Is Your Company Prepared For The California "Wage Theft Prevention Act Of 2011"?

On October 9, 2011, Governor Jerry Brown signed into law Assembly Bill 469, sponsored by State Assembly Member Sandre R Swanson (Dem. Oakland), which will be known as the "Wage Theft Prevention Act of 2011." Effective January 1, 2012, the Wage Theft Prevention Act of 2011 will, among other things, subject California employers to new notice and record keeping requirements and to additional penalties for failing to comply with various provisions of the California Labor Code. Some of the coming changes are as follows: 

1.  The new law amends Labor Code section 98 regarding the procedures used for Labor Commissioner hearings of employee complaints known as "Berman hearings."

2. The new law adds to the Labor Code section 200.5 to increase from one year to three years the deadline for the Division of Labor Standards Enforcement to commence an action to collect "a civil penalty, fee, or penalty fee."

3. The new law amends Labor Code section 226 to require employers to show on wage statements (i.e., check stubs) the name and address of the entity that secured the services of the employer, if the employer is a farm labor contractor.

4. The new law amends Labor Code section 240 to permit the Labor Commissioner to require an employer that has been convicted of violating the provisions of the Labor Code governing the payment of wages or that has failed to pay within the time allowed any judgment for nonpayment of wages to deposit for up to two years a bond "in such sum as the Labor Commissioner may deem sufficient and adequate" that is conditioned upon the requirement that the employer pay its employees in accordance with the provisions of the Labor Code governing the payment of wages and upon the employer paying any judgment(s) for nonpayment of wages. If an employer fails to post a required bond, the Labor Commissioner can require the employer "to provide an accounting of assets of the employer, including a list of all bank accounts, accounts receivable, personal property, real property, automobiles, or other vehicles, and any other assets, in a form and manner as prescribed by the Labor Commissioner," and can require the employer to provide an amended accounting. If an employer fails to post a required bond, the employer becomes subject to a civil penalty of up to $10,000, and the Labor Commissioner can bring an action to compel the employer to post the bond or to stop doing business until the employer posts the required bond.

5. The new law amends Labor Code section 243 to make it easier for an employee or for an attorney for an employee to obtain a court order prohibiting an employer from conducting business for 30 days unless the employer posts a required bond conditioned upon the requirement that the employer pay its employees in accordance with the provisions of the Labor Code governing the payment of wages and upon the employer paying any judgment(s) for nonpayment of wages, if within the preceding 10 years the employer was convicted of violating the provisions of the Labor Code governing the payment of wages or that has failed to pay within the time allowed any judgment for nonpayment of wages. Further, ""t]o aid in the enforcement of this section, upon a request by the Labor Commissioner or an employee bringing an action . . ., the court may additionally require the employer to provide an accounting of assets of the employer, including a list of all bank accounts, accounts receivable, personal property, real property, automobiles, or other vehicles, and any other assets, in a form and manner as prescribed by the Labor Commissioner," and can require the employer to provide an amended accounting."  

6. The new law amends Labor Code section 1174 to increase from two years to three years the period of time employers are required to maintain specified records, including records of hours worked and payroll records, and to forbid employers from prohibiting employees from keeping personal records of hours worked or of piece-rate units earned.

7.  The new law adds to the Labor Code section 1194.3 to permit an employee to recover attorney's fees and costs incurred to enforce a judgment for unpaid wages.

8.  The new law amends Labor Code section 1197.1 to permit an employee to recover under that section restitution of unpaid wages in addition to civil penalties.

9.  The new law adds to the Labor Code section 1197.2 to provide for criminal penalties to be imposed against an employer that is able to pay but "willfully fails to pay" a final judgment or a final order of the Labor Commissioner for wages due to an employee whose employment terminated within 90 days of the date the judgment was entered or the order became final. 

10.  The new law adds to the Labor Code section 1206 to state the penalties provided for by the Labor Code are "minimum penalties.

11. The new law adds to the Labor Code section 2810.5 to require employers to provide to each employee at the time the employee is hired a written notice "in the language the employer normally used to communicate employment-related information to the employee" containing all of the following information: (a) "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, as applicable;" (b) "Allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances," (c) "The regular payday designated by the employer in accordance with the requirements" of the Labor Code, (d) "The name of the employer, including any 'doing business as' names used by the employer," (e) "The physical address of the employer's main office or principal place of business, and a mailing address, if different," (f) the telephone number of the employer, (g) "The name, address, and telephone number of the employer's workers' compensation insurance carrier," and (h) "Any other information the Labor Commissioner deems material and necessary." Further, except for information shown on "a timely wage statement furnished in accordance with Section 226," employers must also notify employees in writing within seven calendar days of any changes to the information required to be contained in the notice. Notably, this new section of the Labor Code does not apply persons employed by any state or local government or to any employee covered by a valid collective bargaining agreement, if the agreement "expressly provides for the wages, hours of work, and working conditions of the employee, and if the agreement provides premium wage rates for all overtime hours worked and a regular hourly rate of apply for those employees of not less than 30 percent more than the state minimum wage."

We are continuing to analyze the California "Wage Theft Prevention Act of 2011," together with other new employment laws that will become effective January 1, 2012.  Beginning January 1, 2012, California employers will be faced with a bumper crop of new employment laws, and we will comment further here about those new laws.  

In any event, we suggest employers consult with competent employment law counsel now in order to prepare for the new employment laws to become effective January 1, 2012.

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