Lawyers Warn of Pay Stub Litigation Wave in California
Matthew J. Matern, Daily Journal Cover
July 6, 2015 – By Matthew Blake, Daily Journal
California employers have long expressed concern about the state’s employee-friendly labor laws. However, many businesses say a recent amendment to California wage statement laws has created a surge of litigation related to pay stub violations.
California Pay Stub Law and the Presumption of Harm
In 2012, Governor Jerry Brown amended an existing labor law to create a presumption of harm whenever an hourly employee’s pay stub is missing required information. Under California law, wage statements must include specific details about the employee’s compensation and employer identity.
If any of these required items are missing from a pay stub, the law presumes the employee has been harmed—even if the employee did not actually lose wages.
Nine Required Pieces of Information on California Wage Statements
California law requires that employee pay stubs include several key pieces of information, including:
- Total hours worked during the pay period
- Total wages earned
- The employee’s applicable rate of pay
- The employer’s legal name
- The employer’s address
Failure to include any of the required information may expose employers to liability under California wage statement laws.
Business Community Criticism of Strict Liability Standard
While employee advocates argue the law helps prevent employers from obscuring wage violations, business groups say the amendment creates strict liability for technical mistakes.
Jennifer Barrera, a policy attorney for the California Chamber of Commerce, described many wage statement claims as “technical violations” that do not necessarily result in real injury to employees.
Critics argue that these cases often produce significant settlements that benefit plaintiffs’ attorneys rather than workers. For example:
- A lawsuit against staffing agency Manpower Inc. settled for approximately $8.7 million.
- A separate case involving Verizon Wireless Inc. resulted in a settlement of roughly $15 million.
Why Pay Stub Claims Are Attractive to Plaintiffs’ Attorneys
Employment defense attorney Francis J. Ortman of Seyfarth Shaw LLP noted that pay stub claims can be easier to prove than other employment violations.
In some cases, an employee may initially consult an attorney regarding difficult-to-prove claims such as wrongful termination or unpaid wages. Rather than pursue those complex claims, attorneys may review the worker’s pay stub to determine whether it complies with California wage statement requirements.
If required information is missing, the attorney may pursue a pay stub violation claim instead. According to Ortman, these claims can be easier to litigate because employers may have little defense once a technical violation is identified.
Example Case: Pay Stub Class Action Against Applied Aerospace
Ortman represented Applied Aerospace Structures Corp. in a class action lawsuit alleging the company failed to include its address on employee pay stubs.
The case, Geer v. Applied Aerospace Structures Corp., CU14-3137 (San Joaquin Superior Court, filed July 18, 2014), focused on the absence of the company’s address on wage statements.
Ortman argued the claim was frivolous because all employees worked at the same location in Stockton. However, because the statute imposes strict liability for missing wage statement information, the company ultimately settled the case.
“Because of the strict liability statute, we had no defense,” Ortman said. A hearing on final settlement approval was scheduled before Judge Barbara A. Kronlund.
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