Labor Code section 226

Employers should remember to take time to review their employee documentation, retention policies, and how this information is being saved on a periodic basis.  Beginning 2019 it is a great time to review these items to ensure compliance with the law and to make the best defense against litigation.  The first article in this series of posts covered hiring practices audit for 2019, this post deals with records.  The next post will cover topics for a wage and hour audit.  Five record retention issues employers should audit at the beginning of 2019:

1. Are employee time records maintained for at least four years?

The statute of limitations can reach back four years in wage and hour class actions under California law, and time records will be the primary issues in most cases.  California law requires employers to track start and stop times for hourly, non-exempt employees. The law also requires employer to track the start and stop times for the employee’s thirty-minute meal periods. The time system needs to be accurate.  Employer needs to be involved in the installation and setup of the system and not simply use the default settings for the hardware and software. Understand what the system is tracking and how it is recording the data.  Employers should also have a complaint procedure in place and regularly communicate the policy to employees in order to establish an effective way to remedy any issues.

2. Are pay stubs and schedules backed-up and saved by the employer? 

Under Labor Code section 226, employers are required to provide employees with pay stubs “semimonthly or at the time of each payment of wages.”   Section 226 requires that employers keep a copy of the pay stubs for “at least three years.”  Section 226(a).  As mentioned above, because the statute of limitations for labor code violations can extend back four years, many employers retain these records for a four-year period.

In addition, employers should also review where and how the pay stubs are being saved.  Electronic copies of the pay stubs are permitted under section 226 as long as the electronic backup accurately shows all of the information required to be on the pay stubs.

Employers should not rely upon their payroll company to retain copies of these documents.  First, the obligation falls on the employer do retain these, and many payroll companies do not necessarily save this information.  Second, if the company changes payroll companies, it may be difficult to access the payroll information from the former payroll company.

Often overlooked, but critical in defending wage and hour lawsuits are employee schedules.  Given the four-year statute of limitations for wage claims, many employers are also maintaining copies of employee schedules for four years.

3. Are employee files maintained confidentially and for at least four years?

California law does not define the terms “personnel records” or “personnel file,” and this creates considerable ambiguity about what documents should be keep in an employee’s personnel file.
While not legally binding on employers, there is some guidance from the Division of Labor Standards Enforcement(“DLSE”) expressing the following view:

Categories of records that are generally considered to be “personnel records” are those that are used or have been used to determine an employee’s qualifications for promotion, additional compensation, or disciplinary action, including termination. The following are some examples of “personnel records” (this list is not all inclusive):
1. Application for employment
2. Payroll authorization form
3. Notices of commendation, warning, discipline, and/or termination
4. Notices of layoff, leave of absence, and vacation
5. Notices of wage attachment or garnishment
6. Education and training notices and records
7. Performance appraisals/reviews
8. Attendance records

Employers should also consider placing the following documents in personnel files:

  • Signed arbitration agreements
  • Sexual harassment compliance records for supervisors
  • Sign acknowledgements of policy by employee (for example, confidentiality/proprietary information agreements, meal and rest break acknowledgments, handbook acknowledgments)
  • Wage Theft Protection Act notice for non-exempt employees
  • If commissioned employee, written commission agreement signed by both the employer and employee beginning January 1, 2013.
  • Warnings and disciplinary action documents.
  • Performance reviews
  • Documents of any grievance concerning the employee
  • Documents pertaining to when the employee was hired
  • Records pertaining to last day of work and documenting reason for departure from employment

4. Are Forms I-9 being maintained long enough and in a manner easily retrievable?

Employers must keep I-9 forms for three years from the employee’s date of hire, or one year after termination, whichever is longer. Employers have at least three business days to produce Forms I-9 during an inspection.  More information about the Form I-9 can be read here.

5. Are managers and supervisors trained about the company’s forms/documents available to them, what must be documented, and who is responsible for saving the documents?

Even if the employer has valid policies about document retention, it is irrelevant if the managers and supervisors are not also trained about the policies:

    • Do supervisors understand which forms are available to them to document discipline, employee absences, and other routine issues?
    • Who is involved in reviewing disability accommodation requests and how are these documented?
    • Do the managers have standard forms for the following:
      • Employee discipline and write-ups.
      • Documenting employee tardiness.
    • How are employee absences documented?
    • How is the employee documentation provided to Human Resources or the appropriate manager?
    • Who is responsible for saving the document in the paper file or electronically?

