As we reported here, a newly enacted California statute (excitingly named “The Wage Theft Protection Act”) requires employers to give new employees a written notice specifying the rate or rates of pay, the basis on which the wages are to be calculated (such as hourly, piece rate, commission, etc.), the applicable overtime rates, the designated regular pay day, and the name and mailing address of the employer. The statute also specified that the notice had to contain “any other information the Labor Commissioner deems material and necessary.”

Well the Labor Commissioner, through her alter-ego the Division of Labor Standards Enforcement, has taken the ball and run with it.  As the year was winding to a close, the DLSE made a template available here and posted FAQs here that say that all the information included in the template is required in any notice given to employees.

So in addition to what is specified in the statute, the notice must contain the following:

  • The employer’s form of business (e.g. corporation, LLC, sole proprietorship);
  • Whether the employer uses another company to hire employees or administer wages or benefits and, if so, information identifying that company;
  • The form of the employment agreement (more on this below); and
  • Information identifying the workers’ comp insurer (including the policy number) or, if the employer is self-insured for workers’ comp, the “Certificate Number for Consent to Self-Insure.”

There are also four paragraphs of language at the end of the DLSE template about the employer’s obligation to notify employees of changes, what categories of employees don’t need to receive the notice, how to find the complete statute online, and the legal significance of the employee’s signature.

There are a number of issues here, but I want to focus on the part of the form that reads:

Employment agreement is (check box):  ? Oral    ? Written

Be careful. It’s a trick question!  While some exempt employees (who aren’t covered by the notice requirement anyway) have detailed written employment contracts, that’s rarely the case for non-exempt employees.  Yet careful employers invariably get some terms in writing, such as an acknowledgment of at-will employment, a trade secrets agreement, or an agreement to arbitrate.

So which box should such an employer check? If they check “oral,” they may have rendered those written terms ineffective and made themselves vulnerable to employees claiming that someone orally promised them all sorts of things. If they check “written,” they could be asked to produce a writing supporting any terms they seek to enforce.

While the law states that private employment is contractual in nature, it doesn’t require that agreements be either oral or written. There can be written terms, oral terms, terms that are implied from the parties’ conduct, or any combination of the three.

This is an area where most employers will be best served by revising the notice. The revision will depend on what employment terms are specified in writing.  An example, however would be:

“Certain terms of your employment are specified in writing.  These include the employment at-will policy and agreement to arbitrate as specified in the Employee Acknowledgment you signed upon receipt of the Employee Handbook.”

For now, the important point is that the person completing the notice better understand the consequences of how they characterize the form of the contract. Pay attention or you could effectively undo with a single check mark all the terms you’ve carefully placed in writing.