Recently, a California appellate court issued a clear reminder to employers that paying meticulous attention to detail is required in complying with California’s wage and hour laws.
In Noori v. Countrywide Payroll & HR Solutions, Inc. (CA3 C084800, 12/26/19), the Third Appellate District closely analyzed the Labor Code’s requirements regarding itemized wage statements and concluded that the plaintiff’s allegations that his employer had failed to comply with Labor Code Section 226(a) were sufficient to state a claim. The Appellate Court therefore reversed the trial court’s granting defendant’s demurrer without leave to amend.
In Noori, Plaintiff Mohammed Noori sued his former employer, Defendant Countrywide Payroll & HR Solutions, for violations of California’s Labor Code Section 226(a), which requires California employers to provide itemized wage statements to their employees along with their paychecks. Noori alleged that Countrywide had violated Section 226(a) because its wage statements bore the name “CSSG” instead of the name of the “legal entity that is the employer.” Noori sought to bring this and other claims under the Private Attorneys General Act (PAGA). Countrywide demurred, claiming that it had adequately complied with Section 226(a). The trial court granted the demurrer without leave to amend. Noori appealed.
A Rose is a Rose is a Rose – Isn’t It?
Noori alleged that he began working for Countrywide in 2015, and that Countrywide provided him with wage statements listing the employer of record as “CSSG.” “CSSG” was an acronym standing for “Countrywide Staffing Solutions Group,” a fictitious business name under which defendant Countrywide Payroll & HR Solutions, Inc. operated in some states other than California. Countrywide Staffing Solutions Group, Inc. operated under the fictitious business name of “Countrywide HR” or “CWHR” in California. Noori alleged that the wage statements violated Labor Code Section 226(a)(8) because they failed to show the proper name of his employer, and that he and other employees had suffered injury as a result of Countrywide’s failure to comply with Section 226(a)(8). Noori further alleged that he and other employees were injured, under Section 226(e)(2), because they were unable to “promptly and easily determine ‘the name . . . of the legal entity’” from the furnished statements.
No, It Is Not.
Countrywide demurred to Noori’s first amended complaint, arguing that since each wage statement identified the employer as CSSG, an acronym for Countrywide Staffing Solutions Group (a fictitious business name of Countrywide). this use of a fictitious business name is proper and it need not state its complete name on the wage statements. Countrywide further pointed out that, in any event, the checks attached to the wage statement provided the complete name.
On appeal, the Court recognized that Noori had correctly argued that no authority holds that a mere acronym for an out of state fictitious business name complies with the requirement to state the name of the “legal entity that is the employer.” The Court acknowledged that Section 226 does not expressly require that a wage statement include the name registered with the California Secretary of State, nor does the company’s complete name need to be included. The Court further recognized that minor truncations of an employer’s name have been found to comply with the statute – and that, in certain circumstances, fictitious business names have been found to satisfy the statute’s requirements.
However, the Court ruled that more severe truncations or alterations of the employer’s name can violate the statute, particularly where confusion might ensue. And since “CSSG” was an unregistered acronym of an out-of-state fictitious business name, the Court found that the shortened name or abbreviation could be deemed to have rendered the name confusing or unintelligible in violation of Section 226(a)(8).
The Court further rejected Countrywide’s argument that because the full name “Countrywide Staffing Solutions Group” appeared on the checks that were attached to the wage statements, Countrywide had complied with Section 226(a)(8). The Court found that the paycheck is not “part of” the wage statement. Section 226(a) requires employers to furnish “as a detachable part of the check . . . an accurate itemized statement in writing showing [the statutorily required information.]”. The Court emphasized that the plain language of Section 226, which requires that the employee be able to “promptly and easily” determine the employer’s name “from the wage statement alone,” means an employee must be able to make such a determination without reference to any other document or information.
The Devil Is In The Details.
The decision in Noori makes clear that employers must comply meticulously with all specific requirements of Section 226 in their wage statements – and that, if they fail to dot all of the i’s or cross all of the t’s by using acronyms, abbreviations, or short hand, they are in serious risk of protracted and expensive lawsuits. The devil is in the details, and employers are wise to examine their wage statements to ensure compliance.
The full opinion in Noori can be read here.