Employers need to be aware of the requirements and tight deadlines they have in responding to an employee’s request for various employment documents under California law.  This Friday’s Five focuses on five areas of records that are typically requested by applicants, current or former employees, and some common deadlines to comply with those requests.

1. Current and former employees have a right to their personnel records under Labor Code section 1198.5.

Under California Labor Code section 1198.5(a) provides that every current and former employee, or their representative, has the right to inspect and receive a copy of their personnel records.  In terms of requests pursuant to 1198.5, the request must be made in writing through two methods:

  • Written and submitted by the current or former employee or his or her representative.
  • Written and submitted by the current or former employee or his or her representative by completing an employer-provided form.

Employers must comply with the request no later than 30 calendar days from receipt of the written request.  Labor Code section 1198.5(b)(1).

2. The terms “personnel records” or “personnel file” are not defined in the Labor Code.

Because Labor Code section 1198.5 refers to the terms “personnel records”, but never defines the term, there is considerable ambiguity about what documents should be keep in an employee’s personnel file and what documents must be made available upon a request to inspect or copy the personnel records.  While not legally binding on employers, there is some guidance from the Division of Labor Standards Enforcement(“DLSE”) expressing the following view:

Categories of records that are generally considered to be “personnel records” are those that are used or have been used to determine an employee’s qualifications for promotion, additional compensation, or disciplinary action, including termination. The following are some examples of “personnel records” (this list is not all inclusive):
1. Application for employment
2. Payroll authorization form
3. Notices of commendation, warning, discipline, and/or termination
4. Notices of layoff, leave of absence, and vacation
5. Notices of wage attachment or garnishment
6. Education and training notices and records
7. Performance appraisals/reviews
8. Attendance records

However, Labor Code section 1198.5(h) clearly sets forth that this section does not apply to: (1) records relating to the investigation of a possible criminal offense, (2) letters of reference, (3) ratings, reports, or records that were: obtained prior to the employee’s employment, prepared by identifiable examination committee members, or obtained in connection with a promotional examination.  In addition, employers may redact the names of “any nonsupervisory employee” contained in the personnel file being requested.  Labor Code section 1198.5(g).

Labor Code section 1198.5 provides that employers must keep a copy of the employee’s personnel records for three years after the employee has left the company.  Labor Code section 1198.5(c)(1).

3. The right to inspect a personnel file under section 1198.5 stops once a lawsuit is filed.

If the current or former employee files a lawsuit that “relates to a personnel matter against his or her employer or former employer” the right to inspect personnel records under Labor Code section 1198 ceases.  Labor Code section 1198(n) and (o).

4. Labor Code section 432 provides applicants and employees with a right to a copy of any document he or she signed.

An employee or applicant is entitled to receive any document relating to the “obtaining or holding of employment.”  The employee or applicant must be provided the document “upon request.”  Labor Code section 432.

5. Employers have 21 days to provide payroll information required under Labor Code section 226.

Employers are required to provide employees with itemized wage statements or pay stubs that lists various items.  I’ve written about the requirements of what must be on wages statements previously here, and the DLSE provides examples of compliance pay stubs on its website for hourly employees here and for employees paid by piece rate here.

Under Labor Code section 226(c), employers have 21 calendar days to respond to written or oral requests to inspect or copy the records covered by this section.  Under this Labor Code section, employers can take reasonable steps to ensure the identify of a current or former employee, and the actual costs of reproduction can be charged by the employer.

A request for personnel records and payroll records cannot be taken lightly by employers, and failure to comply with the various requirements can expose employers to liability.  It is important to seek legal counsel immediately once an employee or their representative makes a verbal or written request for employment related documents or ensure compliance with the request.  It is also a key time period to evaluate whether the employee may file litigation, and to take steps to resolve any potential issues prior to litigation, if at all possible.

