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Wage Theft Protection Act of 2011 - Notice to Employees
Frequently Asked Questions (FAQ)
The Labor Commissioner provides the following answers to frequently asked questions about the new Wage Theft Protection Act, specifically with respect to the required notice by employers to all employees at the time of hire.
The Wage Theft Prevention Act (AB 469) goes into effect on January 1, 2012. The new legislation amends existing laws (Labor Code sections 98, 226, 240, 243, 1174, and 1197.1), and adds new requirements (Labor Code sections 200.5, 1194.3, 1197.2, 1206, and 2810.5) which criminalizes willful violations for non-payment of wages after a court judgment or final administrative order; requires restitution to the employee in addition to a civil penalty for failure to pay minimum wages; requires that specified information be provided to employees at the time of hire and in wage claim proceedings and that employers update changes within specified periods; extends the time period for obtaining judgments on final orders for collection of penalties by the Division of Labor Standards Enforcement (DLSE); enhances bond requirements for employers with convictions or court judgments for non-payment of wages including requiring an accounting of assets upon request by DLSE or court order; establishes that penalties under the Labor Code for failure to comply with wage-related statutes are minimum penalties; and allows employees to recover attorney’s fees and costs incurred to enforce a judgment for unpaid wages.
Specifically, new Section 2810.5 of the Labor Code requires that employers provide notice to employees of their rate(s) of pay, designated pay day, the employer’s intent to claim allowances (meal or lodging allowances) as part of the minimum wage, and the basis of wage payment (whether paying by hour, shift, day, week, piece, etc.), including any applicable rates for overtime. The law requires that the notice contain the employer's "doing business as" names, and that it be provided at the time of hiring and within 7 days of a change if the change is not listed on the employee’s pay stub for the following pay period. The notice must be provided in the language the employer normally uses to communicate employment-related information to the employee, through translated notices provided by the Department of Labor.
Based upon inquiries received by DLSE in anticipation of the effective date for this new requirement, the following are frequently asked questions regarding the new Notice requirements of the Wage Theft Prevention Act:
1. What is the Wage Theft Prevention Act?
A: A new law, effective January 1, 2012 which gives greater protection to workers, and makes changes in the way workers are notified of basic employment information.
2. Who is covered by the law?
A: All private sector employers are covered unless there is a specified exception. The notice is not required for an employee: directly employed by the state or any political subdivision, including any city, county, city and county, or special district; an employee who is exempt from the payment of overtime wages by statute or the wage orders of the Industrial Welfare Commission; or for an employee who is covered by a valid collective bargaining agreement if it meets specified conditions. It is important to note that charter schools, private schools, and not-for-profit corporations are covered, as they are not public entities. Subject to the foregoing exceptions, as of January 1, 2012, employers are required to provide the written notice to each employee “[a]t the time of hiring.” The notice requirement was intended to apprise employees of basic information material to their employment relationship, and to ensure employees are given up-to-date employment information through notice of any changes to that information; as such, it would be a best practice for employers not only to provide the notice to new hires, but also to current employees. (Underlined portion added 1/23/12)
3. What does the law require?
A: Workers have to receive the required notice containing specific information at the time of hire: (A) the rate or rates of pay and basis thereof, whether paid by the hour, shift, day, week, salary, piece, commission, or otherwise, including any rates for overtime, as applicable; (B) allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances; (C) regular payday designated by the employer as required by law; (D) the name of the employer, including any “doing business as” names used by the employer; (E) the physical address of the employer’s main office or principal place of business, and a mailing address, if different; (F) the telephone number of the employer; (G) the name, address, and telephone number of the employer’s workers’ compensation insurance carrier; and (H) any other information the Labor Commissioner deems material and necessary.
It also requires that the employer notify the employee in writing of any changes to the information set forth in the Notice To Employee within seven (7) calendar days after the time of the changes, unless one of the following applies: (a) All changes are reflected on a timely wage statement furnished in accordance with Labor Code section 226, or (b) Notice of all changes is provided in another writing require by law within seven days of the changes.
4. What if a worker’s primary language is not English?
A: Notices need to be given in the language the employer normally uses to communicate employment-related information to the employee. DLSE will be posting versions of the notice template in other languages and will be available on our website for use by employers.
