We are looking at
updating our personnel and payroll systems, and a question has come up about
whether employees’ pay stubs must be on paper or can be provided electronically.
We would like to move to a paperless system. Does the law permit this?
– Shari F. in
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California Labor Code
Section 226(a) requires employers to provide employees with wage statements
when wages are paid. The statements, which can be detachable from the check or
separate, must be an “accurate itemized statement in writing” that gives such
pay period information as gross wages, total hours worked for nonexempt employees,
all deductions, and net wages. Further, employers must keep a copy of the
statements on file for at least three years.
Does this law provide
room for electronic wage statements? In a recent opinion letter, the labor commissioner
said yes.
Electronic Requirements
According to the labor
commissioner, the Section 226(a) requirement that you provide an accurate, itemized
statement permits electronic wage statements. However, the employee must be
able to read the electronic statement easily on a screen or print it out to
read as a hard copy—and at no expense. Employees must retain the right to
choose to receive a written paper stub or record.
The labor commissioner
also noted that, as with paper records, the electronically stored information must
be kept at least three years. Plus, the electronic system must incorporate
proper safeguards to ensure employee confidentiality.
Employer’s System
Approved
The labor commissioner
gave its stamp of approval to an employer’s electronic wage statement system that
included these features:
1. Employees could
choose to receive paper statements at any time.
2. The electronic
statements included all information Section 226(a) requires.
3. Electronic statements
were available on a secure website no later than pay day.
4. Access to the website
was controlled by personal identification numbers and unique employee identifiers.
The website was protected by a firewall and was expected to be available at all
times except in case of downtime caused by system errors or maintenance.
5. Employees could print
out paper copies at work, free of charge, on printers close to the computer. They
could also access their records over the Internet, save the file
electronically, and/or print it out on their personal printer.
6. The electronic
statements were maintained electronically for three years and accessible by
active employees that entire time. Former employees could request to receive
paper copies at no charge.