Soto worked for Motel from June 2012 through January 2015. In May 2015, Soto
brought a representative PAGA action alleging a single cause of action under section
226(a).2 Soto alleged Motel violated section 226(a) by failing to provide its California
1 All statutory references are to the Labor Code; we omit the word subdivision when referring to the statutory subparts.
2 Section 226(a) states: "Every employer shall, semimonthly or at the time of each payment of wages, furnish each of his or her employees, either as a detachable part of the check, draft, or voucher paying the employee's wages, or separately when wages are paid by personal check or cash, an accurate itemized statement in writing showing (1) gross wages earned, (2) total hours worked by the employee, except for any employee whose compensation is solely based on a salary and who is exempt from payment of overtime under subdivision (a) of Section 515 or any applicable order of the Industrial Welfare Commission, (3) the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis, (4) all deductions, provided that all deductions made on written orders of the employee may be aggregated and shown as one item, (5) net wages earned, (6) the inclusive dates of the period for which the employee is paid, (7) the name of the employee and only the last four digits of his or her social security number 2
nonexempt employees with wage statements setting forth "all vacation and PTO (paid
time off) wages accrued during the applicable pay period." Soto sought statutory
penalties and attorney fees. (§ 2699(g)(1).)
Motel demurred, asserting that section 226(a) does not require employers to
itemize the monetary value of vacation balances before the employment relationship is
terminated. Motel relied on the plain language of the statute, the language of related
statutes (§§ 227.3, 227.5), federal and state case law, and a sample itemized wage
statement contained on the Division of Labor Standards Enforcement (DLSE) website.
In opposing the demurrer, Soto argued that section 226(a) requires itemization of
earned "wages" and California cases have recognized (in other contexts) that a "wage"
includes vacation pay. (See Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th
(Suastez).) Soto emphasized the legal principle that vacation benefits are earned and
become vested during the pay period when they accrue. (See Suastez, supra, 31 Cal.3d at
pp. 778-784.) Soto additionally argued a vacation wage reporting requirement is
supported by the strong public policy favoring timely pay for completed work.
or an employee identification number other than a social security number, (8) the name and address of the legal entity that is the employer and, if the employer is a farm labor contractor, as defined in subdivision (b) of Section 1682, the name and address of the legal entity that secured the services of the employer, and (9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee . . . . The deductions made from payment of wages shall be recorded in ink or other indelible form, properly dated, showing the month, day, and year, and a copy of the statement and the record of the deductions shall be kept on file by the employer for at least three years at the place of employment or at a central location within the State of California. . . ." 3
After considering the arguments and taking judicial notice of the DLSE sample
wage statement, the trial court sustained the demurrer without leave to amend. The court
concluded "section 226(a) does not require a wage statement to include the value of
vacation or PTO wages accrued and earned."
I. Review Standards
On appeal from a judgment dismissing an action after sustaining a demurrer
without leave to amend, the "reviewing court gives the complaint a reasonable
interpretation, and treats the demurrer as admitting all material facts properly pleaded."
(Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.) It "is error for a trial court
to sustain a demurrer [if] the plaintiff has stated a cause of action under any possible legal
theory." (Ibid.) We apply a de novo standard in reviewing the court's ruling sustaining
the demurrer. (Lazar v. Hertz Corp. (1999) 69 Cal.App.4th 1494, 1501.)
II. Statutory Interpretation Principles
The issue before us requires that we ascertain the legislative intent underlying
section 226. (See Gattuso v. Harte-Hanks Shoppers, Inc. (2007) 42 Cal.4th 554, 567
(Gattuso).) In so doing, we first examine "the statute's words, giving them their ordinary
and usual meaning and viewing them in their statutory context, because the statutory
language is usually the most reliable indicator of legislative intent." (Ibid.)
"When the statutory language is ambiguous, a court may consider the
consequences of each possible construction and will reasonably infer that the enacting
legislative body intended an interpretation producing practical and workable results rather
than one producing mischief or absurdity . . . . '[A] court's "overriding purpose" in
4
construing a statute is "to give the statute a reasonable construction conforming to [the
Legislature's] intent. . . ." ' . . . . 'The court will apply common sense to the language at
hand and interpret the statute to make it workable and reasonable.' " (Gattuso, supra, 42
Cal.4th at p. 567; accord, Yohner v. California Dept. of Justice (2015) 237 Cal.App.4th 1,
8.)
We independently determine the meaning of a statute. (Ramos v. Garcia (2016)
248 Cal.App.4th 778, 784.)
III. Analysis
Section 226 requires "employers [to] provide accurate itemized statements of
wages to their employees." (Morgan v. United Retail Inc. (2010) 186 Cal.App.4th 1136,
1143 (Morgan).) The employer must provide the wage statement to the employee
"semimonthly or at the time of each payment of wages" and furnish the statement "either
as a detachable part of the check . . . paying the employee's wages, or separately when
wages are paid by personal check or cash." (§ 226(a).) The wage statement must contain
the information specified in the statute. (Heritage Residential Care, Inc. v. Division of
information should be required on a regular basis is a policy matter for the Legislature
and/or the regulatory agencies, and not the courts.3
3 Section 227.5 (relied upon by Motel) requires an employer to provide annual statements upon request regarding payments made "to a health or welfare fund, pension 10
In reaching our conclusions, we do not rely on the sample wage statement on the
DLSE website. As Soto notes, the sample statement does not address the issue of
vacation pay, and therefore it is not helpful on the issue before us. We additionally note
that Soto's complaint alleged a section 226(a) violation based also on Motel's failure to
specify "paid time off" on the wage statements. Soto does not suggest there is any
different analysis regarding this benefit, and therefore we do not separately discuss the
issue. Our conclusions apply equally to the "paid time off" allegations.
DISPOSITION
Judgment affirmed. Respondent to recover its costs on appeal.
HALLER, J.
WE CONCUR:
HUFFMAN, Acting P. J.
NARES, J.
fund or vacation plan or such other plan, for the benefit of the employee." This provision does not appear to be directly applicable to the issue here. 11
AI Brief
AI-generated · verify before citing
Holding. Labor Code section 226(a) does not require employers to include the monetary value of accrued paid vacation time on employee wage statements until the employment relationship is terminated and the payment becomes due.
Issues
Does Labor Code section 226(a) require employers to itemize the monetary value of accrued vacation pay on employee wage statements?
Is accrued vacation pay considered 'wages' that must be itemized under section 226(a) prior to the termination of employment?
Disposition. affirmed
Quotations verified verbatim against the opinion
“Section 226(a) does not require employers to include the monetary value of accrued paid vacation time in employee wage statements unless and until a payment is due at the termination of the employment relationship.”
“unused vacation time does not become a quantifiable vacation wage until the employee separates from the employment.”
“Until a vacation benefit is required to be paid, it need not be included in a wage statement under section 226(a).”