New York Enacts Wage Theft Prevention Act

On December 13, Governor David A. Paterson signed the Wage Theft Prevention Act into law, which will go into effect on April 12, 2011. Among other things, the Act requires New York employers to annually provide employees with certain wage information, increases sanctions on employers that fail to properly pay their workers full earned wages and overtime, provides the Commission greater authority to enforce wage obligations, and increases payroll recordkeeping requirements from three to six years.

New Notice Requirements

Effective April 12, 2011, employers must provide employees, both at the time of hiring and on or before February 1 of each subsequent year of the workers’ employment with the employer, with a written notice (in a format to be prepared by the New York Department of Labor) that includes the following:

• The rate or rates of pay and the basis of the rate;
• 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;
• 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;
• The telephone number of the employer; and
• Any other information as the Commissioner deems material and necessary.

The Act requires that the notice be provided both in English and in the language identified by the employee as his primary language at the time of hiring. Further, the law requires that each employee sign and date a written acknowledgment of receipt of the notice each time that the employer provides this notice to an employee. In the acknowledgment, the employee must affirm that he or she identified his or her primary language to the employer and that the employee received a copy of the notice in their primary language. The employer must maintain these written acknowledgments for six years.

Additionally, the notice provided to employees eligible for overtime compensation must state the regular hourly rate and overtime rate of pay. Pursuant to this law, the notice template will be prepared and made available by the Commissioner, who will determine the languages in which the notice will be available.

The Act also requires that payroll records, which previously had to be maintained for only three years, now be maintained for six years. Further, all pay statements must include information regarding: the dates of work covered by that payment of wage; the name of the employee; the name of the employer; the address and phone 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. If the employee is not exempt, the statement 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.

Increased Sanctions

The Act also expands the types of businesses subject to criminal penalties for nonpayment of wages to include partnerships and limited liability corporations, and establishes criminal penalties of up to one year in prison and a $5,000 fine for failure to pay the minimum wage. The legislation similarly extends criminal penalties to officers and agents of corporations, partnerships or limited liability companies that knowingly permit wage violations.

Failure to provide the newly required notice within 10 business days of an employee’s hire date subjects the employer to an action for damages of $50 per workweek, to a maximum of $2,500, plus costs, attorneys’ fees and injunctive relief. Similarly, 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.) Failure to pay the required wage to an employee will result in a civil penalty of $500 for each offense, to be collected by the Commissioner in any legal action. Significantly, the new law increases the amount of liquidated damages that a prevailing employee may recover from 25 percent to 100 percent.

Increased Powers of the Commissioner of Labor

The Act also significantly expands the powers of the Commissioner of Labor, including that the Commissioner can order reinstatement in cases of retaliation, as well as front pay in lieu of reinstatement, liquidated damages not to exceed $10,000, penalties equal to the amount caused by the violation and an additional 15 percent in assessed fines – as well as treble damages for “willful or egregious violations.” The Commissioner also may post notices of violations at the employer’s worksite for up to 90 days or one year, depending on the nature of the violation. Moreover, the Act tolls the statute of limitations period once a complaint is filed with the Commission or when an investigation by the Commission commences (whichever occurs first). The Act also increases the Commissioner’s ability to address inequities in pay on the basis of gender, particularly to pursue administrative actions.

Finally, the bill also creates stronger whistleblower protections for any employee who reports conduct that he or she reasonably and in good faith believes constitutes a violation of the labor laws.