5. For what languages will the Labor Commissioner provide templates?
A: Templates will be available in non-English languages on our website as they are completed. In an effort to assist employers as much as possible with translations, Spanish, Chinese, Korean, Vietnamese and Tagalog will be provided. We will endeavor to provide other translations.
6. Do I have to use the Labor Commissioner’s template?
A: No, employers can develop their own notices so long as they contain all the information required by the law, including all the information requested on DLSE’s template. The template includes all required information, including that which the Labor Commissioner deems material and necessary for purposes of the notice. Employers should keep a record of the notices provided to their employees.
7. May the notice be included in letters and/or employment agreements provided to new hires?
A: Yes, it can be given with other materials that are presented at the time of hire, but the notice required under Labor Code 2810.5 must be on its own form. Employees should not be required to piece together the information from several separate documents or pages of a manual.
8. Can a worker waive the notice requirement?
A: No, it is a notice required by statute and is not subject to waiver (Labor Code 2804).
9. Can the notice be given electronically?
A: Yes, but there needs to be a system where the worker can acknowledge the receipt of
the notice and print out a copy of the notice.
10. What if a worker refuses to sign the notice?
A: As of April 11, 2012, the template has been updated to indicate that the Acknowledgment of Receipt section of the template is only optional. Signatures by the employer or employee may provide assurance that the notice was, in fact, provided by the employer and received by the employee. If an employer wants to require it but an employee does not want to sign, the employer should still give the notice to the worker and note the worker’s refusal on its copy of the notice. A worker’s signature on the notice merely constitutes acknowledgment of receipt. In accordance with an employer’s general recordkeeping requirements under the law, it is the employer’s obligation to ensure that the employment and wage-related information provided on the notice is accurate and complete. Furthermore, a worker’s signature acknowledging receipt of the notice does not constitute a voluntary written agreement between the employer and employee to credit any meals or lodging against the minimum wage. Any such voluntary written agreement (as required under the law) must be evidenced by a separate document. (Question and Response updated 4/12/12)
11. Do I have to give a new notice every time a wage rate changes?
A: If the wage rate is the only change, notice is not required where there is an increase in a rate and the new rate is shown on the pay stub (itemized wage statement) with the next payment of wages. Note: Decreases in wage rates can only be made prospectively and not retroactively where work was performed and earned under a specified rate.
12. What procedures should be followed if an employee has multiple pay rates?
A: An employer must put all pay rates on the notice (and on the wage statement). The notice must include "[t]he rate or rates of pay and basis thereof whether paid by the hour, shift, day, week, salary, piece commission, or otherwise, including any rates for overtime, as applicable." (Labor Code 2810.5(a)(1)(A)). The Legislature’s inclusion of language referring to "the rate or rates of pay" contemplates that several rates may apply to an employment relationship and thus all applicable rates must be provided in the notice (or may be attached as a separate sheet to the notice with a clear reference in the notice to the attachment, indicated in the space for “Rate(s) of Pay”). (Underlined portion added 1/23/12)
13. What should we do if the worker has multiple hourly or piece rates?
A: The purpose of the notice is to inform workers of the wage rates that apply to them. Multiple rates need to be identified as part of the notice. Only the rates used to determine a worker’s pay need be shown on the wage statement for that period.
14. Does the notice requirement apply to workers covered by a union contract?
A: Generally no. If the workers are under a valid collective bargaining agreement which expressly provides for the wages, hours of work, and working conditions of the employee and provides premium wage rates for all overtime hours worked and a regular hourly rate for those employees of not less than 30% more than the state minimum wage, the notice is not required for those employees. If these conditions are not satisfied, then a notice is required for such employees.
15. Are exempt employees, including professionals, executives, or administrators, excluded from the notice requirements?
A: Yes, as they are not “employees” only for purposes of the notice requirement (Labor Code 2810.5(c)(2).
Additional questions and responses added 1/23/12:
16. In construction projects where workers in trades are paid on a piece rate (e.g. expressed in measurement such as linear feet/yards, roofing squares, etc.) which are adjusted based upon complexity or difficulty of the job, employees may work on different structures or projects with different piece rates. Would it be permissible to provide a piece rate sheet showing the range of piece rates for each type of work?
