Legal Requirements for Wage Statements and Time Records
California law requires that employers provide their employees with a wage statement at the time that wages are paid.1 Many office-bought wage statement templates do not comply with the requirements of the Labor Code. The fines associated with non-compliance with this section of the Labor Code can be very high, so we created a “Wage Statement Guide for California Employers” explaining what information is required on wage statements. Also included in the guide are sample wage statements and time record templates that are compliant with the Labor Code.
Withholding Wages from Employees to Repay Loans to the Employee or to Complete a Worker’s Capital Contribution to a Worker Cooperative
Employers sometimes make loans to employees in emergencies and to help employees with other major life expenses. Also, some worker cooperatives require that members make a contribution of capital in order to become a member. In both cases, the employer might consider withholding money from the member’s paycheck each pay period, in order to complete the repayment or capital contribution. Laws and requirements may vary from state to state. The California statute governing authorized wage deductions is California Labor Code section 224, which provides (with pertinent part underlined):
The provisions of Sections 221, 222 and 223 shall in no way make it unlawful for an employer to withhold or divert any portion of an employee’s wages when the employer is required or empowered so to do by state or federal law or when a deduction is expressly authorized in writing by the employee to cover insurance premiums, hospital or medical dues, or other deductions not amounting to a rebate or deduction from the standard wage arrived at by collective bargaining or pursuant to wage agreement or statute, or when a deduction to cover health and welfare or pension plan contributions is expressly authorized by a collective bargaining or wage agreement.
Employers should be careful, review the rules, and seek advice from an attorney prior to withholding wages. This detailed memo describes the laws that govern when and how an employer may withhold wages for the purpose of making a worker cooperative member’s contribution of capital.
Overtime Laws in Unique Circumstances
Please see SELC’s resource library for cooperatives for more information about the application of overtime laws to worker cooperatives.
More research on the way!
- Cal. Lab. Code §226 ↩