On February 26, the District of Columbia’s new Wage Theft law became effective after a period for review by the U.S. Congress expired without any action being taken.
The law, which applies to employees performing work in the District, requires detailed disclosure of pay information to employees and imposes severe penalties on employers that fail to comply. New York and California, as well as some localities, have similar laws, which are often applied strictly against employers without any recognition of mitigating factors such as substantial compliance, good-faith efforts to comply, errors that were not willful, or reliance on faulty government advice.
The D.C. law, which has already been amended twice since enactment last year to fix apparent drafting errors, is filled with ambiguity, and the District government has yet to issue any explanatory regulations. The D.C. Department of Employment Services has issued its own summary “Notice” on the requirements of the law, but that Notice provides little in the way of clarification and misses some important specifics. On the positive side, the Department is sponsoring webinars to explain the law.
The Wage Theft Prevention Amendment Act amends several statutes, including the D.C. Wage Payment and Wage Collection Law, the Living Wage Act, the Minimum Wage Revision Act, and the Accrued Sick and Safe Leave Act. Here is a summary of key provisions of the Wage Theft law:
- Employers must distribute a written a jointly-signed and dated “pay notice” (details specified below) to each employee, which contains the terms of employment. For current employees first employed before February 26, 2015, the notice must be provided within 90 days of the law’s effective date (May 27, 2015); otherwise, the notice must be provided at the time of hire. The pay notice must be updated whenever required information – such as the applicable wage or an address – changes. Employers are also required to post a government notice summarizing the law.
- Employers must keep records for three years of the “precise time worked,” instead of the typically required record of “hours worked,” for employees covered by the D.C. Wage Payment and Wage Collection Law who are not exempt from minimum wage and overtime requirements based on the D.C. law’s executive, administrative, professional, outside sales, or newspaper carrier exemptions. (The applicable D.C. law exemptions are more limited than the full range of exemptions under the federal Fair Labor Standards Act.) The Wage Theft law does not define “precise time worked,” but it presumably means that, for example, instead of recording “8 hours worked,” the employer would be required to record the employee’s exact start time, the beginning and end time of any break that was unpaid, and the exact quitting time.
- The applicable statute of limitations (normally three years) is tolled on any D.C. wage claim for the period of violation of the new law.
- There are new or increased civil and criminal penalties for violations of the Wage Theft law and other laws that it amends. The amendments also include a wholly-new administrative complaint and hearing process, with no right of de novo review in the courts. Instead, court review will be limited to enforcement or non-enforcement of the administrative order based on the findings of fact at the administrative hearing. Employees can forgo the administrative process and instead bring a civil action in court. If the employee prevails in either venue, he or she can get full legal and equitable remedies and, for minimum wage and overtime violations, liquidated damages of three times the back wage amount.
- Willful violators of the new law or the laws it amends will be barred from obtaining D.C. business licenses for a three-year period.
- If the violation affects more than one employee, a special rule will make class claims virtually automatic. Class action requirements of typicality and commonality are essentially erased, and an employee can pursue an “opt-out” class action on behalf of any employees employed by the same employer during the statutory period who (1) have claims of similar violations and (2) seek similar relief.
- If adverse employment action is taken against an employee within 90 days of the employee’s complaint of a wage theft violation, there is a rebuttable presumption that the action is retaliatory.
- The amendments include provisions specifying joint and several liability for violations in general contractor-subcontractor situations and in temporary staffing agency situations.
“Pay Notice” Disclosure Requirements
The mandatory “pay notice” must contain the following information:
- The name of the employer and any "doing business as" names used by the employer;
- The physical address of the employer's main office or principal place of business, and a mailing address, if different;
- The telephone number of the employer (the law does not specify which number should be used if the employer has multiple numbers);
- The employee's rate of pay and the basis of the rate (for example, whether the pay is by the hour, shift, day, week, salary, piece, commission), any allowances claimed as part of the minimum wage (including tip, meal, or lodging allowances), the overtime rate of pay, exemptions from overtime pay, living wage, exemptions from the living wage, and the applicable prevailing wages;
- The regular pay day designated by employer in accord with the law; and
- Any other information the D.C. Mayor considers to be material and necessary.
The notices must be in writing, signed and dated by both employer and employee, and retained as proof of compliance. As stated above, they have to be furnished to all employees (current and newly hired), and have to be reissued in amended form any time any of the required information is changed. Again, pay notices must be completed now for new hires and by May 27 for employees who were already employed before the effective date of the law "February 26, 2015".
The Mayor’s Template Form for the Pay Notices
Mayor Muriel Bowser issued on March 3 two pay notice templates pursuant to express direction under the law. The law, as amended, requires employers to provide the information “in the form of the sample template made available by the Mayor,” as opposed to creating their own pay notices; thus, we recommend using the Mayor’s templates. One template is for direct employers and the other is for temporary staffing agencies. Both are currently available on the D.C. Department of Employment Services website only in English. Employers who need templates in other languages should check periodically with the Department of Employment Services. The law requires that employers post notices in English and the employee’s primary language if the Mayor has issued a template in that language.
Employers that violate the law’s notice requirement are subject to a civil penalty of $500 per employee. Failure to post a summary Notice issued by the Department of Employment Services has a penalty of $150 per day. Other potential liabilities for employers are somewhat obfuscated by the complexity of the multiple amendments in the law.
The D.C. Wage Theft Prevention Amendment Act presents great potential for employer and employee confusion, miscommunication, disagreement, litigation, and thus unanticipated liability and business disruption. Employers should begin to take steps now to understand and comply with the new requirements.