New Amendments to the New York Wage Theft Prevention Act Relieve Employers of the Requirement to Provide Annual Wage Notices to Employees but Increase Penalties for Noncompliance.

SUMMARY

On December 29, 2014, New York Governor Andrew M. Cuomo signed legislation amending the 2011 New York Wage Theft Prevention Act (“WTPA” or the “Act”), with the effect of immediately relieving employers of the burden of providing an annual notice to employees with detailed wage rate information. The new law also increases penalties for noncompliance, expands coverage to owners of LLCs, and imposes additional requirements.

AMENDMENTS TO NOTICE REQUIREMENTS

The WTPA, in the form enacted in 2011, required employers to provide to all employees by February 1 of each year a detailed wage information statement, and to collect and retain acknowledgements from each employee. The notice requirement was roundly criticized as an unnecessary and costly burden. The new amendment, to New York State Labor Law Section 195(1), removes the reporting requirement for existing employees. Although the law’s other amendments are effective on February 27, 2015, the Governor’s signing memorandum confirms that the change to the notice requirement is effective immediately and thus employers need not issue annual notices in 2015.  The New York Department of Labor has issued a similar announcement on its website.1

The Act’s amendments do not relieve employers from the obligation to provide a wage notice to new employees upon hire, as well as notices to employees whose wage rates have changed. As described in our 2011 memorandum on the WTPA, which can be found here, the notice must contain the following wage rate information: (i) the basis of the employee’s wage rates, e.g., by the hour, shift, day, week, salary, piece commission or otherwise; (ii) the overtime rate of pay, if the employee is subject to overtime  regulations (the employer may, but is not required to, inform exempt employees of the specific applicable exemption); (iii) whether the employer will claim allowances—such as tips, meals, and/or lodging— against the minimum wage; (iv) the employer’s name and any “doing business as” names; (v) the employer’s address and mailing address, if different; and (vi) the employer’s telephone number. Forms of the notice are available on the Department of Labor’s website, http://www.labor.ny.gov/formsdocs/wp/ellsformsandpublications.shtm.

INCREASED PENALTIES

The amendments increase penalties for noncompliance. If an employer fails to provide an employee with a Section 195(1)-compliant notice within ten business days of an employee’s first day of employment, the employee has a private right of action for damages. Employers now face liability of $50 per workday for each day the notice has not been given (up from $50 per workweek), not to exceed a total of $5,000 per employee. In addition, an employer who fails to provide a wage statement to an employee along with his or her wages, as required by Labor Law Section 195(3), is subject to liability of $250 per workday (up from $100 per workweek), not to exceed $5,000. Finally, the amendments add a new penalty provision to Labor Law Section 215, which protects employees from retaliation for complaining about Labor Law violations. Under the new provision, if the Department of Labor finds that an employer has engaged in a second violation within the past six years, the Commissioner of Labor may assess a civil penalty ranging from $1,000 to $20,000.

AMENDMENTS TO OTHER PROVISIONS

Other amendments to the WTPA are as follows:

  • A provision making the ten largest owners (by percentage) of a Limited Liability Company (“LLC”) jointly and severally liable for the debts and wages owed to employees of the LLC. LLC members are eligible for pro rata contribution from other liable LLC members, as defined by the law.
  • A requirement that an employer that has engaged in repeated violations of the Labor Law, or that is found to have engaged in a “willful or egregious” violation, report specified wage and employment information to the Department of Labor for posting on the Department’s website. The law states that no individually identifying information will be posted online.
  • A notice requirement, obligating a construction contractor or sub-contractor found to have failed to pay wages to notify all its employees of the nature of the violations by an attachment to the employees’ paycheck.
  • A provision clarifying the test for successor liability for the purpose of assessing penalties for repeat violations. The new law states that any successor entity  which is engaged in substantially the same work, in substantially the same working conditions, and under substantially the same supervisors is liable for the acts of the predecessor entity. Any successor entity that has substantially the same production process, produces substantially the same products, and has substantially the same body of customers is also liable for the predecessor’s acts.
  • A section clarifying that any investigation by the Department of Labor shall presumptively cover the entire six-year statute of limitations period.
  • A provision creating a new Wage Theft Prevention Enforcement Account, to be used by the Commissioner of Labor for the enforcement and administration of the WTPA.