California high court clarifies applicability of wage statement obligations for employees working out-of-state

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California Labor Code Section 226 specifies numerous wage statement disclosures that employers must provide to employees each pay date. One question that has lingered is whether Section 226’s requirements apply to employees who perform some work in California but also a significant amount of work outside California. This issue has arisen in the context of a couple of cases involving airline workers who spent time both within and outside California: Ward v. United Airlines, Inc. and Oman v. Delta Airlines, Inc.

The California Supreme court recently clarified this question through these two cases by providing the following analysis for application of Section 226’s wage statement obligations:

  • First, evaluate whether California is the employee’s primary work location or base of operations by determining whether the employee works the majority of their time in California, on a pay period by pay period basis. Thus, if an employee spends the majority of their time working in California during a pay period, Section 226 applies to all work in that pay period, including work performed outside of California. However, if an employee spends the majority of their working time during a pay period in a single state other than California, then Section 226 does not apply for that pay period. This means Section 226's obligations may apply for some pay periods and not others..
  • For employees who frequently travel between multiple states where there is not a majority of time worked in any one state during a pay period, the determining issue for the pay period is whether the employee has a definite base of operations in California, in addition to performing at least some work in the state for the employer. If the answer to that is yes, then Section 226 applies.
  • The Court also clarified that the employer's location, the employee's residence, where pay is received and where taxes are paid has no bearing on this determination.

The wage statement requirements under Labor Code Section 226 are highly technical and are commonly the basis of wage claims as they are easily appended to other types of claims. Employers who do not adhere to their wage statement obligations under Section 226 could face substantial penalties and class action/PAGA liability, so it is important to carefully review the content and completeness of your wage statements with the guidance of employment counsel.