DC Employers Should Comply Now with New Wage Theft Act to Avoid Severe Financial and Criminal Penalties
The District of Columbia’s Wage Theft Prevention Amendment Act of 2014 that went into effect this February requires DC employers to provide employees with more information about their wages and to keep more precise timekeeping records. It also creates a new administrative process for employee wage claims and imposes additional liabilities on employers for failing to comply with the revised DC wage laws, including criminal penalties for negligent violation of the Wage Payment Law.
The Wage Theft Act, which went into effect on February 26, 2015, revises the existing DC wage laws, including the Minimum Wage Act Revision Act of 1992, the DC Wage Payment and Wage Collection Law, and the Living Wage Act of 2006. Below are the steps that employers must take to comply with the Wage Theft Act, the new administrative procedure set forth in the Act, and the effects of non-compliance.
Notice and Poster Requirements
- DC employers must provide each current and new employee with written notices providing them with information about their wages. Employers must provide each current employee with a notice by Wednesday May 27, 2015 (90 days from the Wage Theft Act’s effective date). Employers must provide all new employees hired after the Wage Theft Act’s February 26, 2015 effective date with a notice at the time of hiring. Employers must retain copies of the notices signed and dated by each employee. In addition, employers must provide new notices to employees when any of the information contained in the notices changes.
- The Mayor through DOES has provided template notice forms in English for use by employers and temporary staffing firms. However, these forms may not reflect all of the ways employees may be paid. Thus, employers should consult with counsel regarding any questions that arise in completing the form.
- According to DOES, employers may create their own notices or tailor the templates provided by the Mayor by eliminating sections that are not relevant to the employer's business (e.g., tipping), as long as the following required information is maintained in the notice:
- The name of the employer and any "doing business as" names;
- The address of the employer's main office or principal place of business, and a mailing address if different;
- The employer's telephone number;
- The employee's rate of pay and the basis of that rate (including by the hour, shift, day, week, salary, piece, commission), any allowances claimed as part of the minimum wage (including tip, meal, or lodging allowances), or overtime rate of pay, exemptions from overtime pay, living wage, exemptions from the living wage, and the applicable prevailing wages; and
- The employee's regular payday.
- The employer must provide notices in a language other than English only if the Mayor’s office provides sample forms in that language and (1) the employer knows this language is the employee’s primary language or (2) the employee requests the notice in this language. Currently, English and Spanish sample notices for new hires and English and Spanish sample notices for temporary staffing firm employees have been provided. Employers should check the D.C. Department of Employment Services’ (DOES) Wage and Hour Compliance website to see if notices in other languages are provided in the future.
- DC employers must post a new poster that summarizes the new Wage Theft Act in a common place at their worksites for all employees to see. Confusingly, this poster also is titled Notice (specifically Notice of Wage Theft Prevention Amendment Act of 2014) and is located on DOES' Wage and Hour Compliance website. Employees who work off-site must be sent copies of this poster.
Timekeeping Records Must Be Precise
- Under the Wage Theft Act’s amendments to the Minimum Wage Act, DC employers must keep more precise records of the time that non-exempt employees are working each day. Employers must now keep records that show the exact times an employee starts and stops work for the day and for breaks. Thus, presumably, maintaining records that had previously adjusted clocking in and out times pursuant to the applicable “rounding” rules, must now cease. In addition, employers who had previously only recorded the total number of hours worked each day must now record the precise start and stop times.
- Employers do not need to keep precise records of the time worked by employees qualifying for executive, professional, administrative, outside sales, and home newspaper delivery exemptions. Employers with employees qualifying as exempt for other reasons should consult with counsel before deciding whether to keep precise timekeeping records for these employees.
- Employers must maintain these precise time records for the greater of three years or the prevailing federal standard if identified in the regulations interpreting the revised Minimum Wage Act.
