Monetary Amount of Accrued Vacation Need Not Be Included on Wage Statements

Topics: Court Decisions, Wage & Hour Issues

As California employers are increasingly aware, California has a unique law requiring employee wage statements (pay stubs) to include specific items of information.  Failure to include all such information, completely and accurately, exposes an employer to substantial penalties.  The plaintiffs' employment bar has of course seized on the opportunity to profit off of this law because of the automatic right of a prevailing plaintiff to recover attorneys' fees.  Claims alleging inaccurate and incomplete wage statements and seeking penalties on behalf of all aggrieved employees under PAGA have been filed in droves.  One such lawsuit was filed against Motel 6, alleging that this employer violated California wage statement law by failing to include the monetary amount of employee's accrued vacation on their pay stubs.  Yesterday, a California Court of Appeal upheld the dismissal of this claim, ruling that California law does not require the monetary amount of accrued vacation time to be included on employees' pay stubs (unless and until the accrued vacation time is paid out on termination of employment).

The court rejected the plaintiff's argument that because accrued vacation/PTO is considered a form of "wages" in California and wage statement law requires that gross wages and net wages earned during the pay period be itemized on the pay stub, this means that the monetary amount of vacation "wages" earned during the pay period must be itemized on the pay stub.  Rejecting this argument, the court reasoned that an employee does not have any entitlement to be paid the value of accrued vacation until termination of employment and, as such, until termination of employment accrued vacation is just a benefit and not a wage earned during the pay period that must be itemized on an employee's pay stub.

While this case had the right result, it serves as a reminder of the crazy degree to which plaintiffs' attorneys are stretching to "find" wage statement violations and sue employers based thereon.  If employers have not done so already, they should review their wage statements for strict compliance with the itemization reqirements set forth in California Labor Code section 226.