Fail to Pay Wages in D.C. and Get Sued With Some of Your Closest Friends (and Contractors)
If you are a D.C. employer, temporary staffing agency, contractor or subcontractor, you have yet another wage and hour law to contend with: The Wage Theft Prevention Amendment Act of 2014. Among other things, the law introduces new penalties for failure to pay earned wages and exposes to liability related entities that have no relationship to the employee. Here are the highlights:
Under this new law, when a subcontractor is alleged to have failed to pay an employee wages, the subcontractor and the general contractor become jointly and severally liable to the subcontractor’s employees. The subcontractor is required to indemnify the general contractor on wages, damages, interest, penalties and attorneys’ fees, unless the wage violations arise from the general contractor’s failure to submit prompt payment under a contract with the subcontractor.
The law would also hold employers and temporary staffing companies jointly liable when the staffing firm employs a person who provides services for the benefit of another employer under a temporary staffing arrangement. Unless the parties have agreed otherwise, the temporary staffing firm must indemnify the employer for its violations.
There is no longer a coverage exemption for persons employed in a “bona fide executive, administrative, or professional capacity.”
Employers must comply with notice requirements at the time of hire, which require disclosure of other business names used by the employer, the employee’s pay rate and scale for basis of pay (such as hourly, weekly, monthly, etc), and regular paydate.
The Act is a great example of why it’s important to “keep your friends close”. Contracted entities that have engaged workers on substantial projects need to stay abreast of the payroll practices of their business partners to avoid an unpleasant surprise. In the temporary staffing industry, where there is a tremendous amount of turnover, tracking information will be an essential part of the business relationship. While this will result in some increased short-term costs, consider the alternative of a incurring a fine of $1,000 per affected employee. Those D.C.-area businesses that have contracted with other entities to supply labor are advised to confer with legal counsel on how to comply with these new requirements.
The law will go into effect following the mandatory congressional review period.