.

Despite the seeming simplicity of these standards, wage statement compliance is complicated by other pay categories, including differential pay, normal rate of payment calculations, compensation for illness, PTO/vacation pay, and rest and meal break premiums. Employers in California are required to conduct regular and uniform compliance checks.

Repercussions of wage statements that are not in compliance

In addition to any equitable relief, employees may be entitled to all real damages or fifty dollars for the first pay period during which an infraction occurs and one hundred dollars for each employee for every violation in a succeeding pay period, up to a maximum “aggregate fine” of $4000. Employees are also entitled to reimbursement for reasonable legal fees and expenses. Additionally, PAGA may impose civil fines on an employer who breaches Labor Code section 226. These amounts can build up rapidly in a PAGA or class action.

Reasons why companies shouldn’t rely solely on payroll providers

When it pertains to their workers’ wage statements, employers cannot and should not simply assume that the payroll provider has done it correctly. According to the California Labor Code, the payroll business cannot be relieved of the employer’s obligation to provide correct salary statements. Importantly, the California Supreme Court ruled in Goonewardene v. ADP (2019) that payroll vendors are not required to take reasonable steps to guarantee that wage orders and the California Labor Code are obeyed.

In order to assure compliance, businesses in California are therefore strongly encouraged to carefully examine their wage statements, whether or not they were produced by an external payroll provider, and go over the specific provisions of Labor Code section 226. It is essential to get this properly because even an apparently harmless mistake or extremely technical error can lead to expensive legal action, fines, and penalties that could have been prevented.

Have a quick question? We answered nearly 2000 FAQs.

See all blogs: Business | Corporate | Employment

Most recent blogs:

Employee Record Retention by State: Guide for Employers

State-by-state employee record retention guide covering payroll, unemployment insurance, workers’ compensation, child labor, discrimination, and access. Get clear timelines and required details for Alabama to Wyoming so employers meet audits, claims, and compliance duties.

How Much Notice Does an Employer Have to Give for a Schedule Change in California?

California employers must follow state and local rules on schedule changes, including notice periods, overtime, and reporting time pay. This guide explains meal breaks, overtime, predictable scheduling, local city ordinances, and penalties for violating California labor laws.

Employment Mediation: Process, Benefits, Preparation, and What to Expect

Employment mediation offers a faster, cost-effective alternative to litigation for resolving workplace disputes. Get the process, benefits, preparation steps, what to expect, possible outcomes, and mediator roles.

What Is Fair Chance Hiring? Meaning, Benefits, and How It Works for Employers

Fair chance hiring gives candidates with criminal records fair consideration, helping employers access loyal, diverse, and skilled talent. It strengthens compliance, lowers turnover, and helps build high performance teams without compromising workplace safety.

California Labor Code Section 204: Employee Rights When Employers Pay Late

Late wage payments in California can trigger penalties under Labor Code Section 204, protecting employees from repeated payroll delays. Workers have legal options including waiting time penalties, wage claims, and attorney assistance to secure timely pay.

California Equal Pay Act: Differences from Federal Law, Employer Duties, and Employee Protections

California’s Equal Pay Act expands protections beyond federal law, covering pay disparities by sex, race, and ethnicity. Employers must justify wage differences with valid factors; employees gain retaliation safeguards, filing options, and potential damages.

I-9 Compliance: Employer Rules, Penalties, and Best Practices

I-9 compliance helps employers verify work authorization, meet federal rules, and avoid costly fines, penalties, and legal issues. Use proper documentation, audits, E-Verify, and training to maintain compliance and reduce employment verification risks.

California Labor Code: Divisions, Laws, and Employee Rights Overview

California Labor Code overview covering divisions, employee rights, workplace safety, workers’ compensation, and enforcement across key industries. Trace major milestones, landmark cases, and updates that shape employer obligations and protections for California workers today.

Are Non-Solicitation Agreements Enforceable in California? Exceptions and Legal Insights

Non-solicitation agreements in California are mostly unenforceable, except when tied to trade secrets, business sales, or partnership dissolutions. This article outlines key exceptions, legal challenges, and how courts determine when limited restrictions may stand under state law.

California Labor Code Section 226: Wage Statement Requirements & Penalties

Do You Have to Sign a Write-Up at Work? Employee Rights and Employer Policies Explained

Employees often ask if they must sign a workplace write-up, and the answer depends on labor laws and company policies. This guide explains employee rights, employer practices, and options for responding when faced with disciplinary write-ups.

ABC Test California: AB 5 Exceptions, Borello Factors, and Worker Status

AB 5 reshaped California worker classification with the ABC test, Borello factors, and multiple exemptions impacting industries and licensed professionals. This guide covers independent contractor rules, key exceptions, and legal consequences for misclassification under California employment law.

How Long to Keep Employee Files: Record Retention Laws, Timelines, and Best Practices

Keep employee records compliant with federal and state retention laws to protect your business from fines, lawsuits, and compliance issues. Establish clear policies, digitize securely, and retain files for proper timelines to ensure efficiency, privacy, and legal protection.

Separation of Employment: State Notice Requirements, Termination Letters, and Compliance Guide

State separation laws vary, requiring employers to issue termination notices on time to reduce penalties and compliance risk. This guide covers state notice requirements, termination letters, unemployment benefit notifications, and practical steps for multi-state compliance.

Labor Code Section 2810.5: CA Hiring and Wage Notice Guide

California Labor Code Section 2810.5 outlines hiring and wage notice requirements employers must follow to avoid penalties and lawsuits. Employers must provide detailed written notices, comply with minimum wage laws, and use official forms to remain compliant.

California Sick Leave Law 2025: Employee Rights, Accrual Rules, and Local Ordinances

California Sick Leave Law 2025 explains employee rights, accrual rules, and employer duties for paid sick time in California. Local ordinances in Los Angeles, San Francisco, Oakland, Berkeley, and Santa Monica offer additional protections and higher sick leave caps.

What is Comp Time at Work? Definition, Legal Rules, and How it Differs from Overtime

Comp time lets employers offer time off instead of overtime pay, but strict legal rules often limit its use. This guide explains comp time, how it differs from overtime, and the legal risks businesses must review.

California Vacation Law Update 2025: Changes to Paid Leave, PFL Use, and Workplace Policies

California’s 2025 vacation law update adds new protections for employees, impacting paid leave, workplace meetings, and contractor agreements. Employers must adjust to expanded worker rights, anti-discrimination rules, and stricter compliance requirements taking effect January 1, 2025.

California Wage Statement Rules: What Must Be Shown and What to Do If Your Pay Stub Has Errors

California employers must provide accurate pay stubs detailing wages, deductions, hours, and other required information under state labor laws. Employees may seek penalties, back pay, and legal action if wage statements contain errors or missing details.

What Paid Holidays Are Mandatory in California? Employer Requirements, Exemptions, and Federal Worker Pay Rules

California law does not require private employers to provide paid holidays, though many offer them voluntarily for employee satisfaction. Federal employees in California may receive holiday premium pay, depending on eligibility and agency rules.

California Employee Rights: Workplace Discrimination, Wages, and Legal Protections

California employees have rights covering discrimination, wages, and workplace safety under state and federal laws. This guide outlines protections against unfair treatment, retaliation, and wage violations.

SB 616: Key Changes to California Paid Sick Leave Law Every Employer Should Know

California’s SB 616 increases paid sick leave from 24 to 40 hours, requiring policy updates for statewide employer compliance. Employers must adjust accrual, carryover, and usage rules, update handbooks, train staff, and ensure payroll accuracy.

Onboarding Paperwork Checklist: 10 Key Documents Every Employer Needs for New Hires

Onboarding paperwork supports compliance, payroll accuracy, and smooth integration for new hires with important legal, tax, and organizational documents. This checklist outlines 10 vital records employers should provide to support efficiency, clarity, and a positive start for every employee.

Resentment Examples at Work 6 Ways Workplace Tension Takes Hold

Resentment Examples at Work: 5 Ways Workplace Tension Takes Hold

Workplace resentment can silently erode trust, collaboration, and morale, leading to lasting cultural damage if left unchecked. Recognizing resentment examples helps address unresolved conflict, burnout, and broken promises before they harm productivity and team relationships.

How Many Hours Can You Work at 15? State-by-State Guide to Teen Work Limits in the U.S.

Teen work laws set limits on hours for 14- and 15-year-olds, varying by state and job type. Find out work restrictions, permitted jobs, and tips for landing your first position at 14 or 15 in the U.S.

CA Exempt Salary 2025: Minimum Wage and Exemption Updates for California Employers

California's 2025 exempt salary threshold increases to $68,640 annually, with minimum wage rising to $16.50 statewide. New laws also impact sick leave, union exemptions, captive audience meetings, and driver’s license requirements for job postings.

How Long to Keep Payroll Records in California: Employer Rules for 2025

Employers in California must retain payroll and personnel records for up to four years to remain compliant with 2025 regulations. Digital and physical storage methods, I-9 rules, and supervisor training responsibilities are also covered in the updated requirements.

California Fair Chance Act: Updates Employers Need to Know About Criminal History Rules

Employers in California must follow stricter rules on criminal history checks under the updated Fair Chance Act from October 2023. New regulations expand definitions, require tailored evaluations, and mandate written notices before rejecting candidates due to conviction records.

Breaks in California: Detailed Guide to Rest and Meal Break Rules for Employers

California employers must follow detailed rules for rest and meal breaks, including timing, written waivers, and compensation requirements. Improper or missed breaks can result in legal action, wage penalties, and issues related to industry-specific labor standards.

California Labor Code 1198.5: Employee Rights to Personnel Records and Employer Compliance Guide

Employees in California can request access to personnel and payroll records under strict timelines defined by Labor Code 1198.5. Employers must comply with requests within 21 to 30 days or face penalties for noncompliance with record access laws.

See all blogs: Business | Corporate | Employment

235

California Labor Code Section 226: Wage Statement Requirements & Penalties

Introduction

Types of Wage Statement Claims

Why Direct Violations Are Hard to Defend

Repercussions of wage statements that are not in compliance

Reasons why companies shouldn’t rely solely on payroll providers

Free Consultation