I received a few questions this week that I have not heard asked in a while: In what manner do employers need to keep time records?  Can they be kept electronically, or do they have to be written?  A follow-on question was: Do employers need to have a computerized timekeeping system to comply with their requirements under California law?  With technological advances, it is hard to remember that just 10 years ago these questions were on top of everyone’s mind, but today it is sometimes assumed that it must be legal to keep these records electronically.  However, these inquiries raise good questions about employers’ obligations under the Labor Code to create and maintain time records.  Surprisingly (or maybe not so surprisingly depending on your views on how slow the law is in adapting to technological advances), the Labor Code does not address this issue right on point.  Yet, there are some governing principles employers can review in making the decision on what practices are best for their business. This Friday’s Five covers five key obligations employers should consider when setting up time keeping systems:

 1. Are employers required to use a particular type of timekeeping system?

 California law does not require the use of any electronic type of timekeeping system or time clocks.  Employers may elect to use paper and pen in recording an employee’s time.  As explained below, the records should be “indelible,” meaning that the time entries cannot be erased, removed, or changed.  However, even with just a handful of employees, many employers find it more efficient to use an electronic timekeeping system.  Moving towards an electronic time keeping system can reduce mistakes in the recording and calculation of time worked, make it easier to track changes, and could make a review of the time entries easier should there ever be a challenge by the employee about their pay.  Most timekeeping software today will also help monitor meal break compliance and will automatically flag any violations for a manager’s review.

 2. Can time records be kept electronically?

 California Wage Orders require that employers maintain the employees time records “in the English language and in ink or other indelible form.”

The Division of Labor Standards Enforcement (“DLSE”) issued an Opinion Letter on July 20, 1995 stating that “storage of records by electronic means meets the requirements of California law if the records are (1) retrievable in the State of California, and (2) may be printed in an indelible format upon request of either the employee or the Division.”

The DLSE issued another Opinion Letter on November 10, 1998 advising employers that the electronic time record data could be maintained outside of the State of California “as long as a hard copy of the records was maintained at a central location within California.”  While the DLSE’s opinion letters are not binding legal precedent, they are given pervasive authority in court.  Thus, employers need to be careful about relying too heavily on these opinions.  In addition, these two Opinion Letters contradict each other.  As set forth below, the Wage Orders require time records “shall be kept on file by the employer for at least three years at the place of employment or at a central location within the State of California.”  Therefore, employers should consider maintaining a copy of employee time records, either electronically or on paper, within the State of California.

Similar language is also found in Labor Code section 226 pertaining to the information required to be provided to employees on pay stubs:

The deductions made from payments of wages shall be recorded in ink or other indelible form, properly dated, showing the month, day, and year, and a copy of the statement or a record of the deductions shall be kept on file by the employer for at least three years at the place of employment or at a central location within the State of California.

On July 6, 2006, the DLSE issued an Opinion Letter permitting employers to issue electronic pay stubs to employees if certain requirements were met.  The DLSE stated:

The Division in recent years has sought to harmonize the “detachable part of the check” provision and the “accurate itemized statement in writing” provision of Labor Code section 226(a) by allowing for electronic wage statements so long as each employee retains the right to elect to receive a written paper stub or record and that those who are provided with electronic wage statements retain the ability to easily access the information and convert the electronic statements into hard copies at no expense to the employee.

The DLSE approves electronic wage statements as long as the employer incorporates the following features:

  1. An employee may elect to receive paper wage statements at any time;
  2. The wage statements will contain all information required under Labor Code section 226(a) and will be available on a secure website no later than pay day;
  3. Access to the website will be controlled by unique employee identification numbers and confidential personal identification numbers (PINs).  The website will be protected by a firewall and is expected to be available at all times, with the exception of downtime caused by system errors or maintenance requirements;
  4. Employees will be able to access their records through their own personal computers or by company-provided computers.  Computer terminals will be available to all employees for accessing these records at work.
  5. Employees will be able to print copies of their electronic wage statements at work on printers that are in close proximity to the computer or computer terminal.  There will be no charge to the employee for accessing their records or printing them out.  Employees may also access their records over the Internet and save it electronically and/or print it on their own printer.
  6. Wage statements will be maintained electronically for at least three years and will continue to be available to active employees for that entire time.  Former employees will be provided paper copies at no charge upon request.

