Question:

I pay my employees every month by check. I was told that I am paying my employees incorrectly and not providing their paycheck information as required by law. Am I missing something?

Answer:

Generally, non-exempt employees must be paid at least twice during each calendar month. As a California employer, you are required to establish regular paydays, and wages must be paid to non-exempt employees by the 26 th of the month for wages earned during the 1 st through the 15 th day of the month, and wages earned during the 16 th through the end of the month must be paid by the 10 th day of the following month. Therefore, if your employees are not exempt from the receipt of overtime, your payment of wages to such employees only once a month violates California law. If any of your employees qualify for the executive, administrative or professional exemption from overtime under the Fair Labor Standards Act, those exempt employees must be paid at least once a month on or before the 26 th of the month.

You can, if you wish, establish pay periods different than between the 1 st and 15 th, and 16 th and end of the month, such as weekly, bi-weekly (every two weeks) or semimonthly (twice per month) earning periods. However, payment of wages for such periods must be made within seven calendar days from the end of the period in which the wages were earned. Once your pay periods are established, you are required to post the date, time and location of your regular paydays, along with a copy of the California Division of Labor Standards Enforcement Wage Order that applies to your employees, in an area that is frequented by your employees where it may be easily read during the workday.

Note that every paycheck must also include the name and address of a business (usually a bank) in the state at which the check can be cashed. Payment of wages can also be made by direct deposit to an employee’s bank account, but only where voluntarily agreed to by the employee.

Along with each payment of wages (whether by check, cash, or employee authorized direct deposit), a California employer must provide to the employee a separate written statement or detachable pay stub that includes the following information for that payment:

  • Gross wages earned;
  • Net wages earned;
  • Total hours worked (not required for employees exempt from receipt of overtime);
  • All applicable hourly rates in effect during the pay period, and the corresponding number of hours worked at each hourly rate by the employee;
  • The beginning and ending dates of the pay period;
  • The name of the employee and the last four digits of the social security number, or other employee identifier;
  • The name and address of the employer;
  • Where the employee is paid on a piece rate basis, the number of piece-rate units earned and any applicable piece rate; and
  • All deductions.

Deductions from employee’s pay may be made in limited circumstances. Deductions from wages may be made only when:

  • Required or empowered to do so by state or federal law (for example, deductions for federal and state personal income tax, state disability insurance, etc.);
  • When the employee authorizes a deduction in writing to cover insurance premiums, benefit plan contributions or other deductions not amounting to a rebate on the employee’s wages;
  • When a wage or collective bargaining agreement expressly authorizes a deduction to cover health, welfare or pension contributions; or
  • When the employee’s wages are subject to garnishment for the payment of a judgment.

The pay requirements are quite detailed under California law, and employers can be liable for penalties for failure to comply with these requirements.

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