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More AB 1513 Confusion
People Locator Services & Pay Dates
Bryan Little, FELS

September 7, 2016

AB 1513, legislation passed in 2015 to clarify the proper wage treatment of Labor Code-required rest periods for piece-rate workers, continues to cause confusion among employers seeking to understand how to take advantage of the bill’s “safe harbor.”  

The question about proper compensation of piece-rate workers on rest periods first arose as a result of two California appellate court decisions in the spring of 2013 (the Bluford and Gonzalez cases.)   The California Legislature responded with AB 1513, which established rules in the Labor Code for compensation of piece-rate workers’ rest periods and created a safe harbor allowing employers to make back-wage payments and claim an affirmative legal defense if sued by current or former employees for alleged under- or non-compensation of rest periods.

Use of the safe harbor requires employers to use “due diligence” locating employees to whom the employer must make back wage payments as specified by AB 1513 (see “FELS Publishes Piece-rate Payment and Safe Harbor Frequently Asked Questions.”)  Since the passage in late July of the court-delayed deadline for informing the Department of Industrial Relation (DIR) of an employer’s intention to use the AB 1513 safe harbor, employers are asking new questions about how to actually implement back-wage payments to allow the employer to successfully claim the protection of the safe harbor if the need arises:

  • AB 1513 requires employers to exercise “due diligence” in locating former employees with whom the employer may no longer be in communication; but what is “due diligence?”  How do you know when you’ve done enough to satisfy the requirement to exercise due diligence in finding a former employee?
  • AB 1513 also established a December 15, 2016 deadline for payment of back wages to employees to claim the safe harbor; but what are you required to have done by December 1? Mailed all the checks? Ensured all the checks have been cashed?  Finished due diligence to find former employees? Made a payment to DIR’s Unpaid Wages fund?

 

People Locator Services and Due Diligence

How do you ensure you’ve met the “due diligence” requirement?   AB 1513 does not define what constitutes “due diligence,” other than to say that it includes, but is not limited to “the use of people locator services.” There are a variety of people locator services available on the Internet, allowing you to  search for a name in an attempt to locate a current address.  Here is a link to a website listing, rating and explaining how these services work.  http://people-search-services-review.toptenreviews.com/.
 

Some of these services allow you to purchase a one-month pass for unlimited searches.  Given the specific reference in AB 1513 to the use of people locator services, it seems likely that a court would expect an employer claiming the safe harbor’s affirmative defense would require use of one of these services for at least one search per employee if the employer does not have a current address.

 Other than using people locator services as specified in AB 1513, what else does an employer need to do to satisfy the “due diligence” requirement?  A court will likely look for an employer to have made efforts to find employees that are both reasonable and done in good faith.  For example, you may be familiar with a lost former employee’s brother or friend who may still be in the community, and due diligence would likely require that you ask the brother/friend if he has a current mailing address for the former employee.  On the other hand, if you do not have a current address for a former employee who has a very common last name, the people locator search may be unsuccessful because of the common name.  In the absence of any direct information about how to locate that employee, then even unsuccessful use of the people locator service may satisfy your due diligence requirement. 

Issues with People Locator Services

Matt Davidian of Datatech, a Fresno-based company that provides payroll and accounting software for agricultural employers, points out that many people locator services may not be very thorough in their search and this may cause employers problems when trying to show the exercise of due diligence:  “Incomplete or partial matches of data are going to come up, and when they do, what should an employer do?  What criteria should employers use in determining whether a match is “good enough” to mail a check to an address?  It’s possible that a person’s name may be a close enough appear to match the name on the check to cash it even if it is not actually the person for whom the check was intended.

Only two of the sites on the toptenreviews.com link indicated that the Social Security Number can be included in the search criteria.  I inquired with one of these, peoplefinders.com, to see how to do a search by Social Security Number and they replied that they actually do not provide the ability to search by SSN.  findoutthetruth.com does indicate on their site that the SSN can be part of the search criteria.   Both of these sites also include date of birth as a search criteria.  Can you satisfy the due diligence requirement of AB 1513 using a match based on the name, address and date of birth without an SSN number match?"

FELS suggests that if an employer does not have a high degree of comfort with the accuracy of a match provided through the kinds of people locator services commonly available on the Internet, that employer should give serious consideration to making the back wage payment to DIR’s Unpaid Wages Fund well before the December 15, 2015 deadline.

The AB 1513 Back Wage Payment Deadline

AB 1513 does not require employers to wait until December to begin making back wage payments.  It says that employers should “[begin] making payments to employees as soon as reasonably feasible . . . and [complete] the payments by no later than December 15, 2016.”  You may find yourself making back wage payments to former employees at addresses you believed to be valid, only to find those checks being returned to you indicating the address is bad or the addressee has moved.  Depending on how close to the December 15, 2016 deadline these checks are returned, employers have good reason to be concerned.

Part of exercise of due diligence should be to find or confirm addresses for former employees and determine whether a check that has already been mailed is likely to have reached its intended recipient.  If that is not the case, the employer may wish to cancel the first check and then reissue another one if the employer has obtained what he has reason to believe is a correct address.  You might also consider sending these checks and statements by certified mail, return receipt requested, so you will have a record that it was delivered to the intended recipient.  If all your efforts to locate the former employee don’t give you confidence that you’ve delivered a back wage check to a former employee, then that payment can be redirected to the Unpaid Wage Fund.

If, under the circumstance, there is no real doubt the payment and required statement having actually been delivered to the former employee, the employer has done its part, even if the check is not cashed right away.  Satisfying the requirement to undertake “reasonable” efforts will depend on the circumstances and particular facts of the situation.  When all is said and done, the employer will need to show a judge he undertook a reasonable effort in good faith to locate and pay the former employee.  If the employee can’t be found with a reasonable, good faith effort, the option of making the payment of the employee’s back wages can be made to the Unpaid Wages Fund administered by DIR.