Labor Commissioner Releases Updated Wage Notice and FAQ

Today is a big news day in the employment law world.

First, the California Supreme Court released its decision in Brinker Restaurant Corp. v. Superior Court (check our blog post for a summary). Then, California's Division of Labor Standards Enforcement (DLSE) released an updated wage and employment notice “Notice to Employee (Labor Code section 2810.5)” and a second update to its FAQ on the wage and employment notice

As California employers know, the Wage Theft Protection Act of 2011 requires employers to provide nonexempt employees with a new notice at the time of hire that lists specified wage information. California employers struggled with putting the provisions of the law into effect.

The Labor Commissioner issued the first update to its “Frequently Asked Questions (FAQ) Wage Theft Protection Act of 2011 - Notice to Employees” in late January to help answer questions from employers. The second update to the FAQ revises several of the previous FAQs and also contains five additional questions and answers.

For new hires made after the posting of the updated template on the DLSE’s website, the newer posted version of the template must be used. The DLSE will archive any earlier template on its website for informational purposes.     

The updated wage and employment notice is available for download from HRCalifornia. The English version is now available. The Spanish version of the form is being translated by the DLSE and will be posted to HRCalifornia as soon as the form is available.

Need help trying to sort all this out? You’re in luck: CalChamber’s employment law experts will be conducting a live Paying and Scheduling Nonexempt Employees webinar on April 19, 2012.

DOL Provides Tools to Help States Fight UI Fraud

The U.S. Department of Labor (DOL) announced that the Fraud Tips and Leads Gateway is now available to support state agencies in “detecting, preventing, and recovering improper unemployment insurance payments as well as combating UI fraud.”

The online portal provides state-by-state resources for reporting fraud. It also identifies strategies that DOL uses to help states address improper UI payments.

“Too many people don’t know their responsibilities under the programs, and too many businesses don’t know what’s at stake for them especially the tax implications,” said Secretary of Labor Hilda L. Solis.

According to the DOL, improper UI benefit payments are most likely to occur when:

• Recipients continue to claim benefits after returning to work;
• Employers or their third party administrators do not submit timely or accurate separation
  information; and
• Claimants fail to register with the state’s Employment Services (ES) as dictated by state law. In California, this is the Employment Development Department (EDD).

Gail Cecchettini Whaley, CalChamber Employment Law Editor/Staff Counsel

HRCalifornia members and subscribers can get more information about UI obligations for California employers by visiting the HR Library’s Unemployment Insurance page (sign in required). 

Not a member or subscriber? Learn more about how HRCalifornia can help you.

Labor Commissioner Sues Three Carwashes

On March 6, the Labor Commissioner announced filing two lawsuits against three Los Angeles carwash businesses alleging multiple wage theft violations and seeking more than $2 million in unpaid wages, penalties and damages.

As HRWatchdog reported earlier this week, the state Labor Commissioner is making wage theft prevention a top priority. 

“We will use every tool available to ensure employers pay their workers what is owed for the labor that is provided. Employers cannot be allowed to reap the benefit from the labor of their workers without providing them with at least the basic pay required by law,” said Labor Commissioner Julie A. Su.

And the Labor Commissioner has more tools available than ever before:

• HRWatchdog just reported on the Labor Commissioner’s creation of a Criminal Investigation Unit to target employers who perpetrate “wage theft.”
• The state Department of Industrial Relations launched the interagency Labor Enforcement Task Force (LETF) on January 1. The LETF aims to “combat the underground economy” by cracking down on businesses that do not follow the state’s labor laws, including hiring employees off the books and paying them under the table.

The lawsuits against the carwashes allege violations of minimum wage, overtime and recordkeeping laws, and failure to issue itemized wage deduction statements as required by law. One of the lawsuits also contains allegations of meal and rest period violations.

Labor Commissioner Su argued that the failure to accurately record time and provide an itemized statement left the workers with “no way to verify if the pay they received covered all hours worked. This routine practice by the employers is nothing less than an act of wage theft.”

Gail Cecchettini Whaley, CalChamber Employment Law Editor/Staff Counsel

CalChamber members can visit the HR Library to refresh their memory on what is required on an itemized wage statement (login required), and to get details on the new wage notice that must be given to nonexempt employees at the time of hire.

Not a CalChamber member? Download this free white paper with information about the new law requiring the wage notice for nonexempt employees and other 2012 laws affecting California employers. Or sign up for a 15-day Free Trial.