This same analysis would likely apply to the time records employers are required to maintain under California law.  However, employers need to approach this issue with advice from counsel, as there are no clear court decisions that have approved of the DLSE’s position.

3. Length of time electronic records should be kept

Employers should also note that the statute of limitations for many wage and hour class actions in California can extend back to four years under Business and Professions Code section 17200; and, therefore should consider keeping wage statements and other documentation required to defend against claims going back the previous four years.

4. Items time records must report (be careful, it is more than just start and stop times)

The Wage Orders require that California employers keep “[t]ime records showing when the employee begins and ends each work period. Meal periods, split shift intervals and total daily hours worked shall also be recorded. Meal periods during which operations cease and authorized rest periods need not be recorded.”  IWC Wage Order 5-2001(7)(a)(3).

Additionally, Labor Code section 1174 requires employers to keep time records showing the hours worked daily and the wages paid, number of piece-rate units earned by, and the applicable piece rate paid.

5. Records must be maintained in California

These records must be maintained in the state or at the “plants or establishments at which employees are employed.”  The records must be kept for at least three years.  Labor Code section 1174(d).

The Wage Orders likewise require that employers keep records “at the place of employment or at a central location within the State of California.” As mentioned above, if employers have electronic records, a copy of the electronic data should be maintained within the state just as a precaution.

The statute of limitations for wage claims can extend back to four years, so employers generally keep the records for four years.  Employers need to ensure that the data being saved is the actual time records of the employees, and can be reproduced in format that is accurate and easy to read, should the records ever be requested or needed to defend litigation.

(Special thanks to Rick Reyes, a summer associate at my firm, for edits to this post.)

California employment law is a mind field that carries huge exposure for employers not proactively monitoring legal developments and potential legal issues.  There are some statements employers in California should never make, and this Friday’s Five reviews misaligned statements that can create significant liability for an employer.

1. My company has employment practices liability insurance, so there cannot be much exposure from employment lawsuits.

In California, it is very common for insurance companies to exclude wage and hour claims from the employment practices liability (EPLI) coverage.  This applies to single plaintiff and class action claims and representative claims under California’s Private Attorney General Act (PAGA).  This is a significant area of potential exposure for employers, and therefore, the costs and benefit analysis of an EPLI policy must take these considerations into account.

Moreover, under California law an insured cannot buy insurance to cover willful acts.  See Insurance Code section 533.  Therefore, if the employment lawsuit alleges willful acts, it is also likely not going to be covered by insurance.

Employers should seek coverage counsel to assist in reviewing the exclusions and limitations of any EPLI policies prior to purchasing in order to completely understand the coverage that is being purchased for the cost of the policy.

2. I’m busy right now, can you tell me about your workplace complaint tomorrow?

California employers have a legal obligation to conduct workplace investigations.  California Government Code section 12940(j) provides that it is “unlawful if the entity, or its agents or supervisors, knows or should have known of this conduct and fails to take immediate and appropriate corrective action.”  The law also provides that employers are liable if they “fail to take all reasonable steps necessary to prevent discrimination and harassment from occurring.”  Gov. Code section 12940(k).  If the employer fails to take the preventative measures, they can be held liable for the harassment between co-workers.  If the harassment occurs by a manager, the company is strictly liable for the harassment.  If the harassment occurred by a non-management employee, the employer is only liable if it does not take immediate and appropriate corrective action to stop the harassment once it learns about the harassment.  Investigations must follow certain parameters in order to be deemed adequate under the law.  Click here for more information about conducting adequate investigations.

3. There is no need for our company to record meal breaks, all of the employees know that they can take breaks whenever they want.

Meal breaks taken by the employees must be recorded by the employer. However, there is no requirement for employers to record 10-mintute rest breaks.  For more information about meal and rest break obligations, see my previous article.

4. Our company’s handbook is current, it was updated four years ago.

Any California employer can attest, the employment legal landscape changes on a yearly (if not more often basis).  Employers should have someone well versed on employment law reviewing the employee handbook on at least a yearly basis.

