This past DC Council Session, the Council passed The Wage Theft Prevention Amendment Act of 2014 (“Act”); following the Congressional review period, the Act became effective last year. The Act amended several DC wage and hour laws, greatly increased employer obligations and expanded the potential for employer liability.¹ Accordingly, employers must review this article to learn how to mitigate liability under this new law.

Generally, the Act requires employers to document pay for all employees and imposes increased penalties on employers that fail to comply. Because of the Act’s breadth, employers have even more reason to adopt Weiss LLP’s recommended strategies to avoid increased liability. Simply put, on a continuing basis, employers should have all employees complete “Company Scorecards” and, following severance from employment, all employees should sign mutual releases.

Summary of the Act. The Act includes many provisions affecting existing DC wage and hour laws. The most notable changes are described here:

1. Pay notice requirements to current and new employees: Employers must provide pay notices to employees in English and in the employee’s primary language.² These notices must contain detailed information, including, but not limited to, the name of the employer and any “doing business as” names used by the employer; the employee’s rate of pay and the basis of that rate by the hour, shift, day, week or salary; the employee’s overtime rate of pay and any other information the Mayor considers “necessary or appropriate” to enforce the law.³ Moreover, when any information in the original notice changes, the employer must provide an updated notice to the employee.⁴
2. Recordkeeping requirements: Employers must record and maintain the “precise time worked each day and each work week by each employee.”⁵
3. Broadens the definition of “employee”: Prior to the Act’s amendments, wage payment and collection did not apply to persons employed in an executive, administrative or professional capacity. As amended, an employee includes “any person suffered or permitted to work by an employer.”⁶ Therefore, employers must follow the pay notice requirements and recordkeeping procedures for exempt and non-exempt employees.⁷
4. Limits permissible employer retaliation against employees: The Act prohibits employer retaliation against an employer who complains about any conduct the employee “reasonably and in good faith” believes violates the Act.⁸
5. A new administrative process and increased liability: The Act creates a new administrative process through which an employee can file an action against an employer or any other person who violates the Act.⁹ Further, any employer that fails to comply with the Act faces stiffer civil and criminal penalties. For example, the DC Government will assess a $500 fine against an employer for each failure to maintain appropriate payroll records¹⁰ and for each failure to provide an itemized wage statement to all employees.¹¹

Weiss LLP’s Recommendations for Minimizing Employer Liability. Weiss LLP recommends two approaches to limiting employer liability: the “Company Scorecard” (for current employees) and the “Employment Release” (for severed employees).

The “Company Scorecard” – The Employee Scoring The Business. The Company Scorecard is an evaluation by the employee while s/he is currently employed. Employers should consider drafting a short questionnaire that asks the employee questions about workplace safety and health, whether there are current (or likely) violations of food, health, safety or employment laws and whether the employer has any outstanding payroll obligations to the employee, among others. We find that employees seldom will use this forum to complain to the employer or to “rat out” fellow employees. The Company Scorecards typically come back clean; once received, the employer should use these as “insurance policies” if there are employee claims filed or if any of the food/safety/health/ABC inspectors visit the workplace. To be sure, these Company Scorecards can provide useful insurance against these kinds of complaints.

The “Employment Release” – The Mutual Release at Employment Termination. The Employment Release is the mirror of the Company Scorecard but are used when employment isterminated. This form should be a mutual release, making it clear that neither party has any claim against the other for known or unknown claims. To establish the “consideration” legal element to enforce the Release, we also recommend the payment of a severance fee equal to a partial week’s salary for employees who were not terminated for cause. Finally, the Release should make it clear that any unknown claims must be pursued only through binding arbitration, with the parties sharing the related costs. It would be ideal to have this provision signed by the employee at the commencement of his/her employment.

Key takeaways: The Act imposes greater obligations on employers and grants employees new rights. While the Act is cumbersome, employers can use this as an opportunity to bolster their compliance programs by implementing more robust employee documentation policies and recordkeeping procedures. Concomitantly, employers should immediately consult with an attorney to ensure compliance under the Act’s many new provisions to limit potential liability.

WEISS LLP – “AT YOUR SERVICE.”

Contact: Randy Alan Weiss, Esq.

Weiss LLP – 1750 K St., NW – Suite 900 – Washington, DC 20006

Phone: 202-296-2121

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