A. Yes. An employer can modify the DLSE template or attach a sheet to the existing template with a clear reference to the attachment in the space for "Rate(s) of Pay." The employer should specify multiple rates within a range the worker will be paid by the employer, including the basis for variation that informs the employee when certain rates within a range will apply (based upon stated criteria such as complexity/difficulty of project work).
17. Regarding prevailing wages payable on public works projects, can an employer simply state on the notice that they will be paid the appropriate or applicable prevailing wage on a project without having to keep disclosing or re-disclosing changes as they occur?
A: As with all private sector employers, private contractors or subcontractors on public works projects are subject to the notice requirement under Labor Code 2810.5. It would be insufficient to simply state "appropriate prevailing wage" or "variable prevailing wage" when providing the rate(s) of pay for purposes of the notice. For a worker in a public works project, the applicable prevailing rate is dependent on the location and project work performed by the worker. Accordingly, the employer must include in the notice all rates applicable to such work that are known or can be determined at the time the notice is to be provided. Any subsequent changes in wage rates for a later project (or at subsequent locations with a different prevailing rate) must be reflected in itemized wage statements provided to employees under Labor Code 226 in order for the employer to be exempt from issuing a new notice to the employee. (Labor Code 2810.5(b)).
18. Does “the rate or rates of pay” required on the notice require inclusion of other compensation for work performed?
A: Yes. For purposes of the notice requirement, “pay” is not limited to a time-based or piece-based measure of compensation for labor performed by an employee, but includes all rates fixed or ascertained by calculation. DLSE views the term “pay” synonymously with the term “wages.” The word “pay” ordinarily means “a paying or being paid; payment” and “money paid, esp. for work or services; wages or salary.” (Webster’s New World Collegiate Dictionary, 4th Ed, 2001, p. 1058). This ordinary meaning for “pay” thus consists of the concept of a payment of money for work or services performed which is fundamentally consistent with the definition wages. “Wages” is statutorily defined to include “all amounts for labor performed by employees of every description whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation.” (Labor Code 200(a)). Accordingly, if a rate is fixed by hour, commission, piece rate, or a combination thereof, such rates must be provided in terms of a money value and basis for earning such rate. If the rate is ascertained by some other method of calculation, basic information specifying the calculation must be provided and an employer must include all rates of compensation in the notice. An employer need only nominally and briefly provide each type of the pay and rate an employee will receive. For example, specific detail of formulas need not be included, as long as accurate information stating the basis of pay is provided, e.g. “$10.00 per hour, plus commissions of ___% of sales closed during prior month.” Any additional reference to or incorporation of another document or attachment must be specifically described on the notice.
19. Can an employer state that the regular rate of pay varies from pay period to pay period as the hours or amount of includable pay varies? Can the employer simply state on the notice that the overtime rate is a multiplier (1½ times or double) of the regular rate of pay?
A: An important distinction must be maintained between the “the rate or rates of pay” required for the notice under 2810.5 and “a regular rate of pay” for purposes of specifying and calculating statutory overtime compensation. A single rate of pay may be fixed by various measures such as time, task, commission, or piece rate (e.g., $10.00 per hour or $.33 per box). A single fixed pay rate does not constitute a variable rate of pay simply because it results in potentially different amounts of total wages earned over different pay periods (e.g., in pay period #1, employee earns $400 based on 40 hours @ $10.00/hour and in pay period #2, earns $300 for 30 hours @ $10.00/hour – the rate of pay over both periods is a single rate of $10.00/hour regardless of whether total wages varied over the two pay periods). But if an employee is to receive different types of pay (e.g., hourly wage plus commission), the rate for each type and basis of pay must be provided in the notice (e.g., $10.00/hour and commission of 5% of sales per each item sold by employee). If any part of the pay (wage) is ascertained by some other method of calculation, then basic information for calculating that rate must be provided in the notice (e.g., 10% commission for each item employee sells plus 2% shared bonus for department’s monthly gross sales divided by number of employees in department). The notice must accurately inform employees of all applicable rates of pay determinable at the time the notice is to be provided that the employee will receive under his or her employment.
