Barclay Damon
Barclay Damon

Legal Alert

Wage Theft Prevention Act

On December 13, 2010, Governor David Patterson signed the Wage Theft Prevention Act, which amends the New York Labor Law. The Act, which will take effect on April 12, 2011, imposes more stringent record-keeping and notice requirements on employers relating to employee wages. The Act also imposes harsh civil and criminal penalties on employers for failing to pay all wages owed and for failing to comply with the Act.

Notice Requirements

The New York Labor Law currently requires employers to notify all employees, in writing at the time of hire, of their regular rate of pay, regular pay day, and overtime rate of pay, if they will be eligible for overtime. In addition to these requirements, the Act will require employers to provide new employees with notice of the basis of the wage payment (i.e. whether paid by the hour, shift, day, week, salary, piece, or commission); the employer’s intent to claim allowances as part of the minimum wage (i.e. tip or meal allowances); and information about the organization (including any “doing business as” names). The Act requires employers to provide the notice in English and in the employee’s primary language and to obtain a signed and dated, written acknowledgment of receipt of the notice from the employee, affirming that it was in the employee’s primary language. The Act tasks the New York State Department of Labor with developing dual-language templates to assist employers in complying with these notice requirements.

The Act requires employers to provide this notice to employees at the time of hire and on or before February 1st each year thereafter. The notice must be updated and provided again to employees at least seven calendar days before any changes are made to the employee’s pay, unless the change is reflected on the employee’s pay stubs. The Act also requires that employers maintain these records (and the wage statements described below) for six years.

If an employer fails to provide the notice of wages to an employee within ten business days of the employee’s first day of employment, the Commissioner of Labor (the “Commissioner”) or the employee may bring an action to recover damages of $50 for each work week that the violation occurred (not to exceed $2,500), plus costs and reasonable attorneys’ fees.

Wage Statements

The Act also requires employers to provide employees with a detailed wage statement listing the dates of work covered by the specified wage payment; the employee’s rate(s) of pay and the basis thereof; whether the employee is being paid by the hour, shift, day, weekly, salary, piece, or commission; and any allowances claimed as part of the minimum wage. These are in addition to the already required listing of the employee’s gross wages, deductions from such wages, and the employee’s net wages. For non-exempt employees, wage statements must also include regular and overtime pay rates and the number of regular and overtime hours worked. For those employees paid by a piece rate, wage statements must include rates of pay and the number of pieces completed at each piece rate.

If the employer fails to provide the wage statement required under the Act, the Commissioner or the employee may bring an action in court to recover damages of $100 for each work week that the violation occurred or continues to occur (not to exceed $2,500), plus costs and reasonable attorneys’ fees.

Anti-Retaliation

The Act also increases protection for employees for asserting rights regarding their wages. In the event retaliation is found, the Act allows the employee to recover injunctive relief (i.e. reinstatement to former position), up to $10,000 in liquidated damages, back pay, front pay (in lieu of reinstatement), plus costs and attorneys’ fees. It also provides that employers who engage in retaliation will be found guilty of a class B misdemeanor.

Posting Requirements

The Act provides that if an employer is found to have violated New York’s wage payment laws, it may be required to post a notice of the violation for up to one year in an area visible to employees. If the employer’s violation is deemed to have been willful, then, in addition to posting an employee-visible notice for one year, the employer must post the notice in an area that is visible to the general public for up to 90 days.

Civil and Criminal Penalties

In addition to the penalties set forth above, if an employer fails to pay the proper amount of wages, the Act provides for recovery of liquidated damages of up to 100% of the total amount of wages owed (as compared to 25% liquidated damages allowable under the existing law). The Act also provides for an additional assessment of damages for willful or egregious violations. Moreover, if an employer is in default on a final judgment for wages owed for more than 90 days, the Act provides for recovery of an additional 15% in liquidated damages. The Act also provides for recovery of prejudgment interest and attorneys’ fees.

The Act imposes criminal liability on partnerships and limited liability companies (in addition to the liability currently placed on corporations) and their officers and agents who knowingly permit the nonpayment of wages. Specifically, employers that fail to pay the proper amount of wages are guilty of a class B misdemeanor and, upon conviction, can be fined between $500 and $20,000 or imprisoned for up to one year. If employers are convicted of a second offense within six years of the prior offense, then they are guilty of a felony and, upon conviction, can be fined between $500 and $20,000 or imprisoned for up to one year and one day.

If you have any questions or require our assistance in reviewing your policies or conducting management training, please contact the Hiscock & Barclay lawyer with whom you normally work or any attorney in our Labor & Employment practice area.