New Legal Processes for Wage Claims
The new DC Wage Theft Act provides for a new administrative process for employees to use to recover alleged unpaid wages under the Minimum Wage Act, the Wage Payment Law, the Living Wage Act, and the Sick and Safe Leave Act. Previously, the administrative process consisted of a conciliation process led by a wage and hour investigator, and if the parties were unable to reach a resolution through that process, either the employee or the Mayor could file suit on behalf of the employee to recover lost wages. Under the new law, however, failed conciliations may proceed to an expedited formal hearing before an administrative law judge who may order payment of all unpaid wages, reasonable attorneys’ fees, costs, and liquidated damages consisting of three times the unpaid wages. The administrative law judge’s decision is final and binding and not subject to appeal on the merits.
New Liabilities for Non-compliance
DC’s new Wage Theft Act imposes new penalties on employers who violate the Act:
- Penalties for thenoticeandrecordkeeping requirements under the Minimum Wage Act are now:
- The greater of $500 or the penalty under federal law for failure to maintain and retain payroll records for three years;
- $100 per day for failure to post the required poster; and
- $500 for each failure to provide an employee with a wage statement in the form provided by the Mayor. This failure also may be used as evidence against the employer’s credibility regarding the rate of pay promised to the employee in any action to enforce the law.
- In addition, failing to comply with the notice, recordkeeping or posting requirements may result in the tolling of the three-year statute of limitations for wage claims. This means that where an employee generally would be able to recover for unpaid wages (such as overtime) for only three years, if the employer did not hang the poster, provide the written notices, or keep the required records, then the employee could recover unpaid wages for a period longer than three years, if the employee worked for the employer for longer than three years.
- The Wage Theft Act now allows for criminal penalties for negligent violations of the Wage Payment Law and the Living Wage Act in addition to the pre-existing criminal violations for willful violations.
- Administrative penalties imposed for violations of the Wage Payment Law and the Living Wage Act have been increased to $50 per violation per employee per day for the first violation and $100 per employee per day for subsequent violations.
- The new Wage Theft Act includes an expanded definition of the costs that employees may recover for civil actions filed in court for violation of the Wage Payment Law, Minimum Wage Act, the Sick and Safe Leave Act, or the Living Wage Act.
- Liquidated damages for violations of the Minimum Wage Act have been increased, from equal to the amount of unpaid wages determined to be owed, to triple that amount.
- The Wage Theft Act imposes a new retaliation provision for violations of the Wage Payment Law that includes a rebuttable presumption that any adverse employment action that an employer takes against an employee 90 days following the employee engaging in activity protected by the law is retaliation against the employee.
Liability for Contractors, Subcontractors, and Temporary Staffing Firms
Finally, the Wage Theft Act provides for joint and several liability for contractors and subcontractors as well as temporary staffing firms and employers of temporary staffing firm employees for violations of the Wage Payment Law, the Living Wage Act, and the Sick and Safe Leave Act. This means that if a subcontractor violates one of these laws by improperly paying wages to the subcontractor’s employee, the general contractor is also liable for the violation. The same is true if an employer fails to pay the employee of a temporary staffing firm who is performing work pursuant to a contract for services or staffing arrangement properly. In this situation, the temporary staffing firm is also liable for the wage violation.
- However, the Wage Theft Act provides for indemnification of the new jointly liable party. The Wage Theft Act requires the subcontractor to indemnify the general contractor for any wages, damages, interest, penalties, or attorneys’ fees owed by the general contractor as a result of the subcontractor’s violations, unless the violations were due to the general contractor’s lack of prompt payment in accordance with the terms of the contract between the contractors. A similar provision exists in the Wage Theft Act providing for mandatory indemnification of the temporary staffing firm by the employer of temporary staffing firm’s employee.
- In addition, pursuant to a revision of the Wage Theft Act, this joint and several liability cannot be imposed where the parties have provided otherwise in a contract in effect before the February 26, 2015 effective date of the Wage Theft Act.
DC’s new Wage Theft Act requires employers to take these steps affirmatively to comply with the new law and to avoid the new stricter penalties. While most employees will fit into the various classifications set forth in the notice form, employers should consult with counsel regarding those employees who do not precisely fit into these classifications.
Julie Reddig is an employment attorney at Lerch, Early & Brewer in Bethesda, Maryland who defends management in a broad range of matters and disputes involving employment and the workplace, including wage and hour investigations by state and federal officials. For more about the DC Wage Theft Act, contact Julie at (301) 961-6099 or email@example.com.