• Pamela Tahim Thakur

California Court Restricts Claims for Inaccurate Wage Statements

It has become almost a staple for employees bringing wage and hour claims against their employers to tack onto those claims an inaccurate wage statement claim under California Labor Code § 226. Here's an example: A plaintiff brings a claim alleging that she was not paid overtime; she brings a second claim alleging she was provided inaccurate wage statements because the wage statements she was issued do not reflect the overtime wages she should have been paid. The benefit of this tactic is the potential of recovering $4,000 per employee as well as an award of costs and reasonable attorney's fees.

In Maldonado v. Epsilon Plastics, Inc., 22 Cal.App.5th 1308 (2018), the California Court of Appeal weighed in on the strategy and dealt it a heavy blow with its decision. In that case, the class of employees alleged they weren't paid overtime owed, and as a result, their wage statements were inaccurate. The trial court agreed, concluding that even though the wage statements reflected what the employees were actually paid, the wage statements were inaccurate because they did not reflect what the employees should have been paid.

The court of appeal reversed, conducting a thorough analysis of the various sections and subsections of Labor Code Section 226. The court of appeal explained that the legislature intended to allow the recovery of penalties, costs and fees for violations of the statute without a plaintiff's affirmative showing of injury only in certain circumstances. Based on the statutory language, the court set out a simple rule for determining what falls under those certain circumstances: hours worked versus wages earned. The court held that "only the absence of the hours worked will give rise to an inference of injury," and "the absence of accurate wages earned will be remedied by the violated wage and hour law itself."

Following the publication of the opinion, the Maldonado plaintiffs asked the California Supreme Court to depublish the opinion, which would remove the opinion's precedential value. The court denied the request and also declined to review the decision on its own motion. Maldonado is therefore good law for the foreseeable future.

The Maldonado court's conclusion certainly begs the question, which will undoubtedly lead to more litigation, what underlying claims should be classified as an “hours worked” claim versus a “wages earned” claim? The California Supreme Court could shed light on the issue in the case Stewart v. San Luis Ambulance, Inc. (No. S246255), where it will decide whether a violation of meal period regulations gives rise to a Section 226 claim and may revisit, and possibly overrule, Maldonado, but one would suspect that if it were going to do so, it would have taken the opportunity to do so directly by granting review in Maldonado.

Employer’s Takeaway:

California wage statement claims must be based on the wages the employer paid for hours worked; plaintiffs cannot base such a claim on wages they allege they should have been paid.

It has become almost a staple for employees bringing wage and hour claims against their employers to tack onto those claims an inaccurate wage statement claim under California Labor Code § 226. Here's an example: A plaintiff brings a claim alleging that she was not paid overtime; she brings a second claim alleging she was provided inaccurate wage statements because the wage statements she was issued do not reflect the overtime wages she should have been paid. The benefit of this tactic is the potential of recovering $4,000 per employee as well as an award of costs and reasonable attorney's fees.

In Maldonado v. Epsilon Plastics, Inc., 22 Cal.App.5th 1308 (2018), the California Court of Appeal weighed in on the strategy and dealt it a heavy blow with its decision. In that case, the class of employees alleged they weren't paid overtime owed, and as a result, their wage statements were inaccurate. The trial court agreed, concluding that even though the wage statements reflected what the employees were actually paid, the wage statements were inaccurate because they did not reflect what the employees should have been paid.

The court of appeal reversed, conducting a thorough analysis of the various sections and subsections of Labor Code Section 226. The court of appeal explained that the legislature intended to allow the recovery of penalties, costs and fees for violations of the statute without a plaintiff's affirmative showing of injury only in certain circumstances. Based on the statutory language, the court set out a simple rule for determining what falls under those certain circumstances: hours worked versus wages earned. The court held that "only the absence of the hours worked will give rise to an inference of injury," and "the absence of accurate wages earned will be remedied by the violated wage and hour law itself."

Following the publication of the opinion, the Maldonado plaintiffs asked the California Supreme Court to depublish the opinion, which would remove the opinion's precedential value. The court denied the request and also declined to review the decision on its own motion. Maldonado is therefore good law for the foreseeable future.

The Maldonado court's conclusion certainly begs the question, which will undoubtedly lead to more litigation, what underlying claims should be classified as an “hours worked” claim versus a “wages earned” claim? The California Supreme Court could shed light on the issue in the case Stewart v. San Luis Ambulance, Inc. (No. S246255), where it will decide whether a violation of meal period regulations gives rise to a Section 226 claim and may revisit, and possibly overrule, Maldonado, but one would suspect that if it were going to do so, it would have taken the opportunity to do so directly by granting review in Maldonado.

Employer’s Takeaway:

California wage statement claims must be based on the wages the employer paid for hours worked; plaintiffs cannot base such a claim on wages they allege they should have been paid.

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