Section 2810.5 also requires inclusion of “any rates for overtime, as applicable.” Simply stating the multiplier for overtime (e.g., 1½ and/or double the regular rate) does not specify an overtime rate. When providing information regarding applicable overtime rates, only rates known and determinable must be specifically provided to the employee. By law, overtime rates are required to be based upon a “regular rate of pay” which has a special meaning in calculating statutory overtime compensation for hours worked over 8 in a day or 40 in a week (Labor Code 510, IWC Orders §3). Where an employee receives only an hourly pay rate (wage), the hourly pay is the regular rate of pay (as long as it is at least equal to minimum wage) for purposes of overtime. If the employee receives other types of pay (other than the hourly pay such as supplementary commissions, bonuses, or piece rates), such other pay must be included in determining “the regular rate of pay” for purposes of overtime compensation. In such cases, it is sufficient that an employer provide the minimal overtime rate based upon a multiplier of 1½ or double times the hourly rate and also indicate that such specified overtime rate is subject to upward adjustment when other specified forms of wages are earned during the applicable pay period (e.g., “Overtime Rate: At least $15.00/hour (1½ times regular rate) & $20.00/hour (double time rate), subject to upward adjustment based upon earned commissions (10% of sales) and bonus (2% of department gross sales)”). This is allowable because statutory overtime is based upon a “regular rate of pay” which includes all wages earned during the period of time for which overtime compensation is determined as applicable under statute. Only in this context may an overtime rate vary and not be subject to ascertainment for a specific overtime rate. Of course, an employer may provide overtime rates above the statutory rates which may be specified in the notice if ascertainable at the time the notice is to be provided, but all rates of pay (wages) must in combination comply with statutory and regulatory requirements for overtime compensation. More specific information for determining the “regular rate of pay” for overtime compensation under various scenarios is available in the DLSE Enforcement and Interpretations Manual, §49 “Computation of Regular Rate of Pay and Overtime Compensation” available on this website. (Question and Response updated 3/11/16)
20. When does a “hire” occur for purposes of providing the required notice to an employee?
A: For purposes of the notice, it must be given “at the time of hiring,” which may be a date determined by the parties (employer and employee), but in no event may the notice be provided to the employee later than the “start date” for work. As of April 2012, the template has been updated accordingly to indicate the start date which is the latest time for providing the notice. The statute states that employers shall provide the written notice “[a]t the time of hiring,” without defining the phrase. In the absence of a statutory definition for “hiring,” its ordinary meaning is “to get the services of a person or use of a thing in return for payment; employ or engage.” (Webster’s New World Collegiate Dictionary, 4th Ed, 2001, p. 675). The concept does not necessarily depend on the first day of work by the employee but may be sooner where there has been an offer and acceptance of employment establishing an employment relationship. (See Labor Code 2750). While the obligation for payment of wages for work performed arises when work is performed, the employment contract may be created prior to performance. Thus, the first day of work may be used as the time of hire (date of hire) for unilateral contracts, such as where an offer is made by an employer and only accepted by the employee when performance of work commences. More often, however, employment contracts (written or oral) are bilateral where the offer of employment is made by the employer and accepted by the employee, at which time an employment relationship arises (which may be several days prior to commencement of work). Thus, the employer must provide the notice to new hires reasonably close in time to the inception of the employment relationship which may be a date determined by the employer and employee, however, in no event later than the first day services are performed by the employee. Also, it is important to note that even where an employment contract in fact does not exist, an obligation to pay wages (minimum wages and overtime) may still exist if the employment is otherwise established under statute or regulation under applicable definitions contained in the Labor Code and/or Industrial Welfare Commission orders. (See Martinez v. Combs (2010) 49 Cal.4th 35 [discussing employment relationship under statute and regulation definitions]). This means that a denial of the existence of an employment agreement or a failure of an employer to provide the required notice does not dispense with the statutory obligation to pay wages (or to provide the required notice) to one performing labor or services if employment is established under statutory or regulatory provisions. (Question and Response updated 4/12/12)
21. Why does the notice specify whether a written agreement exists providing the rate(s) of pay? Does this information affect the employment at-will doctrine?
