Documentation Concerns Arise Under California’s new "Wage Theft Prevention Act" - When Forms Are Not Your Friends
Posted January 1, 2012

As of January 1, 2012, the newly-issued Wage Theft Prevention Act requires private employers in California (if not governed by a collective bargaining agreement) to provide non-exempt employees with written notice of various payroll information, ranging from the rate of pay to any DBAs of the employer. How is this different than the existing paystub requirements found in Labor Code section 226? It must be provided at the time of hire and within seven days of any changes during employment.

The California Division of Labor Standards Enforcement (“DLSE”) has released a notification form designed to provide the required information to employees. To locate a copy of the form, go to http://www.lightgablerlaw.com/pdf/12/Notice-To-Employee.pdf. Unfortunately, the form creates some issues for employers, and raises questions as to the information sought. Here are some suggestions for completing the form:

  1. First, and perhaps most problematic, the form asks whether the employment agreement is written or oral. Most employees are hired “at-will,” avoiding any suggestion of a binding employment agreement, and this concept is referenced both orally and in various places in the company’s written or electronic employee handbook. To protect at-will status, consider adding (or replacing the employment agreement question with) at-will language, stating: "This notice confirms that your employment is at-will, meaning that either you or the Company can end the employment relationship at any time, without or without cause or notice.”
  2. If an employee is subject to multiple rates of pay, shift differentials, commissions or non-discretionary bonuses on top of regular pay, those should be referenced as part of the employee’s compensation.
  3. If the employee refuses to sign the form, don’t sweat it. Just have a method for confirming that the employee received it, perhaps by a supervisor signing and dating a copy of the form and indicating the date of receipt, or sending by email and archiving the email.
  4. For those employers who have leased or temporary employees, work with those entities to develop appropriate information for the form, as each company will need to be identified. If the other company is merely a payroll processing service, it need not be identified. Don’t delegate responsibility for the notice to a payroll service or temporary agency - provide as much information as you can to the employee and reference the agency’s information if appropriate.
  5. For existing employees with a change in pay or other conditions, you can satisfy your notice obligation by reflecting that change on the pay stub.
  6. If you switch workers compensation carriers, you would need to provide notice of that change in written or electronic form. Providing information about your workers’ compensation insurance carrier may be problematic because you want employees to contact the claims administrator rather than the carrier. Avoid the resulting confusion by also providing the contact information for the claims administrator with a notation that claims may be directed to that resource.
  7. Employers may send the notice electronically, but there must be a format for acknowledging receipt. Also, don’t include this information as part of other forms. It must be separately prepared on its own form.

For further questions regarding the Wage Theft Protection Act or the DLSE form, please contact the employment law attorneys at LightGabler.