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January 3, 2012

Employers Must Ensure Compliance with New California Notice Requirement for Non-Exempt Employees


As part of the Wage Theft Prevention Act of 2011 (AB 469 - Swanson), which added Section 2810.5 to the California Labor Code, employers must provide non-exempt employees written notice regarding pay and other information upon hire starting January 1, 2012. Written notice must also be provided when any changes are made to the required information. Specifics of the new law and tips for compliance are detailed below.

New Notice Requirement

The new law requires employers to provide non-exempt employees, at the time of hiring, with a notice that specifies:

  • (A)The rates of pay, whether paid by the hour, shift, day, week, salary, piece, commission, or otherwise. The notice should also include any rates for overtime at both time-and-a-half and double-time rates
  • (B) Allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances
  • (C)The employer’s regular payday
  • (D)The name of the employer, including any “doing business as” names used by the employer
  • (E)The physical address of the employer’s main office or principal place of business, and a mailing address, if different
  • (F)The telephone number of the employer
  • (G) The name, address, and telephone number of the employer’s workers’ compensation insurance carrier
  • (H) Any other information the Labor Commissioner deems material and necessary

The law also requires the California Labor Commissioner to publish a template form for employers to use, which is now available at Labor Commissioner’s website:

www.dir.ca.gov/dlse/Governor_signs_Wage_Theft_Protection_Act_of_2011.html

The Labor Commissioner’s template form sheds light on what other information the Labor Commissioner deems “material and necessary” for purposes of the notice. For example, the template notice provides more detailed information than is explicitly specified in the requirements of Labor Code Section 2810.5 on the business type of the employer (requiring the employer to check a box as to whether the employer operates as a sole proprietor, corporation, limited liability company, general partnership, staffing agency, or other type of entity). Additionally, the template form requires employers to identify whether the employment agreement is written or oral, and requires disclosure of the workers’ compensation insurance policy number, which is not explicitly specified in the Labor Code.

Additional Notice Required For Changes in Information

Importantly, the law also requires employers to notify employees in writing of any changes to the information set forth in the notice within seven (7) calendar days after the time of the changes, unless all changes are reflected on a timely wage statement furnished in accordance with Labor Code Section 226, or notice of all changes is provided in another writing required by law within seven (7) days of the changes.

Exceptions

Some significant exceptions apply to the new requirements. For purposes of the notice requirement, “employee” does not include employees who are exempt from overtime by statute or the wage orders of the Industrial Welfare Commission. The law exempts employees directly employed by the state or any political subdivision of the state, including any city, county, or special district. The law also provides an exception for employees who are covered by a valid collective bargaining agreement if the agreement expressly provides for the wages, hours of work, and working conditions of the employees, and if the agreement provides premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more than the state minimum wage.

Penalties for Non-Compliance

There is no penalty specified in Labor Code Section 2810.5 for violations of the notice requirement. In such cases, the California Private Attorneys General Act (“PAGA”) typically provides penalties for violations under the Labor Code where the provision does not otherwise expressly provide for a penalty. However, an exception to PAGA may apply as Labor Code Section 2699(g)(2) prohibits bringing actions under PAGA for notice violations. Courts have not yet interpreted the applicable penalties under this new law. Therefore, employers should ensure compliance to avoid any potential liability that may arise.

What This Means for Employers

For non-exempt new hires on or after January 1, 2012, employers should provide notice in compliance with the law. Employers must also ensure that employees receive timely notice when any information required to be in the notice is changed. For example, if the company’s workers’ compensation insurance provider changes, if there is a pay increase or decrease, or if the company changes its name, notice must be provided to the employees within seven (7) calendar days of the change. Employers should be especially mindful of this requirement in light of the fact that many employers may change employees’ rates of pay or other information at the start of the new year.

Importantly, the new law creates additional specific Labor Code requirements that will surely be scrutinized for strict compliance. Accordingly, documentation of compliance efforts is essential and employers are encouraged to keep copies of all notices provided under the new law in the employees’ personnel files. Employers with questions are encouraged to contact us for additional information.

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