A: Following updates to the template in April 2012, the template no longer indicates designation of the employment agreement as “written” or “oral,” but instead requires designation of whether a written agreement exists which provides for the rate(s) of pay. If the answer to the question is “yes,” then the employer must indicate whether or not all rate(s) of pay and bases thereof are contained in that written agreement. As previously stated, the notice requirement is premised upon an employment relationship. (See Labor Code 2750 which provides definition of contract of employment). The information is one of fact—whether there exists a written agreement regarding rate(s) of pay and basis thereof which are items expressly addressed in Labor Code 2810(a)(1)(A). Providing this information on the notice makes it clear to the employee whether all terms relating to the basis and rate(s) of pay are in a (separate) written agreement. Labor Code 2810.5 is aimed at informing employees about such fundamental and material information concerning their pay and rates of pay under an employment relationship.
The designation in the notice of such agreement or contract information has nothing to do with “at will” employment in California, which refers to termination of an employment relationship having no specified term. Prior to the enactment of Labor Code 2810.5, written and oral employment agreements have existed without conflict with the “at will” doctrine in Labor Code 2922. Indicating on the notice whether the terms relating to pay rate(s) and the basis thereof are contained in a written agreement has no legal effect on Labor Code 2922. (Question and response updated 4/12/12)
22. If workers’ compensation policy information is required on the notice, does any change in policy carrier or policy number require that a new notice be issued to every employee?
No. The statute clearly provides that notice of a change may be accomplished (without having to issue a new notice) if all changes are provided in another writing required by law within 7 days of the changes. (Labor Code 2810.5(b)). Any change to the policy number could be accomplished through a posting of the workers’ compensation notice (a writing required under Labor Code 3550-3351), which contains current policy information, and which all employers are required to post in a conspicuous location where employees can readily view the notice during the hours of the work day.
23. Why does the notice contain an Acknowledgment of Receipt?
A: As of April 11, 2012, the template has been updated to indicate that the Acknowledgment of Receipt is optional. Signatures by the employer or employee may provide assurance and confirmation that the notice was, in fact, provided by the employer and received by the employee, as intended by the Legislature. While the use of this acknowledgment thus better protects both the employer and employee, it is not required. If an employer wants to use the acknowledgment section (indicated as “optional” on the template), the employer representative may be any person the employer has authorized to sign the acknowledgment. (Question and response updated 4/12/12)
24. When providing information regarding the regular pay day, can an employer simply state “bimonthly, bi-weekly,” etc., rather than a specific date?
An employer need not provide a specific date (month, day, and year) for each pay day, but the information provided should be sufficient for an employee to understand when she will be paid. Thus, the regular day(s) of the month when wages will be paid should be specified in addition to the measure of time between pay days (e.g., semi-monthly, monthly, bi-weekly, weekly, etc.). Examples include: 1st and 15th of every month; 1st and 2nd Friday of every month, each Friday of every month.
25. Is there a requirement that a notice is required to be given annually to employees as in New York’s wage theft law?
A: No. Unlike New York’s law, annual notices to employees are not required under California’s wage theft protection law. California requires that changes to information initially provided in the notice shall be accomplished by issuing a new notice containing all changes within 7 calendar days after the change or in the manner described in Labor Code 2810.5(b)(1)-(2).
Additional questions and responses added 4/12/12:
26. When identifying the hiring employer what is the difference between the “legal name” and other names “doing business as”?
A: The statute requires that the notice to employee contain “the name of the employer, including other ‘doing business as’ names used by the employer.” (Labor Code 2810.5(a)(1)(D)). In recognizing the distinction between the name of an employer and other names an employer might use, the Legislature specified a more expansive inclusion of information. Accordingly, the employer must specify its full formal legal name which includes, as appropriate, “Inc.,” “Co.,” “Corp.,” “LLC,” “Partnership”, or other entity designation if such is part of the full legal name of the business. Also, the employer must specify any other name it is “doing business as” (also known as “dba”) which applies to the employment of the employee receiving the notice. A “dba” may include any name used by an employer pursuant to a filed fictitious business name statement (see Business & Professions Code 17900 et seq.) or other informal names it uses which may be similar or very different from the legal name. [Note: The use of a fictitious business name or any other name does not create or constitute a separate entity apart from the entity which owns the business (designated by the full legal name) but is simply a different name which is used by a business.(Providence Washington Ins. Co. v. Valley Forge Ins. Co. (1996) 42 Cal.App.4th 1194, 1200).
27. Does an employer that has previously provided notice to new hires have to issue a new notice based upon DLSE’s updates to the template posted on its website in April 2012?
