The District of Columbia’s new Wage Theft Prevention Amendment Act of 2014, D.C. Act A20-426 (Act), is scheduled to take effect on February 26, 2015.1 Among other things, the Act expands rules on timing of pay during employment and on termination to cover exempt workers, requires that employers provide all employees with new notices about their wages, and creates new recordkeeping obligations. The Act also increases potential liability and penalties for violation of wage laws, makes employers responsible for violations by their subcontractors or temporary staffing providers, makes it easier to bring a class action, and creates a new detailed administrative enforcement scheme.
On December 2, 2014, the D.C. Council passed emergency amendments to the Act, which are discussed below.
The Act is a complicated piece of legislation that amends the Wage Payment Act, D.C. Code § 32-1301, et seq.; the Living Wage Act, D.C. Code § 2-220.01 et seq., the Minimum Wage Revision Act, D.C. Code § 32-1000 et seq.; and the Accrued Sick and Safe Leave Act, D.C. Code § 32-131.01, et seq. (collectively, Affected Laws). The Act leaves a number of open questions to be clarified by regulations and case law in the future. The following is a summary of some of the Act’s most important features.
Expansion of the Wage Payment Act to include exempt workers
The Act expands the Wage Payment Act to cover employees who are exempt from minimum wages and overtime pay. Thus, employers now must follow the Wage Payment Act’s requirements for both non-exempt and exempt employees — such as paying employees at least twice during each calendar month and following strict rules on the timing for payment of final wages after termination. Note that there is an exception for the twice-per-month payment requirement where “by contract or custom, an employer has paid wages at least once each calendar month.”
New wage information notices for new hires and incumbents
The Act requires that all employers provide their exempt and non-exempt employees with a notice, both in English and in the employee’s primary language, containing:
- the name of the employer and any “doing business as” names
- the physical address of the employer’s main office or principal place of business, and a mailing address if different
- the employer’s telephone number
- the employee’s rate of pay and the basis of that rate (including by the hour, shift, day, week, salary, piece, commission), any allowances claimed as part of the minimum wage (including tip, meal, or lodging allowances), or overtime rate of pay, exemptions from overtime pay, living wage, exemptions from the living wage, and the applicable prevailing wages
- the employee’s regular payday
- “any such other information as the [m]ayor considers material and necessary”
Within 60 days of the effective date of the Act, the mayor is obligated to provide a sample template of this notice.
Beginning on the effective date of the Act (as noted above, scheduled for February 26, 2015), employers must provide this notice at the time of hiring. In addition, the employer must provide an initial notice to each incumbent employee within 90 days of the effective date of the Act. Additionally, if any of the foregoing information changes with respect to an employee, the employer must provide an updated notice to the employee.
Each employer must retain copies of the notice, signed and dated by the employer and by the employee acknowledging receipt of the notice. Failure to comply with the notice provisions not only constitutes evidence against the credibility of any testimony offered by the employer as to the rate of pay promised, but also tolls the statute of limitations to bring a claim under the Affected Laws. The notice requirements differ for temporary staffing firms and can be found in Section 3(d) of the Act.
Recording precise time worked
Instead of the Minimum Wage Revision Act’s former requirement to simply record all “hours worked,” the Act mandates that employers now maintain records of the “precise time worked” for each day and each week by employees. The legislative history on this point does not define this phrase’s meaning, though perhaps this new requirement is directed at preventing employers from forcing employees to work off-the-clock hours. Regulations may clarify whether this means that employers must record the total number of hours (including partial hours) worked by an employee, specific hour and minute start and stop times, or something else. Regulations will also confirm that the Act is not intended to require time recording by exempt employees.
Expanded obligations with respect to contractors and temporary staffing firms
A general contractor will be jointly and severally liable with a subcontractor with respect to violations of the Affected Laws committed by a subcontractor; however the subcontractor must indemnify the general contractor for all amounts owed as a result of the subcontractor’s violations, unless the violations were due to the general contractor’s lack of prompt payment under the terms of their agreement with the subcontractor. Under an emergency amendment to the Act, joint and several liability will not apply if so provided “in a contract between the contractor and subcontractor in effect on the effective date of the” Act.
