Effective January 1, 2012, the Wage Theft Prevention Act (Act) will subject California employers to a host of new provisions and amendments to the California Labor Code. The most significant provision -- which requires employers to provide newly hired non-exempt employees with a written notice containing specified wage and hour information -- calls for immediate action by employers to prepare the appropriate notices and update their procedures in time to be compliant at the start of the new year. Among other changes, the Act also creates additional penalties for wage and hour violations, extends certain statutes of limitations for wage and hour claims and expands employers' recordkeeping obligations.

NEW EMPLOYEE NOTICE

Pursuant to the new Labor Code § 2810.5, employers must, at the time of hiring, provide each employee (except those who are specifically exempted from the requirement) with a written notice which provides a specific list of information, including the employee's rate(s) and basis of pay (by the hour, shift, commission, etc.), including any applicable overtime rates; the designated payday; contact information for the employer's workers' compensation insurance carrier; and any other information the Labor Commissioner deems material and necessary. Employees must be given timely written notification of any changes to the information provided in the notice.

Notice does not have to be provided to employees who are employed by the state or local government, are subject to a valid collective bargaining agreement (as determined under the code) or are exempt under state law from payment of overtime wages.

The Labor Commissioner is currently working on a template that is compliant with the requirements of the new law and is preparing employer guidance and/or FAQs to comply with the Act. The Labor Commissioner anticipates posting these items on its website by mid-December 2011.

In order to document compliance, employers should maintain signed acknowledgements of employees' receipt of the required notices in personnel files.

RECORDKEEPING

Employers must now maintain payroll records for three years rather than only two and must maintain both itemized wage statements and records of deductions. In addition, employers are now specifically prohibited from forbidding an employee from maintaining a personal record of hours worked, or, if paid on piece-rate basis, piece rate units earned.

EXPANSION OF PENALTIES, STATUTES OF LIMITATIONS, ETC.

The Act also includes many enhancements to the Labor Commissioner's enforcement powers and the consequences to employers of violating California wage and hour laws. For example, employees no longer need to file a court action to recover liquidated damages for failure to pay minimum wage, but may now do so pursuant to a complaint filed with the Labor Commissioner. Under the Act, employees may also recover attorneys' fees and costs incurred to enforce a court judgment for unpaid wages. Further, in addition to being subject to any civil penalties, an employer who causes an employee to be paid below the minimum wage must pay restitution of wages to the employee.

The Act also extends the amount of time the Labor Commissioner can require an Employer convicted of wage and hour violations or who fails to satisfy a judgment to maintain a bond. Where the bond is not maintained, the Labor Commissioner may require an accounting of the employer's assets. The Act also extends the statute of limitations, from one year to three years, for the Division of Labor Standards Enforcement to file a request for entry of judgment on a civil penalty or fee with the clerk of the appropriate superior court.

Finally, employers may be charged with a misdemeanor, punishable by a fine or prison term, for willfully violating certain wage statutes or orders or failing to pay wages due pursuant to a judgment or order of the Labor Commissioner.