Beginning January 1, 2012, the California Labor Code requires most California employers to provide newly hired employees with a written notice that contains basic information about the employer and the employee’s wages. Called the Wage Theft Prevention Act of 2011, and passed last year as part of AB 469, the new law mandates employers include information specified in the statute and other disclosures the California Labor Commissioner-the state agency tasked with enforcing many of the state’s wage-related rules-deems “material and necessary.”
The law excludes public employers and applies to nearly all private employers. The notice need not be provided to exempt employees or most union members. When any of the information in the notice changes, the employer must also provide written notice of the change.
Basic Information on the Notice
The notice must include the employer’s name, any “doing business as” names, physical and mailing addresses, and telephone number. The notice also must identify the employer’s workers’ compensation carrier, address, and telephone number.
The notice must also contain information specific to the particular employee and his or her wages. These data include the employee’s pay rate, overtime rate, any allowances claimed against the minimum wage (such as meals or lodging), and the employee’s regular payday.
If the employee has more than one wage rate or method of payment (for example, different hourly rates applicable to different shifts), the notice should include all those wage rates. Unfortunately, neither the law nor the Labor Commissioner explains how an employer should address an overtime rate that can change from week to week. For example, if an employee earns a nondiscretionary bonus in a particular pay period, then the employee’s overtime rate will increase for that pay period. To address these and similar circumstances that affect the overtime rate (such as shift differentials or commissions), an employer should include the basic overtime rate on the form, but also include language indicating the overtime rate will never fall below legal requirements.
Additional Information in the Labor Commissioner’s Template
The Labor Commissioner’s model notice includes additional information the statute did not mandate. The employer must specify whether its employment agreement with the employee is written or oral. Of course, an “employment agreement” does not have to be a formal contract, and an agreement does not preclude employment at will. For example, an offer letter that lays out the basic terms of employment, including that employment is at-will, is a written contract once it is accepted by the employee.
If the employer uses a third party business to administer wages, such as a temporary services agency, the employer must include identifying information about the business on its website. Finally, the Labor Commissioner’s template notice includes space for the employee to acknowledge receipt, as well as introductory and concluding text (primarily about the purpose of the form).
How and When to Provide the Notice
Employers should immediately begin providing the notice to newly hired employees. While the Labor Commissioner permits the notice to be included with an offer letter, it must be a separate document. An employer may provide the notice electronically, but it must receive employee acknowledgement and provide a method for the employee to print the document.
The notice should be presented to each new hire in the language the employer uses to communicate employment-related information to that individual. Currently, the Labor Commissioner provides its template notice in several languages other than English.
While the Labor Commissioner permits employers to create their own notices, it is not clear whether the Labor Commissioner considers all the information on its template to be “material and necessary,” and therefore legally required. Absent specific guidance, employers should include all the substantive information on the Labor Commissioner’s template. Additionally, because the Labor Commissioner has not stated whether an employer may provide significant additional information on the notice, an employer should limit deviations from the template to non-substantive alterations such as adding a Company logo or changing the formatting.
If there are any changes to the information provided in the notice, the employer must give the employee an updated notice within seven days, with one exception. If the only change is to the wage rate, and the new rate is shown on the next wage statement, the employer does not need provide an updated notice. This requirement applies to current employees, not just newly hired employees.
Failure to comply with these new law’s requirements will likely subject an employer to a claim under the Private Attorneys General Act. Under that law, an employer would be required to pay $100 per employee per pay period for the first violation, and then $200 per employee per pay period for a second violation. To avoid such claims, an employer should immediately begin providing the notice. Employers who do not need or want to deviate from the Labor Commissioner’s template can find the form on the agency’s website.