A: No. An employer need not issue a new notice to new hires who were previously provided notices using the earlier template until there is a substantive change in the provided information. Employers who used the previous template (either using the template form or creating their own form based upon the information in the earlier template) are in compliance with the notice obligation in Labor Code 2810.5 as long as the information based upon the earlier template remains the same. If there are changes to the information provided in the earlier template which would also impact information required in the newer template, the employer must, within 7 calendar days of the change, provide notice using the updated template information or otherwise provide notice of a change in the manner specified in 2810.5 (b)(1)-(2). For new hires made after the posting of the updated template on DLSE’s website, the newer posted version of the template must be used. DLSE will archive on its website any earlier template for informational purposes.
28. Why does the template require a check box indicating whether the hiring employer is a staffing agency or business?
A: DLSE recognizes that employment relationships are affected by relationships between independent business entities. Two or more businesses may contractually determine or fix certain aspects of labor administration or costs in varying degrees ranging from one business supplying labor to another business entity for a specified period or defined project, providing temporary employee services, or contracting major workforce administration and independently performing entire human resource functions as an employer. These are recognized business relationships which impact the employment of an employee and are not prohibited relationships under current law. For an employer who is, in fact, a staffing agency (which for purposes of the notice includes a temp service, leasing company, or PEO), it must provide the 2810.5 notice to its employee and indicate that it is providing such notice in that capacity by checking the box for “staffing agency.” As there is an employment relationship between the staffing agency and employee (even where the work is performed at and for another business), checking this box informs the employee of the capacity or role of the identified employer with respect to the employee. This information further identifies the named employer (required under Labor Code 2810.5(a)(1)(D)) and specifies its role as an employer which hired the employee for purposes of the required notice. If the hiring employer is not a staffing agency, then the box is not checked. Also, a recruiting service or simple payroll processing service is not a staffing agency or business for purposes of the notice.
29. Why must a staffing agency provide information regarding “the other entity for whom this employee will perform work” when the staffing agency is the hiring employer?
A: This information is only required if the answer box is checked “yes” to the question whether the hiring employer is a staffing agency/business, and thus, is limited in its application as specified. As discussed in the previous response to Question 28, this item of information recognizes the relationship between the respective business entities with respect to the hired employee and this item specifies identification information of the other entity (other than the staffing agency/business who hired the employee). As this pertains to a notice required by statute, identification of the other entity for whom the employee performs work does not itself establish liability among the respective businesses (staffing agency and client business for whom work is performed) but simply identifies the other entity for whom work is performed by the employee for which liability as an employer for wage payment and/or workers’ compensation coverage can be determined, if necessary, with respect to the rights of the employee who performs services. While employers may seek to apportion or parse out their employer responsibilities/obligations by agreement (contract), such agreement cannot alter or vitiate employee rights and statutory obligations of each of the involved employers (See Labor Code 1194; Martinez v. Combs (2010) 49 Cal.4th 35[discussing employer under IWC Order definitions].) If the staffing agency or business provides the required notice with information regarding the other entity for whom work is performed, the client business is not required to provide a separate notice to the employee.
30. Is a new notice required for every new placement of the employee made by a staffing agency/business?
A: If the staffing agency/business knows the client business (the “other entity for whom this employee will perform work”) where the employee is to be placed, the client business information must be indicated in the notice provided “at the time of hire,” which in no event may be later than the employee’s start date of work. If other placements are known at the time of initial placement, the staffing agency/business can list the other known placements in the notice (including all required information for “other entity for whom this employee will perform work”).
If the notice provides information regarding the employee’s initial placement, or if this information is not included because it was not known by the staffing agency/business at the time the notice was provided, any subsequent placements are substantive changes to the information provided in the first notice. In such case, the staffing agency/business must, within 7 calendar days of the change, provide notice of any change by providing either a new notice, or, reflecting the change in an itemized wage statement or other notice, pursuant to Labor Code 2810.5(b)(1)-(2). It is important to note that a new notice under Labor Code 2810.5(a)(1) is not required at the start of every new subsequent placement, since changes in placements not listed in the first notice fall within Labor Code 2810.5(b). Under 2810.5(b), all changes applicable to the new placement can be reflected on a timely pay stub furnished in accordance with Labor Code 226, or notice of such changes can be provided in another writing required by law within 7 calendar days of the change.
Revised March 11, 2016