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New York State Wage Theft Prevention Act Provides More Protection for Employees-Heavier Burdens for Employers

by Felicia Ennis

New York’s Wage Theft Prevention Act (the “Act”) becomes effective on April 9, 2011, substantially increasing penalties for employers who violate the Act’s requirements.  The Act imposes penalties against employers for among other things, an employer’s failure to comply with written wage notice requirements, the underpayment of wages and retaliation against an employee who complains about an employer’s wage violations.

The Act’s Notice Requirements

The Act revises the recent 2009 amendment to the Labor Law requiring employers to notify all new hires in writing of their rate of pay and designated pay date.  The new amendment expands on these requirements by requiring employers to issue written notices at the time of hire and by February 1 of each year.  The act also expands on the information that must be provided in the written notice to include the following:  the rate or rates of pay and basis thereof (whether paid by the hour, shift, day, week, salary, commission, piece or other); any allowances included as part of the minimum wage including tip, meal, or lodging allowance; the regular hourly rate and overtime rate (if non-exempt); the regular pay date; the name of the employer, including any “doing business as” names used by the employer; the physical address of the employer’s main office or principal place of business and a mailing address if different; the telephone number of the employer; plus such other information the Commissioner of Labor deems “material and necessary.”  Employers are required to notify employees in writing at least seven days in advance of any changes to this information unless otherwise reflected on the employee’s wage statement discussed below.

The written notice must be signed, dated and acknowledged by the employee each time the employer provides such notice to an employee.  The written notice must be provided in English or the primary language of the employee and a receipt of this notice must be maintained by the employer for six years.  The acknowledgement must include an affirmation by the employee that the employee accurately identified his or her primary language to the employer, and that the notice provided by the employer to the employee was in the employee’s primary language.  The Commissioner of Labor will provide template notices in English and other languages to assist employers.

In addition to the written notice requirements, the Act also requires employers to provide employees with a statement containing the following information with every wage payment:  the dates of work covered by the wage payment; name of employee; name of employer; address and phone number of employer; rate or rates of pay and basis thereof, whether 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; net wages; and for non-exempt employees, the regular hourly rate or rates of pay plus the overtime rate or rates of pay; the number of regular hours worked, and the number of overtime hours worked.  For all employees paid a piece rate, the statement must also include the applicable piece rate or rates of pay and number of pieces completed at each piece rate. Upon the request of an employee, an employer must furnish an explanation in writing of how the wages were computed.  These records must be maintained by the employer for six years.

Employers must also notify employees in writing or by publicly posting the employer’s policy on sick leave, vacation, personal leave, holidays and hours if applicable.  Terminated employees must be notified in writing within five working days of their termination, of the exact date of their termination and the cancellation of any employee benefits with such termination.

Penalties for Violating the Act’s Notice Requirements

An employer who fails to provide an employee with written notice within ten business days of the employee’s first day of employment can be subjected to civil penalties of fifty dollars for each work week that the violation occurs, not to exceed a total of twenty-five hundred dollars, plus costs, attorney’s fees and other relief including injunctive and declaratory relief.  An employer who fails to provide a written statement containing the necessary wage information with each payment can be subjected to civil penalties of one hundred dollars for each work week that the violation occurs, not to exceed a total of twenty-five hundred dollars, plus costs, attorney’s fees and other relief including injunctive and declaratory relief.

Penalties for Wage Payment Violations

Both civil and criminal penalties may be imposed against an employer who fails to pay or underpays employees.  An employer who does not pay wages in accordance with the requirements of the Act, or one who differentiates in wages because of the sex of the employee can be required to pay five hundred dollars for each failure.  Additionally, an employee or the Commissioner can commence a civil action for the full amount of the underpayment, plus costs, prejudgment interest and attorney’s fees.  If the Commissioner brings a civil action or administrative proceeding against the employer, the Commissioner is required to seek the full amount of the underpayment plus assess liquidated damages in an amount no more than one hundred percent of the total amount of wages found to be due.  Previously, liquidated damages were capped at twenty-five percent of the amount due.

Employers, including the officers and agents of any corporation, partnership or limited liability company who knowingly fail to pay employees in accordance with the Act are guilty of a misdemeanor for first time offenders and if convicted, can face fines of not less than five hundred dollars nor more than twenty thousand dollars or imprisoned for up to one year.  A second offense occurring within six years of the first is a felony, and if convicted, the violator is subject to fines of not less than five hundred dollars nor more than twenty thousand dollars or imprisoned for up to one year and one day, or both, for each offense.

Anti-Retaliation Provisions

The Act also increases protection for employees who complain about employer violations by permitting the Commissioner to order additional remedies in the event of retaliation, specifically enjoining conduct, providing for liquidated damages not to exceed $10,000, reinstatement with back pay, and/or front pay instead of reinstatement.

New York employers should familiarize themselves with the Act’s new requirements and review hiring, payroll and recordkeeping practices to avoid the significant penalties that can result from non-compliance.

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