California Labor Code section 226 lists information that must be included in every employee’s wage statement. Pursuant to subsection (a)(8), one piece of information required is “the name and address of the legal entity that is the employer.” Employers can face substantial penalties if they do not provide accurate information. Litigious employees have claimed that use of a fictitious business name on a wage statement violates this requirement and, in such cases, have sought statutory penalties.

Of course, best practices would dictate that employers use their registered name, not a fictitious business name, on wage statements. However, not all employers do that.

Fortunately, on April 10, 2019, the California Court of Appeals for the First Appellate District in Savea v. YRC Inc. has saved employers who use fictitious business names on wage statements. In Savea, the employer, YRC Inc., listed “YRC Freight” as the employer on its employees’ wage statements and the employee, Savea, claimed YRC Inc. should have been listed as it was a legal entity and YRC Freight was merely a fictitious business name. YRC Inc. was able to show that, at all times during Savea’s employment, YRC Freight was a duly recorded and valid fictitious business name of YRC Inc. The Court of Appeals held, since YRC Freight was an actual, recorded fictitious business name of YRC Inc. in California, YRC Freight was also a valid name for YRC Inc. and thus, YRC Inc. had complied with the requirements of Labor Code section 226.

While Savea v. YRC Inc., provides certainty on this technical requirement and employers, imagine the cost to the employer. Here, YRC Inc. defended the action, prevailed on demurrer, had to respond to an appeal and prevailed on appeal. Just think of the attorneys’ fees incurred because YRC Inc. merely used its valid fictitious business name on its wage statements.

While Savea addressed use of fictitious business names as the listing of the legal entity’s name on wage statement pursuant to Labor Code section 226, Section 226 contains a myriad of other technical legal requirements with regard to wage and employment records that require strict compliance because any error could place your company in YRC Inc.’s position. Therefore, it is essential that companies have their wage, hour and pay policies and documents critically scrutinized by legal counsel to avoid becoming the next YRC Inc.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.