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California Labor Commissioner Revises Wage Notice Form and Guidance

By Adam Abrahms

Last year, California passed the Wage Theft Prevention Act (AB 469) which amended several existing Labor Code sections and added several new ones. Most notably, in addition to criminalizing certain wages payment violations, the statute created a new mandate for California employers to provide each new employee a written notice upon hire containing individual information, including their regular rate of pay, overtime rates, and regular pay day. The law also required the California Division of Labor Standards Enforcement (DLSE) to prepare a template of the notice that employers could use for compliance.

Although the new law had an effective date of January 1, 2012, the DLSE did not provide its first template with guidance until the final week of December. Its initial attempt seemed to raise more questions than provide answers, and the DLSE issued a revision within weeks. Even its second attempt, however, raised serious concerns that the notice went far beyond the requirements of the law and invited the potential for another round of class action lawsuits and employers.

Reacting to concerns raised by and on behalf of employers, the DLSE has announced revisions to both the template and the FAQ Guidance. The revisions are designed to address concerns that the prior template language could be read as evidencing an employment contract with an employee and diminishing the presumption of at-will employment. The revisions also addressed concerns related to what and how “rates of pay” must be listed, especially where employees may have multiple rates or a fluctuating regular rate of pay. Finally, the FAQs provide new guidance on the respective obligations of joint-employment situations including those involving staffing agencies.

The updated FAQ (link here) provides underlined and other notations indicating where and how the FAQ had been updated. The most helpful changes are contained in the addition of questions 16-30 at the end of the FAQ.

The new template (link here) is simplified and has removed or amended several (though not all) areas of concern. Importantly, the FAQs make it clear that employers can choose to use their own form or a modified form as long as the information from the template is included.

Although the DLSE’s revisions are helpful and a step in the right direction, employers still must be cautious in ensuring compliance with the Wage Theft Prevention Act. The requirements of this law still contain many pitfalls that could find a well meaning employer faced with an individual lawsuit or class action despite its best efforts at compliance. We recommend employers carefully review their processes to ensure they are both in compliance with the law and have established forms and procedures designed to limit their exposure and meet their individual business needs.