Important Developments for California Employers

California’s Wage Prevention Theft Act (the “Act”), Labor Code Section 2810.5, took effect on January 1, 2012. The California Labor Commissioner recently posted 15 frequently asked questions about the Act on its website. According to Simpson, Garrity, Innes and Jacuzzi, PC, a California-based law firm specializing in employment and labor law, the Labor Commissioner’s responses to the FAQs appear to significantly expand employers’ obligations. These responses can be viewed here.

An important addition from the FAQs is that the notice must be a standalone document.  Including the information in an offer letter will not meet the requirements of the statute.

The FAQs are also very specific about requirements for electronic notice. A company that provides the notice electronically must have a system where workers can acknowledge receipt of the notice and print out a copy of the notice.

The FAQs also state that a signed notice is not sufficient to constitute a voluntary written agreement between the employer and employee to credit any meals or lodging against the minimum wage.  Written agreements to this effect must be contained in another separate document.

The FAQs failed to address several significant unanswered questions about the notice form, such as what it means for an employee to be employed pursuant to a “written” or “oral” agreement and what is meant by the Labor Commissioner’s reference to businesses or entities that “administer wages or benefits.”

On December 29, 2011, the Labor Commissioner issued a template Wage Disclosure Notice form that employers may use, which can be found at http://www.dir.ca.gov/dlse/Governor_signs_Wage_Theft_Protection_Act_of_2011.html.  The website includes translations into Spanish, Vietnamese, Chinese, Korean, and Tagalog.

Should any of the above required notice information changes, the employer must provide the employees notice of these changes within seven days by: (1) providing a written amendment to the statement; (2) issuing an entirely new notice; or, (3) via paycheck stub, if the updated information is contained on the paycheck stub.

All non-exempt, private sector employees are covered by the Act for purposes of receiving the notice, except employees covered by a collective bargaining agreement that provides premium overtime rates and an hourly wage that is at least 30 per cent more than minimum wage. The notice must be provided to employees “in the language the employer normally uses to communicate employment-related information with the employee.”

Penalties for non-compliance include: a civil penalty pursuant to Labor Code Section 2699(f)(2) of one hundred dollars ($100) for each aggrieved employee per pay period for the initial violation and two hundred dollars ($200) for each aggrieved employee per pay period for each subsequent violation.

The Act requires employers to give covered, non-exempt employees a customized notice at the time of hire with the following specific information about their wages and other employment-related information upon hire:

• The rate or rates of pay and basis thereof, whether paid by the hour, shift, day, week, salary, piece, commission, or otherwise, including any rates for overtime, as applicable;
• Allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances;
• The regular payday designated by the employer in accordance with the requirements of the Labor Code;
•  The name of the employer, including any “doing business as” names used by the employer;
•  The physical address of the employer’s main office or principal place of business, and a mailing address, if different;
• The telephone number of the employer;
• The name, address, and telephone number of the employer’s workers’ compensation insurance carrier;
• Any other information the Labor Commissioner deems material and necessary.