California’s Wage Theft Protection Act (Assembly Bill 469, California Labor Code Section 2810.5), which came into effect on January 1, 2012, created a new compliance obligation on the part of all California employers. The new law requires California employers to provide written notice of certain wage information to hourly, non-exempt employees that includes the following:

  • The rate of pay and the basis, whether hourly, salary, piece commission or otherwise, including any overtime rate; 
  • Allowances, if any, claimed as part of the minimum wage, including meal and lodging allowances; 
  • The regular pay day designated by the employer; 
  • The name of the employer, including any “doing business as” names;
  • The physical address of the employer’s main office or principal place of business and any mailing address, if different; 
  • The telephone number of the employer; and 
  • The name, address, and telephone number of the employer’s workers’ compensation carrier.

In addition to providing new employees with the information above, the Act also authorizes California's Division of Labor Standards Enforcements (“DLSE”) to require any other information it deems “material and necessary.”

To assist employers in complying with the Act, the DLSE published a template for employers to use, which can be found by clicking on the appropriate language-specific link at https://www.dir.ca.gov/dlse/Governor_signs_Wage_Theft_Protection_Act_of_2011.html. The DLSE has also published a guide to some Frequently Asked Questions (“FAQs”) regarding the Act which can be found at http://www.dir.ca.gov/dlse/FAQs-NoticeToEmployee.html. Because the law is new and complex, neither the form nor the FAQs address all employer concerns.

Harmonizing Specific Provisions of the Act with the FAQ section

Notice to Current Employees

Although the Act explicitly applies to newly-hired hourly, non-exempt employees, the FAQs state that it would be “best practice” for employers to “not only to provide the [information required under the Act] to new hires, but also to current employees.” Thus, it is recommended that employers provide the Notice to current hourly, non-exempt employees, in addition to new hires.

The Definition of “Time of Hire”

The Act places an obligation on employers to provide employees with the information listed above at the “Time of Hire,” however the Act does not define when the “Time of Hire” technically occurs. The FAQs seek to remedy this omission and provides that “the employer must provide the notice to new hires reasonably close in time to the inception of the employment relationship.”

Defining Pay Days

The FAQs provide a specific guide to employers in how to describe the employee’s pay day in their Notice. The FAQs state: “An employer need not provide a specific date (month, day, and year) for each pay day, but the information provided should be sufficient for an employee to understand when she will be paid. Thus, the regular day(s) of the month when wages will be paid should be specified in addition to the measure of time between pay days (e.g., semi-monthly, monthly, bi-weekly, weekly, etc.). Examples include: 1st and 15th of every month; 1st and 2nd Friday of every month, each Friday of every month.”

Implications of Multiple Pay Rates

Depending upon the type of employment relationship being entered into, employers may have difficulty complying with provisions regarding pay rates, particularly when an employer pays an employee at multiple pay rates (e.g. different pay rates for travel time). According to the Act, the Notice must include “[t]he 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.” Regarding employees who may have multiple pay rates, the FAQs state that “all applicable rates must be provided in the notice (or may be attached as a separate sheet to the notice with a clear reference in the notice to the attachment, indicated in the space for ‘Rate(s) of Pay’).”

Defining Overtime Rates

According to the FAQs, an employer “[s]imply stating the multiplier for overtime (e.g., 1½ and/or double the regular rate) does not specify an overtime rate. When providing information regarding applicable overtime rates, only rates known and determinable must be specifically provided to the employee.” However, the FAQs state that when an employee receives pay other than hourly pay (such as commissions, bonuses, or piece rates), “such other pay must be included in determining ‘the regular rate of pay’ for purposes of overtime compensation. In such cases, it is sufficient that an employer provide the minimal overtime rate based upon a multiplier of 1½ or double times the hourly rate and also indicate that such specified overtime rate is subject to upward adjustment when other specified forms of wages are earned during the applicable pay period.” Thus, when an employee receives pay other than hourly pay, the Act allows employers to be inexact about the overtime rate.

Changes in Workers’ Compensation

Should an employer change the policy number or provider for their workers’ compensation plan, the FAQs state that no notice of change is required, but employers are required to post the workers’ compensation notice “in a conspicuous location where employees can readily view the notice during the hours of the work day.” This should occur within seven days of any change to the employees’ workers’ compensation provider or policy number.

Effects of Signing the Notice and Refusal to Sign by an Employee

Although the Act does not require signatures from either the employer or the employee, the FAQs recommend that the employer and employee sign the Notice because the signature “better protects both the employer and employee [in proving] that the statutory notice [was] in fact provided as intended…” The FAQs also discuss what occurs if an employee refuses to sign the Notice. In the event that employee refuses to sign the Notice, the FAQs state that this refusal does not void the Notice requirements under the Act. Rather, if an employee refuses to sign the Notice, the FAQs recommend that the employer “should still give the notice to the worker and note the worker’s refusal on its copy of the notice.” By doing so, the employer will be in compliance with the Act, regardless of the employee’s missing signature. But employers should make certain that they have signed the Notice, and the employer representative who signs the Notice “may be any person the employer has authorized to sign the acknowledgment.” Thus, though the employer should sign the Notice and attempt to get a signature from the employee, an employee’s refusal to sign does not constitute a breach of the Act by the employer.

If you have any questions about how your company can comply with this new requirement, please contact one of Dorsey’s experienced California employment lawyers: Gary Gansle, Karen Wentzel, Mandana Massoumi or Gabrielle Wirth.