Governor Jerry Brown signed a bill that provides employers with a limited window to correct technical violations in itemized wage statements before being subject to costly litigation. AB 1506 is a bi-partisan effort to strike a balance between protecting the integrity of wage statements and providing relief to employers from potential litigation over minor paperwork violations. The bill, which received unanimous support in both the Assembly and Senate, includes an urgency clause that allowed it to immediately become law after signed by the governor .
In recent years, there have been a number of cases in which employers were sued under the Private Attorneys General Act (PAGA) over minor, hyper-technical violations of existing law. PAGA requires employers to provide accurate itemized wage statements – and allows employees, through an attorney, to file what is called a “representative action” against an employer for any violation of the California Labor Code related to paystubs.
Because PAGA penalties can be high, and the cost of defending them substantial, some employers have opted to settle employee claims rather than contest them in court. And a handful of legal firms around the state have made a lot of money convincing clients to go after their employers for PAGA-related claims.
But AB 1506 now allows employers up to 33 days to cure any alleged technical violation on wage statements. The bill states that if the alleged violation involves the wage statement’s inclusion of the name and address of the employer, or the inclusive dates of the pay period, then the employer shall have an opportunity to “cure” the violation before any PAGA claim may be filed.
AB 1506 was supported by the California Chamber of Commerce, which applauded Gov. Brown’s “fiscal prudence” in limiting “frivolous and potentially devastating” litigation against Golden State employers. “By allowing the employer a limited time period to fix technical violations on an itemized wage statement that does not create any injury to an employee before civil litigation is pursued, AB 1506 will enable an employer to devote its financial resources to expanding its workforce,” said a CalChamber report.