One of several employment laws recently signed by Governor Jerry Brown, AB 469 takes effect on January 1, 2012. Titled the “Wage Theft Prevention Act of 2011,” AB 469 modified a number of current laws 10and created several new Labor Code provisions.

Labor Code Section 98 – Revised

As revised, Labor Code Section 98 permits the Labor Commissioner to hold an administrative hearing to recover “liquidated damages” when employers do not pay minimum wage. Liquidated damages currently may be sought only in court.

Labor Code Section 200.5 – New Section

New Section 200.5 extends the statute of limitations when the Division of Labor Standards Enforcement seeks penalties available under the Labor Code. Currently one-year, the statute of limitations will be three years from the date an assessed penalty becomes “final.”

Labor Code Section 226 – Revised

Section 226 sets forth information that must be included in itemized wage statements (the detachable part of an employee’s paycheck). Section 226 will now require farm labor contractors to list the name and address of the legal entity that secured the services of the employer. In addition, the revised language requires employers to retain both a copy of the wage statement and a record of deductions taken for three years.

Labor Code Section 240 – Revised

Section 240 provides that the Labor Commissioner may require certain employers to post a bond in an amount the Labor Commissioner deems sufficient. The purpose of the bond is to coerce employers to follow the law, and ensure there is a source of funds to pay awards. The new law extends – from six months to two years – the time period that an employer must avoid further trouble under the Labor Code to obtain release of its bond.

The employer may appeal the Labor Commissioner’s order requiring a bond. If the employer does not appeal and fails to post the bond, the Labor Commissioner may require the employer to provide an accounting of its assets. If the employer refuses to provide an accounting, the Labor Commissioner may bring an action against the employer to compel the employer to provide it. The employer will also be subject to a civil penalty of up to $10,000.00.

Labor Code Section 243 – Revised

When an employer has been twice convicted of wage violations or failed to satisfy a judgment for the nonpayment of wages within a 10-year period, revised Section 243 permits the court to immediately grant an order prohibiting the employer from conducting business unless the employer posts a bond or pays the wages.

The bond will not be released until after the employer satisfies all judgments for nonpayment of wages, as opposed to a judgment for nonpayment of wages. The bond will also be payable for wages and any other damages and monetary relief provided to the employee(s). To enforce the bond provision, a court may again order an accounting of the employer’s assets, and award sanctions if the employer fails to comply.

Labor Code Section 1174 – Revised

Employers now will be required to retain employee payroll records for three rather than two years. In addition, employers cannot prohibit an employee from maintaining a personal record of hours worked or piece-rate units earned.

Labor Code Section 1197.2 – New Section

Section 1197.2 provides for potential criminal liability against an employer who willfully refuses to pay a final court judgment or order for wages due within 90 days of its becoming final. If convicted and the amount owed is less than $1,000.00, the employer can be fined between $1,000.00 and $10,000.00 or imprisoned for up to six months, for each offense. If the amount owed is more than $1,000.00, the employer can be fined between $10,000.00 and $20,000.00 or imprisoned between six months to one year, or both the fine and imprisonment for each offense.

If the judgment involves more than one employee, the total amount of wages due to all employees will be combined for purposes of determining the level of fine and term of imprisonment.

Labor Code Section 2810.5 – New Section

Section 2810.5 requires an employer, at the time of hire, to provide all non-exempt employees (except state or any political subdivision or certain collective bargaining agreement employees) with a written notice containing specific wage and contact information. The Labor Commissioner will prepare a template of the hire notice containing the required information and will make it available to employers.

The employer must also notify employees in writing of any changes to the information in the hire notice within seven calendar days after the change. The notice to the employees may be (1) a new notice, (2) a notice of only the changes, or (3) if the changes are all contained in the normal wage statement provided pursuant to Section 226, that is sufficient.

Although the law does not require it, employers should keep a copy of the hire notice in the employee’s personnel file in case there is a dispute over whether the employee received the notice, or in the event the employer must defend itself against wage-hour or other claims.

Conclusion

AB 469 is just one of many laws Governor Brown signed at the end of this year’s legislative session. In the weeks to come, we will cover the most important of these laws.