U.S.: California's "Wage Theft Prevention Act" Imposes New Requirements and Potential Penalties On Private Employers Starting January 1, 2012
Effective January 1, 2012, private California employers of non-exempt employees not subject to certain collective bargaining agreements will face new reporting and recordkeeping requirements and penalties for violations of California's aggressively-titled "Wage Theft Prevention Act" signed into law in October 2011. Similar to New York's law of the same name enacted last year, the Act includes:
- New Labor Code Section 2810.5 requires private employers of newly-hired, non-overtime-exempt employees to provide each new hire with:
(a) The job rate or rates of pay and whether it pays by the hour, shift, day, week, salary, piece, commission, or otherwise, including any rates for overtime.
(b) Any allowances claimed as part of the minimum wage, such as for uniforms, meals, and lodging.
(c) The employer's regular payday, subject to the Labor Code.
(d) The employer's name, including any “doing business as” names used.
(e) The address of the employer's main office or principal place of business, and its mailing address, if different.
(f) The employer's telephone number.
(g) The name, address, and telephone number of the employer’s workers’ compensation insurance carrier.
(h) Other information added by the Labor Commissioner as material and necessary.
Exempted from the Act and these requirements are public employees, employees exempt from California wage/hour laws requiring overtime pay and, under circumstances detailed in the Act, employees covered by collective bargaining agreements.
- Employers must also notify employees of any changes in this information within seven days of the change.
- Increases in civil and criminal penalties for wage-related violations, as well as an increase from 1 to 3 years for the Department of Labor Standards Enforcement to seek wage-violation-related penalties, but no change in the 1-year limit for seeking penalties in private enforcement actions.
In addition to increasing employers' administrative reporting and recordkeeping requirements and penalty risks, the Act adds pressure on employers to properly classify their employees as overtime exempt versus non-exempt. That is because employers who misclassify employees as exempt risk violating the Act and incurring incurring its increased penalties.
California employers need to work on prompt compliance strategies. Consider, for instance, periodic, attorney-led, privileged reviews of wage/hour practices to ensure compliance.