The decision brings a degree of relief to California employers plagued by wage-and-hour claims that often include penalties for faulty pay stubs.
In a significant victory for California employers, the state Court of Appeal issued a decision on February 27, 2023, that provides them with a defense to wage statement penalties recoverable under Labor Code § 226 when they can show a “good faith” belief in their compliance with the Labor Code. See Naranjo v. Spectrum Security Services, Inc. (Feb. 27, 2023 Second District, Div. Four No. B256232) __Cal.App.5th __. Note: Duane Morris was counsel for the defendant in this appellate case.
In a published decision of widespread importance to employers of all sizes in California, the Court of Appeal held that under both Section 203 (waiting time penalties) and Section 226 (wage statement penalties), an employer’s good faith belief that no wages are owed will operate to preclude a finding that the employer “willfully” or “knowingly and intentionally” failed to comply with the statutory requirements. While prior cases have recognized that such good faith beliefs or disputes can preclude the imposition of waiting time penalties in other contexts (Labor Code § 203 and California Code and Regulations § 13520), it was unclear whether such defenses could be applied in the context of wage statement penalties (Labor Code § 226’s “knowing and intentional” requirement)―until now.
The decision brings a degree of relief to California employers...
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