Changes to the Mandatory Notice for Non-Exempt New Hires

On Jan. 19, 2012, we reported on the Wage Theft Prevention Act (“WTPA”),¹ which requires California employers to provide non-exempt employees at the time of hire with specific information in a notice prescribed by the Department of Industrial Relations (“DIR”). Last week the DIR changed the form notice in what appears to be an effort to clarify ambiguities regarding the previous notice.

Whether the Employee has an Employment Agreement Changes to Whether a Written Agreement Exists with Rates of Pay

The original notice required employers to check a box stating whether the “employment agreement” with the newly hired employee was “written” or “oral.” The Labor Commission had not, however, provided any information on what constituted an employment agreement for purposes of the form. As a result, employers, especially those who wished to confirm in writing that the employment relationship was at-will, were concerned about checking a box that could be used to suggest that the employee had an employment agreement with the employer. The current notice has replaced the “check the box” approach with the question, “Does a written agreement exist providing the rate(s) of pay?” Unlike checking the box for “written” with respect to an employment agreement, an answer of “yes” to this question does not suggest that an employee is employed for a term or cannot be terminated at-will.

“Type of Employer” Question Simplified for Leased or Temporary Employees

The new notice has also changed the questions regarding “type of employer.” The previous form required employers to identify “any other business or entity used to hire employees or administer wages or benefits.” Examples of “other business entity” were listed as professional employer organization, employee leasing company or temporary services agency. Although an “other” box was also available for employers to check, there were no examples for when this box was applicable. The new notice now asks whether the “hiring employer is a staffing agency/business” and provides the examples of a temporary services agency, employee leasing company or a professional employer organization. If the employer answers “yes,” the employer is then required to identify the “other entity for whom the employee will work.” Employers who use the services of temporary or leased employees do not have to complete the notice provided the staffing agency does so.

As we reported in our Jan. 19 alert, employers’ concern with respect to the “type of employer” question was whether completing this section would be used later as an admission by the employer that it is a joint employer with the “other business entity” and potentially subject to “employer” liability to the worker. On April 12, 2012, the DIR addressed this concern by opining that “identification of the other entity for whom the employee performs work does not itself establish liability among the respective businesses (staffing agency and client business for whom work is performed), but simply identifies the other entity for whom work is performed by the employee for which liability as an employer for wage payment and/or workers’ compensation coverage can be determined, if necessary, with respect to the rights of the employee who performs services.” Although this “disclaimer” is helpful, employers who use temporary workers should contact employment counsel to evaluate their potential for liability to such workers, including any written agreements that exist between the company and any staffing agency.

No Obligation to Reissue Notice for Employees Provided Old Notice

Employers do not need to issue a new notice to new hires who were provided with the earlier template until there is a substantive change in the information provided. Going forward, however, employers are required to use the new version of the notice for all non-exempt new hires.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers: