When it comes to California wage and hour compliance, sometimes it’s not the big-ticket issues like overtime or meal breaks that land employers in hot water—it’s the small details. Wage statements, often called pay stubs, are a prime example.

California has some of the strictest wage statement requirements in the country. Missing or inaccurate information can trigger lawsuits and Private Attorneys General Act (PAGA) claims, even if employees were otherwise paid correctly. For many businesses, what seems like a technicality can snowball into six- or seven-figure liability.

What Must Be on a California Wage Statement?

The law is very specific about what information must appear on every wage statement. Under Labor Code Section 226, each non-exempt employee must receive an accurate, itemized pay stub with each paycheck. That means the statement must show:

• Gross wages earned
• Total hours worked
• The number of piece-rate units earned (if applicable)
• All deductions (taxes, benefits, garnishments)
• Net wages earned
• Pay period dates, including start and end
• The employee’s full name and identifying employee number (or last four digits of their SSN)
• The employer’s legal name and address
• Hourly rates and number of hours worked at each rate

For employees paid by piece rate or commission, additional disclosures are required to show how earnings were calculated.

For example, a retail employee who works 40 hours at $20/hour and 5 hours of overtime at $30/hour must have both rates and hours clearly listed. If only the total pay appears, the wage statement is non-compliant—even if the paycheck itself is correct.

Why These Details Matter

California courts have made clear that wage statement compliance is not optional. Inaccuracies or omissions can lead to penalties of up to $50 for the first violation and $100 for each subsequent violation, per employee, per pay period, capped at $4,000 per employee. Multiply that across dozens of employees and multiple years, and the exposure is staggering.

Beyond penalties, wage statement violations are a favorite target of PAGA attorneys. Because PAGA allows employees to sue on behalf of the state for technical violations, even a formatting mistake can form the basis of a lawsuit.

Common Employer Mistakes

Although the law seems straightforward, employers often trip up on small details. Some of the most common mistakes include:

1. Incorrect employer name: Using a trade name instead of the legal entity name can trigger non-compliance.
2. Missing pay period dates: Some employers list the pay date but forget to specify the start and end dates.
3. Failure to show all hourly rates: When employees earn different rates (overtime, double time, bonuses), all must be itemized.
4. Inaccurate employee identifiers: Using only first names or internal codes that don’t comply with Section 226.
5. Bundling deductions: Listing “miscellaneous” without itemization can create liability.

For example, say a construction company pays overtime correctly but fails to break out overtime hours and rates on the pay stub. If employees bring a PAGA claim, the company could face penalties despite never shorting paychecks.

Recordkeeping and Retention

It’s not enough to issue wage statements; employers must also keep them. California law requires employers to retain copies (or make them electronically accessible) for at least three years. Employees can request copies at any time, and employers must provide them within 21 days. Failing to do so creates additional penalties on top of any pay stub errors.

Best Practices for Compliance

Avoiding wage statement liability requires diligence, not luck. Employers should take proactive steps to ensure every pay stub is accurate:

• Use robust payroll systems. Software should be configured for California’s detailed requirements, not just federal standards.
• Audit regularly. Periodically review wage statements to confirm all required items are included and accurate.
• Check legal entity names. Make sure pay stubs list the registered business entity, not just a brand or DBA.
• Train HR and payroll staff. Staff should understand that wage statements are compliance documents, not just receipts.
• Document fixes. If errors are found, correct them promptly and record the correction—courts often look at whether employers acted in good faith.

Final Thoughts

Wage statements may seem like administrative paperwork, but in California they are a frontline compliance issue. Small mistakes can lead to massive liability under PAGA and the Labor Code. Employers who invest in proper systems, audits, and training can protect themselves from unnecessary risk.

Protect Against PAGA with Wage & Hour Training

At Cal Comply, we help California employers identify compliance risks before they become lawsuits.

Our wage and hour training, designed by employment litigators, teaches managers and employees to review their wage statements, timekeeping, and overtime pay—and communicate with HR and management about any issues.

👉 Learn more about Cal Comply’s Wage & Hour Training

FAQ

Q: What must be on a California wage statement?
A: California Labor Code Section 226 requires pay stubs to include gross wages, total hours worked, deductions, net pay, pay period dates, employee name and ID, employer’s legal name and address, and all hourly rates with corresponding hours.

Q: How long must employers keep wage statements in California?
A: Employers must retain wage statements (or make them electronically accessible) for at least three years. Employees may request copies, and employers must provide them within 21 days.

Q: What are the penalties for inaccurate wage statements in California?
A: Penalties can be up to $50 for the first violation and $100 for each subsequent violation, capped at $4,000 per employee. Violations can also lead to lawsuits under the Private Attorneys General Act (PAGA).

Q: Can wage statement violations trigger PAGA claims?
A: Yes. Even technical wage statement errors can form the basis of a PAGA lawsuit, exposing employers to significant penalties.

This post is for informational purposes only and does not constitute legal advice. California’s meal and rest break laws are complex and vary by industry and workforce. Consult an experienced employment attorney for guidance tailored to your business. Cal Comply is a paid training provider mentioned for illustrative purposes; other compliance resources are available.