DLSE Updates California Wage Theft Prevention Act FAQs and Template
by:Labor and Employment Practice
Latest update from the DLSE answers many employer questions and provides updated and improved template for compliance with notice requirement.
Since it went into effect on January 1, 2012, California's Wage Theft Prevention Act (WTPA), California Labor Code § 2810.5, has generated many questions from employers that have been genuinely confused over how to comply with the WTPA's many provisions. One such provision is WTPA's requirement that the Labor Commissioner prepare a template of the written notice that employers must provide to employees. On April 12, 2012, the Division of Labor Standards and Enforcement (DLSE) updated its template and accompanying FAQs to address previous ambiguities and employer questions.
A copy of the updated template is available online.
The DLSE's revised FAQs on the WTPA can be accessed online.
We have highlighted below the questions that we received most frequently as a result of the previous FAQs and have provided answers based on the newly released FAQs.
Q1. Is the use of the Acknowledgment of Receipt mandatory? What if a worker refuses to sign the notice?
The DLSE's template now indicates that the Acknowledgement of Receipt section is optional. Therefore, no signature is required for full compliance, although the DLSE recommends that employers include this section and asks employees to sign it. If an employer decides to use the Acknowledgment of Receipt section on a notice form, but the employee refuses to sign it, the employer should still give the notice to the employee and indicate on the employer's copy that the employee refused to sign. (See DLSE FAQ #10, 23.)
Q2. Can an employer state that the regular rate of pay varies from pay period to pay period as the hours or amount of includable pay vary? Can the employer simply state on the notice that the overtime rate is a multiplier (1.5 times or double) of the regular rate of pay?
At the very least, the notice must provide the overtime rates that are known and determinable at the time notice is given. This means stating a minimal overtime rate based on these multipliers and some fixed hourly rate, plus a statement that the actual overtime rate is subject to upward adjustment based on the earning of other specified forms of wages during the applicable pay period. For example, if the employee's minimum hourly rate is $12.00 per hour, the notice should state that the 1.5x overtime rate is at least $18.00 per hour and the double time rate is at least $24.00 per hour.
Q3. When does a "hire" occur for the purpose of providing the required notice to an employee?
The employer and employee may determine the "date of hiring" by agreement, as long as that date is not later than the "start date" for work. The template now provides a space indicating this "start date," and under no circumstances should the notice be given later than that date. In the case of an employment contract signed by both the employee and the employer, the "date of hire" can be before the "start date" on the notice. In such cases, the notice should be provided to an employee as soon as possible after the employee's acceptance of a job offer (following the completion of all contingencies that the offer may rest on). (See DLSE FAQ #20.)
Q4. Why does the notice specify whether a written agreement exists providing the rate(s) of pay? Does this information affect the employment at-will doctrine?
Unlike the previous template, the updated template no longer asks employers to check a box indicating whether the employment agreement is written or oral. Now, the employer is only instructed to indicate whether a separate written agreement exists providing the employee's rate(s) of pay. This is intended to provide notice to the employee that another written document exists that contains complete pay rate information.
The DLSE has made clear that acknowledging the existence of such agreement has no bearing on the legal status of an at-will relationship. (See DLSE FAQ #21.) However, employers should still clearly include at-will language in their separate agreements (e.g., offer letters), if applicable.
Q5. When identifying the hiring employer, what is the difference between the "legal name" and "other names doing business as"?
The statute requires the notice to include the employer's full, formal legal name (including, if part of the full legal name of the business, any appropriate entity designation such as "Inc.," "Corp.," "LLC," etc.). The notice must also include any "doing business as" or "dba" name that the employer uses that could apply to the employment of the person receiving the notice. (See DLSE FAQ #26.)
Q6. Does an employer that has previously provided notice to new hires have to issue a new notice based upon the DLSE's updates to the template posted on its website in April 2012?
No. An employer would be in full compliance for having used an older template before the April 12, 2012, release of the new template as long as there has been no change to the substantive information on the original notice. If there has been a change to this information, the employer must follow the notice-of-change procedures in the statute. If the employer is providing notice of the change on a template, then the new April 12, 2012, template should be used. (See DLSE FAQ #27.)
Q7. Why does the template require a check box indicating whether the hiring employer is a staffing agency or business? Why must a staffing agency provide information regarding "the other entity for whom this employee will perform work" when the staffing agency is the hiring employer?
A staffing agency (e.g., a temporary service, leasing company, or professional employer organization) is also required to provide a Section 2810.5 notice to its employees and must indicate that it is doing so in its capacity as a staffing agency. The staffing agency is then required to identify the entity for which the employee will perform work. This should reduce employee confusion over who actually hired the employee.
The identification of the other entity by a staffing agency does not on its own establish liability among the respective businesses. According to the DLSE, the identification of this entity merely allows for determining liability for wage payment and/or workers' compensation coverage with respect to the rights of the employee who performs services for an entity through a staffing agency. If the staffing agency provides the notice, then the other entity is not required to provide a separate notice. (See DLSE FAQ #28, 29.)
Q8. Is a new notice required for every new placement of the employee made by a staffing agency?
The staffing agency must provide the information for the initial placement and any other placements then known "at the time of hire," which cannot be later than the start date of work. Any subsequent placements (including the initial placement, if not known at the time of hire when notice was given) are substantive changes to the information on the notice and require notice of change within seven calendar days under Section 2810.5(b). An entirely new notice is not required for the new placement if any applicable changes can be reflected on a timely pay stub or another writing required by law within seven calendar days of the change. (See DLSE FAQ #30.)
The ambiguities in the WTPA, the DLSE's notice template, and the FAQs will continue to generate some confusion, and there remains an open question of whether the notice template exceeds legislative intent. However, there currently is no indication that the DLSE has any plans for additional revisions to the FAQs or the notice template. Thus, employers should make their best efforts to understand and comply with the new law and the notice template.
For more information regarding the WTPA, or any other questions relating to California employment law, please contact any of the following Morgan Lewis attorneys: