Employee Requests For Payroll Records: Haste Makes, er, a Hash of Things
Published: July 18, 2016
Conventional wisdom notwithstanding, employers are people or, if they are not, they are staffed by people. People often take short cuts. HR workers are no different from anybody else. They are prone to take the shortest distance between two points. It may be for that reason that I am increasingly seeing employers make a common error in responding to employee requests for “payroll records”. Labor Code section 226, among other things, requires an employer who receives a written or oral request (from a current or former employee) to inspect or copy records to comply with the request “as soon as practicable,” but no later than 21 calendar days of the request.
Let me back up a second; Labor Code section 226 requires employers to produce to employees at the time of payment of wages, a statement that contains nine specific categories of information, including the “legal” name of the employer (more on that in another blog); a description of deductions and all time worked, wages earned and paid, and all hourly rates of pay. Failure to comply with this section can cause an employer no end of grief.
The same section requires employers to retain a copy of wage statements and a record of deductions for at least three years. In my experience not a lot of employers retain hard copies of wage statements. As an alternative to hard copy or “.pdf” storage, section 226 permits employers to produce a computer generated record that accurately shows all of the required information. Fairly read, this section requires employers to produce duplicates of wage statements provided to employees. Even if that is not what is intended by this section, it is fair to say that many employees and their attorneys expect employers who receive a request for payroll records under Labor Code section 226 to produce a duplicate wage statement that contains all nine categories of information required by this section.
Yet, when responding to such a demand, many employers produce “payroll inquiries,” payroll summary documents or screen shots of electronic payroll system data, rather than produce a duplicate wage statement or summary that contains all of the information required by section 226. This can be a costly and time consuming mistake. Employers have been known to spend tens of thousands of dollars trying fix that mistake. When an employer produces a “payroll inquiry” or other summary of wages (rather than the wage statement required by section 226), the attorney for the worker will examine the record produced in response to that demand for sufficiency under section 226. If it fails that examination because of missing information (employer identity, hourly rates, etc.), the employer then has to explain why, when asked for “payroll records” it produced something other than the wage statement required by section 226.
I know, this is unfair. But here is the take away as I see it: When asked by an employee (or an attorney for an employee) to produce wage statements issued to the worker pursuant to Labor Code section 226 or “payroll records required to be maintained pursuant to Labor Code section 226,” either provide duplicates of the wage statements provided to the employee or a computer generated record that contains all of the information required by Labor Code section 226.
As I say above, failure to do this, can be an expensive mistake to fix.