5. I’m sure my payroll company is issuing compliant pay stubs.

Employers are cautioned not to rely on their payroll companies for compliant itemized wage statements, as these companies often times do not understand the legal requirements of the Labor Code. Ensuring the required information is properly listed on the itemized wage statements is an item that employers should review at least twice a year for compliance.

Labor Code Section 226(a) requires the following information to be listed on employees’ pay stubs:

  1. Gross wages earned
  2. Total hours worked (not required for salaried exempt employees)
  3. The number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece rate basis
  4. All deductions (all deductions made on written orders of the employee may be aggregated and shown as one item)
  5. Net wages earned
  6. The inclusive dates of the period for which the employee is paid
  7. The name of the employee and the last four digits of his or her social security number or an employee identification number other than a social security number
  8. The name and address of the legal entity that is the employer
  9. All applicable hourly rates in effect during the pay period, and the corresponding number of hours worked at each hourly rate by the employee

Here is an example of an itemized wage statement published by the DLSE.

Also, do not forget that under California’s paid sick leave law that went into effect on July 1, 2015 employers have additional reporting information regarding employees’ accrued paid sick leave and usage. Employers must show how many days of sick leave an employee has available on the employee’s pay stub or a document issued the same day as a paycheck.

Companies are ultimately liable for these violations, so it is best to double check your payroll company’s work to ensure compliance.

With the end of summer quickly approaching, this Friday’s Five (and next week’s post as well) covers broad topics employers should review periodically.  Today’s post covers five questions a company operating in California should be asking on a routine basis:

1. Has the company reviewed and updated the employee handbook and related policies?

As discussed in last weeks Friday’s Five about the new court decision on vacation pay in Minnick v. Automotive Creations, an employer’s policies are critical in defending claims.  Vague or out dated policies can create huge amounts of liability for employers. California’s requirements change throughout the year, and it is important that employers have a good relationship with employment counsel so that they are routinely communicating and reviewing the need to update policies based on new case law and legislation.

2. Does your company train supervisors and employees on its handbook and other policies, and does the company standby what it tells employees in these policies?

Legally drafted policies only get your company half of the way there.  Companies need to train managers and supervisors about what the policies mean and how they need to be implemented day-to-day.  Furthermore, the company needs to follow-through with what it tells supervisors, managers, and employees.  For examples, if the company maintains an open door policy, but none of the employees are utilizing the open door policy there could be a problem.  One solution is for the company to start pro-actively having open door sessions with employees to discuss their experience at the company (my post next week will discuss what should be asked during these open door sessions).

3. Has the company conducted a review of a local county and city laws that apply?

State, county and city laws regulating minimum wage and paid sick leave are numerous and California employers need to ensure they have closely reviewed they are complying with these requirements.  As Carl’s Jr. is finding out, noncompliance can have steep penalties.

4. When was the last time the company conducted an internal wage and hour audit internally? When was the last time an external lawyer or other professional reviewed wage and hour practices?

Many companies establish policies or simply continuing using policies from the past that have never been reviewed internally or externally by a lawyer or other professional.  I’ve published an HR audit list that covers a few of the essential areas that must be reviewed to lower a company’s legal exposure in California.

5. Is there an open line of communication with the employer’s payroll company and have specific wage and hour compliance issues been discussed?

The information that must be listed on employee’s pay stub is detailed, but easy to comply with.  A model pay stub published by the State Division of Labor Standards Enforcement can be found here (but note this only lists the state requirements – any other local county or city requirement will also apply).  The model pay stubs does not list paid sick leave, which employers must also remember to list on the employee’s pay stub or other writing provided to employees when they are paid.

Many payroll companies do not review the accuracy of the information listed on the pay stubs they generate, and this burden falls on the employer.  In addition to the California Labor Code requirements of the information that must be listed on pay stubs, the local requirements for reporting the amount of paid sick time available to employees must also be provided.  Employers need to proactively review and discuss these requirements with their payroll companies.

Let me start with the lawyer’s disclaimer up-front: this Friday’s Five list has no scientific or statistical backing whatsoever, I generated it based on the cases I’ve been litigating in 2014. My experience may be (and probably is) skewed a bit, but nevertheless California employers should pay attention to the following areas of potential litigation.

