Can good faith defeat a wage-statement penalty in California?

Section 226 lets an employee recover statutory penalties where they are injured by a knowing and intentional failure to provide a compliant wage statement. The question in Naranjo was whether an employer that got it wrong while genuinely believing it was right meets that standard.

The court held it does not. An employer that reasonably and in good faith believed it was providing a complete and accurate wage statement is not liable for the § 226 penalty, even if the belief turns out to be mistaken.

The limits matter more than the holding. Good faith goes to the penalty, not to the underlying obligation — the wages themselves are still owed, and the belief must be both genuine and objectively reasonable. An employer that never considered the question at all is not in good faith; it is simply unaware, which is a different thing.

The practical reading is that this defence rewards employers who took a defensible position on an unsettled question and documented why. It does nothing for an employer whose wage statements are wrong because nobody looked, which is the more common situation.