In California wage-and-hour law, it's often the little things that matter.
For example, practitioners know that an employer must provide a "wage statement" (i.e., a paystub) that complies with Labor Code section 226 (e.g., showing all hours worked, the applicable rates of pay, etc.) semimonthly or along with the wage payment itself. See Labor Code § 226(a) (employers must "furnish" wage statements "semimonthly or at the time of each payment of wages"). Employers must also pay all wages due to an employee at the time of involuntary termination of employment or within 72 hours' notice if the employee voluntarily quits. See id. §§ 201-202. Failing to do so subjects the employer to a "waiting-time penalty" of one day's wages for each day the employer fails to pay all wages due, up to a maximum of thirty days. See id. § 203.
Typically, for involuntary terminations, this means handing the employee a final paycheck and wage statement at the time the employer fires the employee.
Some questions flow from these statutes. May the employer mail the wage statement instead of including it with the wage payment? And must an employer provide a wage statement when involuntarily terminating an employee, or may the employer simply furnish the wage statement "semimonthly"?
The Court of Appeal just answered these questions in Canales v. Wells Fargo Bank, N.A., 23 Cal. App. 5th 1262 (May 30, 2018).
This one came out of Judge Wiley's courtroom in Los Angeles. The plaintiffs filed a purported class action premised on certain wage-and-hour violations that were not part of the certified appellate opinion. They also alleged that the employer had a practice of failing to provide wage statements at the time of termination when it provided a final paycheck to an employee by cashier's check---the employer would then mail the wage statement either the same day or the day after. Canales, 23 Cal. App. 5th at 1266. The trial court granted summary judgment, and the plaintiffs appealed.
The Court of Appeal affirmed. First, the employer's practice of providing the wage statement on the date of termination or the day after did not violate section 226 because the requirement to "furnish" a wage statement "semimonthly or at the time of each payment of wages" provides an outer limit for compliance of up to semimonthly. Providing a wage statement at the time of termination is not required if the semimonthly deadline falls later:
For purposes of section 226, if an employer furnishes an employee's wage statement before or by the semimonthly deadline, the employer is in compliance. Thus, we interpret “semimonthly or at the time of each payment of wages” as representing the outermost deadlines by which an employer is required to furnish the wage statement. Since defendant mailed the wage statement to certain discharged employees paid in-store by the same day as or the next day after termination, defendant was in compliance with section 226 because the employee was “furnished” with the wage statement semimonthly.
Canales, 23 Cal. App. 5th at 1271.
The plaintiff cited to the Division of Labor Standards Enforcement's policy manual, which provides that wage statements must be provided at the time of final payment. See id. But the Court of Appeal held that the policy manual constitutes a void regulation because there was no evidence in the record of compliance with the Administrative Procedure Act in creating this portion of the manual. See id. Further, the court did not find the policy manual persuasive because there is no language in section 226 requiring the provision of a wage statement in person, nor does the statute require the wage statement to provided at the earlier of "semimonthly or at the time of of each payment of wages," e.g., words to the effect of "whichever occurs first" are not in the statute. See id. Statements in other cases that wage statements are required at the time of discharge are dicta because they did not address the issue before the Canales court.
Next, the Court of Appeal held that mailing the wage statement complies with the statute. Why? Because mailing satisfies the requirement that the employer "furnish" the wage statement:
“Furnish” means to “provide with what is needed,” or to “supply” or “give.” (Merriam-Webster's Collegiate Dict. (10th ed. 1993) p. 474, col. 1.) Section 226 provides that an employer must furnish the wage statement as either “a detachable part of the check, draft, or voucher paying the employee's wages,” or separately when the wages are paid by personal check or cash. Other than that one provision, section 226 describes no other specific means by which an employer is to furnish the itemized statement to an employee. Thus, mailing the wage statement is a viable means to “furnish.” Defendant could also furnish the wage statement separately because paying discharged employees by cashier's check was the equivalent of paying them by cash.
Id. at 1270.
So there you have it---more of the very basic questions of wage-and-hour law were just answered. An employer may provide wage statements to terminated employees after the date of termination and up to the semimonthly deadline so long as the deadline does not fall on the date of termination, and an employer may mail the wage statement.