1. Meal and rest break litigation.

Meal and rest break class action litigation is still very prevalent in California. While employers are becoming more sophisticated in ensuring compliance with their obligations, the litigation has turned to more nuanced issues, such as the employer’s failure to record meal breaks or provide a full 30 minutes for the meal break. Meal and rest break policies and procedures should always been under review by employers to ensure compliance.

2. Rounding policies.

There have been a number of cases I’ve litigated this year involving time rounding policies. It is important for employers to simply no use the default settings provided by their time keeping software, but instead ensure that the rounding complies with California law.
The Division of Labor Standards Enforcement (DLSE) provides the following guidance for California employers in regard to time rounding:

…the federal regulations allow rounding of hours to five minute segments. There has been practice in industry for many years to follow this practice, recording the employees’ starting time and stopping time to the nearest 5 minute s, or to the nearest one-tenth or quarter of an hour. Presumably, this arrangement averages out so that the employees are fully compensated for all the time they actually work. For enforcement purposes this practice of computing working time will be accepted by DLSE, provided that it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked. (See also, 29 CFR § 785.4 8(b))

3. Private Attorneys General Act claims.

In 2014, the California Supreme Court held that class action waivers in arbitration agreements are enforceable. Click here to read more about the holding, Iskanian v. CLS Transportation Los Angeles, LLC. This holding provided a tool for employers to reduce their class action liability by entering into arbitration agreements with their employees. However, Plaintiffs continually challenge class action waivers on numerous grounds, and it is critical employers’ arbitration agreements are properly drafted and up-to-date. In addition, while courts will uphold class action waivers, the California Supreme Court held that employee may still bring representative actions under the Private Attorneys General Act (PAGA). PAGA claims are limited to specific penalties under the law, and have a much shorter one year statute of limitations compared to potentially a four year statute of limitations for most class actions. Given that the California Supreme Court found that the arbitration agreements could not have employees waive their rights to bring “representative actions” under PAGA, the PAGA claims are more prevalent and being litigated harder by both plaintiffs and defendants.

Click here to read more about PAGA and what do to in response to receiving a Private Attorney Generals Act notice.

4. Required information on pay stubs/itemized wage statements.

Employers are cautioned to rely on their payroll companies for compliant itemized wage statements, as these companies often times do not understand the legal requirements. Ensuring the required information is properly listed on the itemized wage statements is an item that employers should review at least twice a year for compliance.

Labor Code Section 226(a) requires the following information to be listed on employees’ pay stubs:

1. Gross wages earned
2. Total hours worked (not required for salaried exempt employees)
3. The number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece rate basis
4. All deductions (all deductions made on written orders of the employee may be aggregated and shown as one item)
5. Net wages earned
6. The inclusive dates of the period for which the employee is paid
7. The name of the employee and the last four digits of his or her social security number or an employee identification number other than a social security number
8. The name and address of the legal entity that is the employer
9. All applicable hourly rates in effect during the pay period, and the corresponding number of hours worked at each hourly rate by the employee

Here is an example of an itemized wage statement published by the DLSE:

Also, do not forget that with California’s paid sick leave law taking effect July 1, 2015, employers will have additional reporting information regarding employees’ accrued paid sick leave and usage. Employers must show how many days of sick leave an employee has available on the employee’s pay stub or a document issued the same day as a paycheck.

5. Off the clock claims.

Litigation alleging that employees were not paid for all time worked was continuing strong in 2014. This claim arises in various scenarios. The basic claim is that the employee clock out from work and was required to or voluntarily continued to work. This type of claim is usually very difficult to have certified as a class action because the employer’s liability for not paying for off the clock work is whether the employer knew or should have known that the work was being performed and that the employee was not compensated for the work. Anther common scenario given rise to an off the clock claim is when employees have to do some task before or after clocking or out for their work. While the U.S. Supreme Court recently held that security screenings of employees at the end of their shifts to ensure they were not stealing product was not compensable time, employers need to review their practices to avoid these types of situations in their workplace.

