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New York Wage Theft Protection Act: Compliance Required as of April 12, 2011

February 07, 2011

New York employers have new obligations commencing April 12, 2011, under the Wage Theft Protection Act (the “Act”). The Act adds to employers’ obligations to give information to employees at the time of hire, annually and each time it pays its employees. The Act also subjects employers who fail to comply with wage and hour laws to liquidated damages in the amount of 100% and provides harsh remedies against employers who retaliate against employees who complain about the payment of wages.

Obligation to Provide Employee Upon Hire and Annually a Notice of Their Rates of Pay

Since the fall of 2009, New York employers have been required to provide new employees at their time of hire with their pay rate(s), overtime pay rate(s) (if they are non-exempt) and their regular pay days. Starting April 12, 2011, employers will also be required to provide the following information to employees at the time of hire and annually before February 1 of each year of employment:

  • the name of the employer and any doing business name (d/b/a) used by the employer;
  • the physical address of the main office or principal place of business of the employer and a mailing address if different; and
  • the employer’s telephone number.

All information must be provided in English and the employee’s primary language. Employers must obtain signed and dated acknowledgments from employees confirming receipt of this information in English and their primary language. If an employee’s primary language is other than English, the acknowledgment must include an affirmation by the employee that the employee accurately identified his/her primary language to the employer. Employers must maintain these records for six (6) years. The New York Commissioner of Labor will prepare template notices and acknowledgments that comply with these requirements. 

In addition, the Act requires employers to provide an employee with at least seven (7) days’ written notice prior to changing an employee’s pay rate(s) unless this information is provided on an employee’s wage stub.

Employees who do not receive the notice of wages within ten (10) business days of their start date may recover $50 for each workweek their employer has failed to provide the notice up to a maximum of $2,500, plus costs and attorney’s fees. The Commissioner of Labor may also bring an action on behalf of employees and is not subject to the $2,500 cap.

Wage Statement Obligations

The Act also increases the recordkeeping requirements for payroll records from three to six years and requires of the employer to provide the following information on employee wage statements:

  • the dates covered by the pay period (non-exempt employees other than manual workers who must be paid weekly must be paid not less frequently than semimonthly);
  • the name of the employee and the employer;
  • the employer’s address and telephone number;
  • rate(s) of pay and basis thereof whether paid by the hour, shift, day, week, salary, piece rate, commission or other allowance, if any;
  • gross wages;
  • deductions;
  • allowances if claimed as part of the minimum wage; and
  • non-exempt employees must also be provided their regular hourly rate and overtime hours and the number of hours worked at each rate.

Employers who fail to provide the above information may be subject to damages in the amount of $100 per week up to a maximum of $2,500 plus costs and attorney’s fees. Again, the Commissioner may bring an action against an employer and the recovery is not capped.

Enhanced Civil Penalties

Perhaps the most daunting aspect of the Act is the potential for enhanced civil penalties. As of April 12, 2011, employers who run afoul of wage and hour obligations and are unable to demonstrate that they had a good faith basis to believe that their conduct was in compliance with the law will be subjected to liquidated damages of up to 100%. Currently, liquidated damages are capped at 25%. In addition, judgments which remain unpaid after 90 days may be increased by 15%. Therefore, an employer who has failed to pay properly wages may be required to pay up to 1.3 times the amount it owes an employee in addition to attorney’s fees and costs.

Retaliation

The Act also broadens the definition of retaliation to include “threats” against employees who have complained about their employer’s compliance with wage payment laws or who the employer believes has complained. It also permits the Commissioner to award aggrieved employees compensatory damages, liquidated damages up to $10,000, and reinstatement or front pay instead of reinstatement.

Significance for Employers

The Act is a loud message to New York employers that they should review their pay practices prior to April 12, 2011. Employers must also make sure they are ready to provide employees with the mandatory information regarding the payment of wages upon hire and at the beginning of each year. While the penalties for failure to provide notices and proper wage statements may appear small, they are a welcome invitation for class actions and an easy “add on” to any other wage and hour violation claim. Employers should take full advantage of the period between now and April 12, 2011, and review their practices to make sure they are not facing exposure for any of the most common violations which often trigger class actions, i.e., misclassification of employees; working “off the clock”; calculation of the regular rate of pay for purposes of overtime; and failure to pay for meetings, trainings and travel time. Such review will prove worthwhile especially in light of the United States Department of Labor’s recent announcement of its new regulatory and enforcement strategy, which is expected to require employers to create and monitor plans to ensure federal wage and hour compliance.

For more information on this alert, please contact any of the lawyers listed below:

Boston
John Adkins, john.adkins@bingham.com, 617.951.8551
Jenny Cooper, jenny.cooper@bingham.com 617.951.8473
Louis Rodriques, Co-chair, Labor and Employment Group, lou.rodriques@bingham.com, 617.951.8340

Los Angeles/Orange County
Jacqueline Cookerly Aguilera,jackie.aguilera@bingham.com, 213.229.8439
Debra Fischer, debra.fische@bingham.com, 213.680.6418

San Francisco
James Severson, james.severson@bingham.com, 415.393.2242

New York
Douglas Schwarz, douglas.schwarz@bingham.com, 212.705.7437

Tokyo
Mie Fujimoto, mie.fujimoto@bingham.com, 81.3.6721.3138

This article was originally published by Bingham McCutchen LLP.