California Dept. of Industrial Relations Creates Wage Theft Crime Unit

The state Labor Commissioner announced the creation of a Criminal Investigation Unit (CIU) to target employers who perpetrate “wage theft.”

Generally, “wage theft” is a phrase used to refer to infractions of the California Labor Code involving the payment of wages to workers. Wage theft might refer to employers who fail to pay for all hours worked, fail to pay nonexempt employees overtime, fail to pay minimum wage or fail to properly classify workers as employees and report them to the various state and federal agencies.

According to Labor Commissioner Julie Su, the new criminal unit “will be tasked with leveling the playing field for California employers by raising the stakes for those who underpay, underbid and under-report in violation of the law.”

The goal is to protect workers and to allow companies who follow the law to compete. The CIU will handle cases including:

• Workers’ compensation violations
• Theft of labor (felony or misdemeanor)
• Payment of wages with bounced checks or insufficient funds
• Unlicensed farm labor contractors and garment manufacturers
• Kickbacks on public works projects
• Violations involving minors on the job

The CIU will conduct investigations, make arrests, file criminal charges and serve subpoenas and inspection warrants. The CIU will be made up of sworn peace officers who have completed the police academy and who qualify to carry firearms.

Wage theft prevention certainly appears to be at the forefront of the Labor Commissioner’s agenda. In January, HRWatchdog reported that the California Department of Industrial Relations (DIR) also launched an interagency Labor Enforcement Task Force (LETF) to “combat the underground economy” by cracking down on businesses that do not follow the state’s  labor laws — hiring employees off the books and paying them under the table.

Employers should not forget that the Wage Theft Protection Act (AB 469) took effect January 1, 2012. Under AB 469, employers must provide nonexempt employees with a notice at the time of hire specifying certain wage and employment information.

Gail Cecchettini Whaley, CalChamber Employment Law Editor/Staff Counsel

CalChamber customers can visit HRCalifornia for a free white paper with information about the wage notice. CalChamber also provides a sample wage notice for download.

 

Gas Prices Surge! Don’t Forget Your Reimbursement Obligations

If you put gas in your car lately, you know about skyrocketing gas prices. In the past two weeks, gas prices nationwide rose nearly 20 cents according to the U.S. Energy Information Administration. 

It’s worse in California, where gas prices spiked by more than 45 cents in two weeks, and more than 25 cents in the past week alone. The average price for all grades of gasoline in California has been pushed to $4.338 a gallon (week ending 2/27/12). Prices in California are expected to exceed all-time highs.

As employees face rising gas costs, employers may be hit with questions regarding reimbursement of business mileage expenses. Last summer, the IRS gave a mid-year increase to the mileage reimbursement rate — to 55.5 cents per mile from 51 cents per mile — because of rising gas prices. The IRS has not changed this rate in 2012, and 55.5 cents per mile remains the effective rate.

Under California Labor Code section 2802, employers must fully reimburse employees for all expenses actually and necessarily incurred. Many employers typically choose to use the IRS mileage reimbursement rate, but its use is optional. The Division of Labor Standards Enforcement has opined that the use of the IRS mileage rate will generally satisfy an employer’s obligation to reimburse for business related vehicle expenses, absent evidence to the contrary.

However, if an employee can show that the chosen mileage reimbursement rate, even the IRS rate, does not cover all actual expenses the employee has incurred, the employer must pay the difference. Business vehicle expenses do not include only gasoline, but also wear and tear (depreciation), repairs, oil, insurance and other costs.

Generally, the IRS rate will cover such expenses. But California employers should make certain those expenses are covered, especially if the employee drives a gas guzzler:

• Employee drives his/her older model truck for work. The truck gets only 10 miles per gallon. Gas is $4.50 per gallon. The employee drives 100 miles, using 10 gallons of gas, and his gas expenses total $45. The IRS mileage reimbursement is 55.5 cents per mile.
• Does the $10.50 left over after paying gas expenses cover the employee’s other actual costs? This is the question employers should make sure they answer.

Employers should review their policies to make certain that they are providing a rate of reimbursement that takes into account the necessary and reasonable costs employees will incur,  including the rising cost to fill up at the pump.

Be cautious if tempted to alter the rate of reimbursement based on the type of vehicle the employee drives and the costs associated with that particular vehicle.

Gail Cecchettini Whaley, CalChamber Employment Law Editor/Staff Counsel

Visit HRCalifornia’s HR Library page on Timely Payment  for more information about reimbursement of employee expenses.