California Court Finds Employer Violated Labor Code By Using Unregistered Acronym For Fictitious Business Name on Wage Statements

February 12, 2020

California’s Third Appellate District recently held that an acronym for an out-of-state fictitious business name does not comply with section 226(a)(8) of the state’s Labor Code.

Calif. (February 12, 2020) - California’s Third Appellate District recently held that an acronym for an out-of-state fictitious business name does not comply with section 226(a)(8) of the state’s Labor Code. Section 226(a)(8) requires California employers to provide employees with accurate itemized statements, including the name and address of the legal entity that is the employer. An employer’s failure to do so can lead to potential statutory damages, court costs, attorneys’ fees, and injunctive relief.

The Case

In Noori v. Countrywide Payroll & HR Solutions, Inc. (Cal. Ct. App., Dec. 26, 2019, No. C084800) 2019 WL 7183403, plaintiff Mohammed Noori (Noori) sued his former employer, Countrywide Payroll & HR Solutions, Inc. (Countrywide) for violating Labor Code section 226 by providing wage statements bearing the acronym “CSSG” which stood for “Countrywide Staffing Solutions Group.” This name served as Countrywide’s fictitious business name, but was not listed with the California Secretary of State.

Noori argued that “CSSG” is not Countrywide’s registered name, nor is it a minor truncation. CSSG corresponded to “Countrywide Staffing Solutions Group,” an entity unknown and unfamiliar to Countrywide employees. As a result, Noori claimed that he and other Countrywide employees were unable to promptly and easily determine their employer’s true name from their wage statements. 

The Court’s Analysis

The Third Appellate District agreed with Noori. The court first acknowledged that section 226 does not require that the employer state its complete or registered name. Indeed, “minor truncations” of an employer’s name, as well as fictitious business names, actually do comply with the statute. However, “severe truncations or alterations” of the employer’s name violate the statute where it has the potential to cause confusion to employees.

The court also rejected Countrywide’s argument that its full name “Countrywide Staffing Solutions Group” appears on checks physically attached to wage statements, thereby fulfilling section 226’s requirement.

Takeaway

Noori is yet another example of the recent trend in the California legislature to strictly interpret the requirements regulating the content that appears on employee wage statements pursuant to Labor Code section 226. Accordingly, now more than ever, California employers must ensure that wage statements include the entity’s legal name or registered “dba” rather than an unregistered acronym for a fictitious business name.

If you have any questions about compliant wage statements, contact a member of Lewis Brisbois’ Labor & Employment team for further guidance.


Author:

Eva Adel, Associate

Editor:

Thalia S. Rofos, Associate