California Revises Mandatory New Hire Notice

The California Labor Commissioner recently revised (for the second time) its form of mandatory new hire notice that must be provided to non-exempt employees in California, and the FAQ guidance regarding the notice. The changes are significant. Employers must comply with the new requirements as to employees hired after April 12, 2012, but are not required to provide additional notices to employees hired between January 1 and April 11, 2012 (assuming the notices provided to those employees were compliant at the time).

For the most part, the changes are helpful for employers – although not entirely. The most significant changes include:

• “Written” vs. “Oral” “Employment Agreement”: The form no longer requires the employer to state whether the “employment agreement” is “written” or “oral.” This is a very favorable change that eliminates potential confusion regarding what was meant by the term “employment agreement.” Instead, the new form requires the employer to state whether “a written agreement exist[s] providing the rate(s) of pay,” and whether “all rate(s) of pay and bases thereof [are] contained in that written agreement.” Most employers define at least some rates of pay in offer letters that applicants are required to sign to accept employment. We suggest that employers consider adding language to the new form to identify specifically the offer letter and/or other document(s) that are being referred to as the “agreement.”

• Staffing Agency Workers: As to workers employed by a staffing agency, now it is sufficient if only the staffing agency provides the requisite notice. Previously, both the staffing agency and worksite employers were required to provide the notice. To the extent the staffing agency knows the identity of the other entity or entities that the employee will work for, the staffing agency must also identify those entities in the notice.

• Overtime Rates of Pay: The new form and FAQs make clear that it is not sufficient merely to provide notice of the “multiplier” for overtime pay. Rather, the applicable actual overtime rate(s) must be stated (including all wages that must be legally factored into the overtime rate on top of any regular hourly rate). Among other forms of wages, the overtime regular rate must factor in commissions and many forms of bonuses. To the extent the amount of such commissions, bonuses, and/or other wages is unknown at the time of hire, the FAQs provide that the notice may simply provide the “minimal overtime rate” based upon the hourly rate times the multiplier and explain how it is “subject to upward adjustment” based upon such other wages.

• Employee Acknowledgement: The section requiring employees to sign to acknowledgement receipt is now optional. Nevertheless, employers should still consider requiring a signed acknowledgement to document compliance.

In light of the various complexities presented by these requirements, employers should request legal counsel to review their new hire forms and practices to ensure compliance and minimize legal risks.

Employers seeking further guidance on any of these issues may contact any of the firm’s lawyers listed below.

Raymond H. Hixson, Esq. ([email protected]; 408-486-9977)

Brian K. Nagatani, Esq. ([email protected]; 408-486-9988)

Mary Wang, Esq. ([email protected]; 408-486-9933)