Gov. Davis has signed into law A.B. 2509, which changes a number of existing state laws affecting responsibility for payment of wages and penalties for violations of employment-related laws. Here’s a rundown on the key provisions of the bill, which takes effect Jan. 1, 2001.
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- Itemized wage statements. The new law makes a number of modifications to the existing requirement that employers provide workers with itemized wage statements along with their paychecks. The changes include:
- Hourly rates. The wage statement must show all applicable hourly rates and the number of hours worked by the employee at each rate.
- Piece rates. Statements must now include any applicable piece rates and the number of piece rate units earned by the worker.
- Record retention. Piece rate records must be kept for at least two years, which is the current required retention period for other payroll records.
- Penalties. An employer who intentionally violates the new law must pay each employee the greater of: (a) their actual damages, or (b) $50 for the initial pay period, plus $100 for each subsequent pay period in which a violation occurs, up to a maximum of $4,000.
- Hourly rates. The wage statement must show all applicable hourly rates and the number of hours worked by the employee at each rate.
- Credit card tips. If customers tip by credit card, you must pay the employee the full amount of the gratuity indicated on the charge slip no later than the next regular payday following the date on which the customer authorized the credit card payment. Plus, the statute clarifies that you can’t deduct from the employee’s tip any processing fees you may have to pay to your bank or the credit card issuer.
- On-duty meal periods. As we first reported in the August 2000 issue, the new Industrial Welfare Commission wage orders require you to pay an employee one additional hour at their regular pay rate for each day that a meal or rest period is not provided. A.B. 2509 adds this requirement to the state Labor Code.
- Penalties for bad paychecks. Employers are liable for up to an additional 30 days’ wages and benefits to any employee paid by a check that is not honored or drawn on a nonexistent account. The new law extends this penalty, which previously applied only to the building and construction industry, to all employers. The law covers regular paychecks as well as final payments when an employee quits or is discharged.
- Attorneys’ fees. Under existing law, the winning party, whether employer or worker, can seek to recover their attorneys’ fees in a lawsuit involving a claim of nonpayment of wages or fringe benefits.
The new measure creates an important exception to this rule. In suits to recover underpayment of the minimum wage or overtime wages, only victorious workers—but not winning employers—may recover their attorneys’ fees. This will likely impact employers who ultimately prevail in lawsuits brought by employees claiming back overtime after allegedly being improperly classified as exempt.
- Interest on awards. Awards for unpaid wages, penalties and other compensation in actions brought by the Labor Commissioner will now accrue interest at the legal rate, currently 10%.
- Bond required for appeals. Employers will now have to post a bond to appeal a wage award issued in a case initiated by the Labor Commissioner.