Similarly, an employer who receives services through a temporary staffing firm will be held jointly and severally liable with the temporary staffing firm for violations of the Affected Laws to both the employee placed by the staffing firm and the District. Unless otherwise agreed to by the parties, the temporary staffing firm must indemnify the employer as a result of the firm’s violations. In addition, under an emergency amendment to the Act, joint and several liability will not apply if so provided “in a contract between the temporary staffing firm and the employer in effect on the effective date of the” Act.
Presumption of retaliation for adverse actions within 90 days
Under the Act, it is unlawful for an employer to discriminate or retaliate against an employee for engaging in protected activity, which includes making a complaint that the employer violated the Affected Laws, initiating a proceeding under the Act (and/or such laws), providing information about an investigation, testifying, or “[o]therwise exercis[ing] rights protected under” the Affected Laws.
If an employer takes adverse action against an employee within 90 days of the employee or another person engaging in protected conduct, it raises a presumption that such action is retaliatory. The presumption may only be rebutted by clear and convincing evidence showing that such action was taken for a permissible reason.
An employee may file a civil action or administrative complaint against the employer or other person alleged to have retaliated. Relief for retaliatory conduct may include civil penalties, enjoining the conduct; awarding lost compensation, costs, and reasonable attorney’s fees; and reinstatement with equivalent seniority.
Expanded employees’ remedies and penalties
The Act creates detailed civil and administrative enforcement mechanisms. For civil actions, the Act makes it easier to bring a class action by setting forth a relatively lenient test to define when employees are similarly situated, and also allows for opt-out class actions. The Act now allows for treble damages for violations of the Minimum Wage Revision Act, and extends the three-year statute of limitations to provide that it does not begin to run until the date of last occurrence, if the violation is continuous. The Act further provides that the statute of limitations is tolled if the employer fails to provide the employee with notice of the employee’s rights.
If an employee files an administrative complaint, the mayor will commence an investigation and make an initial determination, which may be followed by a hearing before an administrative law judge (ALJ). If an employee files such a complaint, the employer must post a notice, for at least 30 days, stating that an investigation is being conducted, and informing employees of how they may participate in the investigation. If there are proceedings before an ALJ, the employee ordinarily bears the burden of proof, however, that burden can be shifted to the employer if the employer has failed to keep adequate records or failed to provide adequate notifications to employees.
Finally, penalties and civil fines for violation of the Affected Laws have been enhanced by the Act. These include being convicted of a misdemeanor (with jail time), and substantial financial payments. Perhaps most severely, the Act directs the mayor to deny an employer’s application for any license to do business in the District if, during the three-year period prior to the application, the employer admitted guilt or was found guilty of committing or attempting to commit a willful violation of any of the Affected Laws. The mayor must also suspend any license to do business issued by the District if the licensee has failed to comply with an administrative order or conciliation agreement, until the licensee proves that it has complied.
Effective date and “applicable” date
As stated above, the D.C. Council’s legislative tracker estimates that the law will take effect on February 26, 2015, unless Congress rejects the Act, which is unlikely. Initially, Section 7 of the Act stated that it “shall apply to violations occurring after October 1, 2014,” despite the fact that the Act was not to become effective until months later. An emergency amendment to the Act has repealed this section, so presumably, the Act will not apply retroactively to violations that occur before its effective date in 2015.
What should employers do?
- Due to the significant potential liability and penalties under the Act, and onerous enforcement mechanisms created by the Act, pay especially careful attention to all obligations under any D.C. law relating to payment of wages to employees.
- Beginning on the Act’s effective date, provide statutorily required pay notices to new hires. Additionally, within 90 days of the Act’s effective date, provide all employees with the statutorily required pay notice described above.
- Review instructions to employees for time reporting to assure they are directed to record the “precise time worked” and not to overlook recording any time on a daily and weekly basis.
- Ensure compliance with the time-for-payment requirements of the Wage Payment Act with respect to both non-exempt and exempt employees.
- If you are a general contractor, ensure prompt payment to all subcontractors so that your business will be indemnified for their violation of the wage laws.
- If you use the services of a temporary staffing firm, review and possibly alter your contracts with your staffing provider in order to avoid joint and several liability.
- Watch carefully for potential regulations and other administrative guidance that may clarify requirements imposed by the Act.