Employers can receive requests for employment records of current and former employees though different ways. It is important for employers to first carefully review the request to understand what is being requested. It is important to understand who is making the request? Is the request only seeking a personnel file? Is the request only seeking payroll records? It is possible that a third party, such as a governmental agency or a party in litigation is seeking employment records for an employee. In this case, it is important for the employer to understand its obligations in protecting the privacy interest of the employee in connection with the rights of third parties to obtain these records.

The following are five ways that employers may have to provide copies of employment records or make employment records available for inspection.

1. Request under Labor Code Section 432, which provides employees with a right to receive a copy of any signed document upon request by the employee.

2. Request under Labor Code section 1198.5, which provides for the right of current and former employees to inspect and receive a copy of personnel records.

A few guidelines regarding requests under section 1198.5:

  • Employers must comply no later than 30 days from when the request is received.
  • If employee asks for copy of file, employer may charge actual costs of coping to employee.
  • Employers may take reasonable steps to ensure identity of the current or former employee.
  • Employers may redact the names of any nonsupervisory employees contained in the personnel file.
  • Employees have no right to inspection under this section if lawsuit has already been initiated.
  • Failure to comply with this section can result in a $750 penalty.

3. Request under Labor Code section 226(b), which allows current and former employees to inspect or copy records pertaining to their employment.

A few guidelines regarding requests under section 226(b):

  • Employers can take reasonable steps to ensure the identity of a current or former employees, and that they are actually making the request.
  • Actual costs of reproduction may be charged by the employer.
  • Employers must comply within 21 days of request.
  • Failure to comply with this section can result in a $750 penalty.

4. Public agencies, such as the Department of Labor or California Labor Commissioner, have the right to inspect records and workplaces under limited circumstances.

For example, under the Federal Labor Standards Act (FLSA), the Department of Labor (DOL) has certain permissions to investigate and gather date about wages, hours worked, and other working conditions at workplaces. The FLSA also provides the DOL limited permission to enter employers’ premises, review records, and even potentially question employees about employment practices. Upon receiving a request from any public agency, such as the DOL or the California Labor Commissioner, an employer should immediately review what obligations and rights it has in responding to the request.

5. Requests for records through subpoenas.

Employers can also receive subpoenas from third parties seeking employment records. The “custodian of records” is responsible for responding to the requests and producing employment records in certain circumstances. California law requires that a request for a personnel file include a “Notice to Consumer” notifying the employee that such records are being sought, and providing the individual an opportunity to object to the disclosure of the information. If the employee or former employee has not been notified, or objects to the production of the requested records, the employer should not produce the information requested unless and until a court orders otherwise, or the affected employee agrees to the production. If the subpoena seeks the disclosure of confidential or proprietary information, you should contact an attorney to see if the company has an obligation to move to quash the subpoena or seek an appropriate protective order to preserve the confidentiality of the information sought.

Employers should not produce requested documents before they are due and without being satisfied that the proper subpoena procedures and notice requirements, if applicable, have been met. Employers do have a duty to maintain the privacy rights of current and former employees.

The DOL is pushing for regulations to require employers to provide more information about how employee’s paychecks are calculated. This week, the Labor Secretary Hilda Solis said that the Department of Labor is backing a proposal that would require employers to provide more information to employees in order help stop wage and hour violations. Bloomberg reported that the proposal “would require companies to give employees a report explaining how their pay and hours are set and is aimed at ensuring companies compensate workers for overtime.”

Many states already require certain information to be provided to the employees on their paystubs. For example, California Labor Code section 226(a) has specific requirements of the type of information that must be provided on employee wage statements. That section provides:

Every employer shall semimonthly, or at the time of each payment of wages, furnish each of his or her employees either as a detachable part of the check, draft, or voucher paying the employee’s wages, or separately when wages are paid by personal check or cash, an itemized statement in writing showing: (1) gross wages earned; (2) total hours worked by each employee whose compensation is based on an hourly wage; (3) all deductions; provided, that all deductions made on written orders of the employee may be aggregated and shown as one item; (4) net wages earned; (5) the inclusive dates of the period for which the employee is paid; (6) the name of the employee and his or her social security number; and (7) the name and address of the legal entity which is the employer.

Many California employers, as well as out-of-state employers, often are unaware of this requirement, which can expose them to substantial penalties, even for minor, technical violations of this section.