Confusion Surrounds California’s New Wage Notice
As we previously posted on this blog, a new California law was passed in October requiring California employers, effective January 1, 2012, to provide new hires with a written notice containing certain wage and other information. The new law is codified as Labor Code section 2810.5 and requires employers to provide newly hired non-exempt employees with the following categories of information (in one self-contained writing):
1. The rate or rates of pay and basis thereof, whether paid by the hour, shift, day, week, salary, piece, commission or otherwise, including any rates for overtime;
2. Allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances;
3. The regular payday designated by the employer;
4. The name of the employer, including any “doing business as” names used by the employer;
5. The physical address of the employer’s main office or principal place of business, and a mailing address, if different;
6. The telephone number of the employer;
7. The name, address, and telephone number of the employer’s workers’ compensation insurance carrier; and
8. Any other information the Labor Commissioner deems material and necessary.
Employers are required to begin providing the foregoing information to non-exempt new hires effective January 1. If there are changes to any of the information provided, written notice of the change must be provided to employees within 7 calendar days. The information must be provided in the language normally used by the employer to communicate employment-related information. The new law exempts from the notice requirement State workers and most unionized employees covered by the terms of a collective bargaining agreement, as well as employees who are exempt from overtime.
While the foregoing seems fairly straightforward to apply, some confusion has arisen over the eighth category of prescribed information listed—“any other information the Labor Commissioner deems material and necessary.” The Labor Commissioner waited until late December to post anything substantive about this new law and has since revised its position at least once regarding the scope of the new law, leaving employers with less than clear guidance over compliance. Under the new law, the Labor Commissioner is charged with creating a template that employers may (but are not required to) use to comply with the new notice requirement. The Labor Commissioner waited until almost the end of December to publish this template, which is available here. Interestingly, the Labor Commissioner’s template includes several additional categories of information (beyond those enumerated in the actual statute):
1. The employee’s hire date and position;
2. The business form of the employer (e.g. corporation, partnership, LLC, etc.);
3. Specified information about other businesses or entities the employer uses to hire employees or to administer wages or benefits;
4. Whether the employee’s employment agreement is written or oral; and
5. The employer’s workers’ compensation policy number.
Adding more to the confusion, the Labor Commissioner also posted (at the eleventh hour) some “Frequently Asked Questions” about the new law, including guidance stating that the notice needed to be provided to all current employees, not just to new hires as indicated in the statute. It appears that the Labor Commissioner’s office then realized it had overstepped its authority in exceeding the scope of the statute by extending its coverage to current employees, so the Labor Commissioner (without explanation) revised the FAQ to delete this reference. The most current FAQ published by the Labor Commissioner’s office is here. Employers should review both the template and FAQ.
Although employers are not required to use the Labor Commissioner template as a form notice, they are advised to make sure that any written notice they create includes all categories of information indicated on the Labor Commissioner template. To be clear, it appears that the Labor Commissioner does have the authority (prescribed by the express language of the statute) to broaden the categories of information that must be provided in writing to new hires. At this time, the notice must only be provided to new hires and not to current employees. However, changes to any of the information provided in the new hire notice will need to be provided to current employees within 7 calendar days of the change.
Employers should note that although the new law does not provide for any specific penalties for non-compliance, it appears that the law can be enforced through California’s “catch-all” penalty provision, known as the Private Attorneys’ General Act (PAGA). PAGA allows for recovery of substantial penalties for non-compliance with provisions of the Labor Code. Employers should review the Labor Commissioner template and guidance and ensure that they have a compliant notice in place, if they have not already done so. Employers are advised to include language in their notice to make clear, as applicable, that the employment relationship is at will and that nothing in the notice should be construed as creating a contract of employment or for the promise of any particular term or condition of employment, and that the employer has the right to change the terms and conditions of employment at any time with both employer and employee having the right to terminate the employment relationship with or without cause or advance notice. Employers should also monitor the Labor Commissioner website from time to time in the event there are changes to the content of the notice requirement that may be prescribed by the Labor Commissioner.