On December 13, 2010, Governor David Paterson signed into law the New York Wage Theft Prevention Act, which imposes significant new notice and disclosure requirements on all New York employers. Businesses with operations in New York should begin modifying their payroll practices now to ensure that, as of the April 12, 2011 effective date, they are in compliance with the following requirements:

Notice of Pay Rate and Payday: Employers must furnish each employee with a detailed written notice pertaining to pay rates and paydays (1) at the time of hiring, (2) on or before February 1 of each subsequent year of employment, and (3) within seven days of any change in the required information not reflected in the employee’s wage statements. This notice, which will be prepared by the New York Department of Labor (NYDOL) and posted on the agency’s website, must include the following:

  • The rate or rates of pay and the basis of the rate, including overtime rates;
  • Whether the employee is being paid by the hour, shift, day, week, salary, piece, commission, or in some other method;
  • Allowances, if any, claimed as part of the minimum wage, including tip, meal, or lodging allowances;
  • The regular pay day designated by the employer;
  • The name of the employer, and any “doing business as” names used by the employer;
  • The physical address of the employer’s main office or principal place of business and the mailing address, if different; and
  • The telephone number of the employer.

Employers must provide this notice in English and in the language identified by the employee as his or her primary language at the time of hiring. To assist employers, the NYDOL intends to prepare notices in multiple languages.

The employee must (1) sign and date a written acknowledgment of receipt of the notice each time that the employer provides the employee with notice, (2) affirm that he or she identified his or her primary language to the employer, and (3) affirm that he or she received a copy of the notice in his or her primary language. The required written acknowledgments must be retained for six years.

These provisions of the Act replace and expand upon the October 2009 amendments to Section 195 of the Labor Law, which merely required written notice of pay rates and pay days at the time of hire.

Wage Statements: All wage statements provided to employees must include, at a minimum, the following information:

  • The dates of work covered by the wage payment;
  • The name of the employee;
  • The name, address and telephone number of the employer;
  • The rate or rates of pay and basis thereof;
  • Whether the employee was paid by the hour, shift, day, week, salary, piece, commission or other;
  • Gross wages;
  • Deductions;
  • Allowances (if any claimed as part of the minimum wage); and
  • Net wages.

Employers also should pay special attention to the additional requirements for the wage statements of non-exempt employees, which must include: the regular hourly rate or rates of pay; the overtime rate or rates of pay; the number of regular hours worked; and the number of overtime hours worked. If the employee is paid on a piece rate, the statement must include the applicable piece rate or rates of pay and the number of pieces completed at each piece rate.

In addition, employers should be particularly careful to note fluctuations in pay rates, such as when a shift premium or dual rate applies.

Retention of Payroll Records: Employers must maintain all payroll records for six years, rather than the 3-5 year period previously in effect.

Penalties for Noncompliance: An employer that fails to provide the required notice within 10 business days of an employee’s hire date is subject to an action for damages of $50 per workweek, up to a maximum of $2,500, plus costs, attorneys’ fees and injunctive relief. Also, employers that fail to provide employees with the wage information in each payroll statement will be penalized $100 for each week, up to $2,500, plus costs, attorneys’ fees and injunctive relief. (If the Commissioner brings the action, there is no cap on damages, but an employer can avoid these penalties if it made complete and timely payment of all wages to the employee(s) in question or the employer reasonably believed in good faith it was not required to provide the notice.) Additionally, employers that fail to pay employees their required wages will be subject to an additional $500 civil penalty for each offense to be collected by the Commissioner in any legal action. A prevailing employee may recover 100 percent in liquidated damages.

Although the statute places caps on civil penalties per employee, the statute resembles legislation in California that has created fertile soil for class action lawsuits, where the penalties have accumulated quickly, and minor violations of the statute have produced the potential for significant damages awards.

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