NY’s Wage Theft Prevention Act Imposing Additional Requirements on Employers

On December 10, 2010, former governor David Patterson signed into law the Wage Theft Prevention Act (“WTPA”), a piece of legislation that comprehensively amends various sections of the New York Labor Law. Enacted as Chapter 564 of the Laws of 2010 and slated to take effect on April 9, 2011, The WTPA imposes additional notice and record-keeping requirements on employers. It also increases employee protections and establishes harsher penalties for non-compliance.

Annual and New Hire Notice Requirements
Currently, Section 195.1 of the Labor Law requires employers to notify, in writing, all new employees at the time of hiring of their regular rate of pay, regular pay day and overtime rate of pay if they will be eligible for overtime payments. The WTPA amends Section 195.1 to require every employer to provide written notice, both in English and in the primary language identified by the employee, of the following information: (1) the employee’s rate or rates of pay (including overtime rate of pay for non-exempt employees); (2) the basis of that rate of pay, for example, by the hour, shift, day, week, salary, piece, commission, or otherwise; (3) any allowances claimed by the employer as part of the minimum wage, such as tip, meal or lodging allowances; and (4) the employer’s established pay day. The written notice must also include the name of the employer, including any “doing business as” names used by the employer, the address of the employer’s main office or principal place of business and mailing address (if different from the employer’s physical address), as well as the employer’s telephone number.

This written notice must be provided to each employee at the time of their hire and on or before February 1st of each subsequent year of the employment. Moreover, employers must also notify an employee in writing of any changes to the information previously provided in the written notice at least seven calendar days prior to the change, unless the change is reflected on the wage statement furnished to the employee. Employers are obligated to obtain from the employee a signed and dated written acknowledgement of receipt of the written notice in both English and the primary language of the employee. The written notice and signed acknowledgement must be kept by the employer for a period of not less than six years.

The New York State Department of Labor is tasked with preparing template notices that comply with the amended Section 195.1 in both English and additional languages. However, if the Department of Labor has not created a template in the employee’s primary language, an employer is only required to provide the employee with an English-language notice and acknowledgment form.

Wage Statements
The WTPA also amends Labor Law § 195.3, requiring employers to provide to employees a more comprehensive wage statement on the employer’s established pay day that contains the following information: (1) the dates of work covered by the wage statement; (2) the employee’s rate or rates of pay; (3) the basis for the rate of pay, for example, by the hour, shift, day, week, salary, piece, commission, or otherwise; (4) the employee’s gross wages; (5) deductions from such wages; (6) allowances, if any, that the employer claims as part of the minimum wage; and (7) the employee’s net wages. With respect to employees who are entitled to overtime, the wage statement must also include the employee’s overtime pay rate and the number of regular and overtime hours worked. For employees paid a piece rate, which is defined as a rate of pay per item produced, the wage statement must include the applicable piece rate or rates of pay and number of pieces completed at each piece rate.

Like the aforementioned written notice and signed acknowledgement, employers are required to maintain employee wage statements containing the above-information for a period of not less than six years.

Enhanced Civil and Criminal Penalties for Non-Compliance
The WTPA imposes harsh penalties for non-compliance with respect to its notice and wage statement provisions. For example, employers who do not provide proper written notice to their employees, under Section 195.1, within ten business days of the employee’s initial date of employment or annually thereafter, will be liable for damages equaling $50 for each work week during which the violation occurred, up to a maximum of $2,500, in addition to injunctive relief, costs and attorney’s fees. Similarly, an employer who fails to provide their employees with compliant wage statements, under Section 195.3, will be liable for damages in the amount of $100 per week for the duration of the violation, up to a maximum of $2,500, plus costs and attorney’s fees. However, an employer may avoid liability if it can establish that (1) it furnished complete and timely payment of all wages due to its employees or (2) it reasonably believed in good faith that it was not required to comply with the annual and new hire notice requirements and/or provide its employees with wage statements.

The WTPA also amends Labor Law § 198(1)(a) to increase the potential liquidated damages available to an employee for a violation of various provisions of the Labor Law. In particular, the WTPA authorizes liquidated damages of up to 100% of the total amount of wages due, unless an employer can affirmatively prove that it had a good faith basis for not complying with the law.

The WTPA enhances the criminal penalties that may be imposed on an employer, or the officer or agent of any corporation, partnership, or limited liability company who knowingly fail to abide by the State’s minimum wage and overtime laws. Indeed, an employer may be guilty of a misdemeanor and, if convicted, may be fined between $500 and $20,000 or face one year imprisonment. In the event that a second offense occurs within six years of the date of conviction for a prior offense, the employer may be guilty of a felony and, if convicted, may face fines between $500 and $20,000 or imprisoned for not more than one year plus one day.

In addition, the WTPA increases the penalties assessed against employers who retaliate against employees who reasonably and in good faith file a complaint concerning a violation of the State’s wage laws. An employee who is retaliated against for filing a complaint may be entitled to reinstatement, back pay and front pay. The employer may also be fined $10,000 for engaging in retaliation.

Next Step for Employers
Since the penalties for non-compliance are severe, employers should start reviewing their internal practices and polices now in order to take the affirmative steps necessary to ensure future compliance.

Christopher G. Gegwich is partner and Ethan D. Balsam is an associate at Forchelli, Curto, Deegan, Schwartz, Mineo, Cohn & Terrana, LLP in Uniondale, and concentrate their practices in the areas of labor and employment law.