Two recent decisions provide clarity with regard to claims made pursuant to California Labor Code Section 226(a), which requires that employers provide their employees with "accurate itemized statement[s]" containing various categories of information regarding employee wages each pay period. In Price v. Starbucks, 192 Cal. App. 4th 1136 (2011), a California court of appeal held that an employee must allege a cognizable injury to be entitled to penalties for an employer's violation of Section 226(a)—a mere violation on its own will not suffice. In McKenzie v. Federal Exp. Corp., 765 F. Supp. 2d 1222 (2011), however, a California federal district court held that Price does not apply to actions seeking penalties under PAGA for an employer's violation of Section 226(a), and that no allegation of injury is required in the PAGA context.
In Price, Plaintiff sued Starbucks on behalf of himself and a putative class of baristas for various Labor Code violations, including failure to issue wage statements in compliance with Section 226(a). Plaintiff alleged that the wage statements: (1) did not list the "total" hours worked because it provided the total of regular hours worked and the total of overtime hours worked, but not the total of both; (2) did not show "net wages" because Starbucks used the term "amount paid" following gross pay and deductions; and (3) listed the regular rate of pay but not the overtime rate of pay. Plaintiff alleged that this "caused confusion and possible underpayment of wages due," and forced the putative class members to attempt to reconstruct their time and pay records.
Starbucks filed a motion to strike Plaintiff's claim on the ground that Plaintiff failed to allege a cognizable "injury," as required under Labor Code Section 226(e) in order for employees to recover for violations of Section 226(a). The trial court granted the motion, and the court of appeal affirmed. The court of appeal held that the "injury" requirement of Section 226(e) "cannot be satisfied simply if one of the nine itemized requirements in [Section 226(a)] is missing from a wage statement." While Plaintiff alleged a "mathematical injury," the information allegedly missing from the wage statements was not the type that required computations in order for Plaintiff to analyze whether he had been compensated for all hours worked. The court further found that Plaintiff's allegations regarding the non-payment of wages were based on speculation, which is insufficient to sustain a claim of injury under Section 226(e). Price therefore appears to have heightened pleading standards for Plaintiffs asserting claims under Section 226(a).
McKenzie, however, clarified that such heightened standards do not apply to actions seeking PAGA penalties for violations of Section 226(a). In McKenzie, Plaintiff sought to recover PAGA penalties on the ground that FedEx's wage statements did not comply with Section 226(a) because they were ambiguous as to the hours worked and rates of pay, and deficient in their failure to identify the start date of each pay period. FedEx moved for summary judgment, arguing that Plaintiff failed to prove an injury as required by Section 226(e). The court, however, found that proving a violation of Section 226(a) was sufficient to warrant penalties under PAGA because PAGA specifically provides penalties for violating "subsection (a) of section 226" without any reference to subsection (e).