California’s hodge-podge of overlapping and confusing wage and hour laws forces employers to guess whether their pay practices are lawful. This is particularly true with respect to the preparation of pay stubs. Each year, pay stub law evolves and expands, leaving even the most conscientious of employers exposed to lawsuits and Labor Commissioner claims.
Fortunately, last month the Court of Appeal for the Fourth Appellate District provided some clarity as to one uncertain issue – whether to include accrued vacation on the pay stub. The Fourth District held that although accrued vacation is a wage of sorts and therefore must be paid out upon termination of employment, the amount accrued need not be disclosed on pay stubs. The Fourth District reasoned that the statute governing pay stubs, Labor Code Section 226, does not expressly or implicitly require employers to include this information and the courts should not include that obligation in the absence of clear legislative intent.
Employers should bear in mind, however, that the preparation of pay stubs remains complex, particularly for those who pay overtime, pay on a piece rate, or on a similar basis. The Fourth District’s decision is not a game changer in that regard. Employers in California must continue to carefully monitor the intricate and detailed mandates governing preparation of pay stubs.