On December 13, 2010, New York passed the Wage Theft Prevention Act (“WTPA”). The WTPA, which amends the state’s labor law regarding wage payments, and becomes effective on April 12, 2011. It heightens the requirements of employers as relating to notice and the payment of wages while also stiffening the penalties for notice and payment failures.

Notice Requirements:

The law currently in effect requires employers to inform new hires in writing of their designated pay date, rate of pay, and overtime rate, if applicable. The WTPA revises this portion of the law, placing further obligations on employers by requiring this notice to be issued not only upon hire but also by February 1 of every subsequent year. The WTPA also expands the information to be provided to include: the employee’s rate of pay and how it is paid (hourly, weekly, commission, etc.); allowances claimed against minimum wage (e.g., tip, meal or lodging credits); the employer’s regular pay day; the employer’s name and any “doing business as” names; the address of the employer’s main office or principal place of business and mailing address if different; the employer’s telephone number, plus any other information the Commissioner of Labor deems “material and necessary.” The notice must be provided in English, or in the employee’s primary language if his/her primary language is not English, and must be signed and acknowledged by the employee each time it is received.

The WTPA also requires notice beyond the hiring and annual notice periods discussed above. Along with every wage payment, employers must provide the following information: dates of work covered; employer’s address and telephone number; the rate of pay and the manner in which it is paid (hourly, salary, commission, etc.); gross wages; net wages; deductions; allowances against minimum wage; and for non-exempt employees, the regular rate, overtime rate, and the number of regular and overtime hours worked. Such records must be maintained for six years. And, if the employer plans to make any changes relating to an employee’s wage payment, employers are also required to provide the employee with seven days written notice of the changes prior to the changes taking effect.

Penalties for Violation of the Notice Requirements:

Along with the new notice requirements came more exposure to employers for violation of such notice provisions. Failure to provide the required notice within ten business days of an employee’s hire date subjects the employer to an action for damages of $50 per workweek (up to a maximum of $2,500) plus costs, attorney’s fees and injunctive relief. Similarly, employers who fail to provide employees with the wage information in each payroll statement are facing an action for damages of $100 for each week (up to $2,500) plus costs, attorney’s fees and injunctive relief. In either case, if the Commissioner brings the action, there is no cap on damages.

Penalties for Violation of Wage Payment Provisions:

The WTPA has also made wage payment violations that much more costly for employers. Under the current law, the Commissioner can seek attorney’s fees and liquidated damages of 25 percent of the total unpaid wages due. The WTPA increases that number to 100 percent of the unpaid wages due. Moreover, whereas the Commissioner currently has discretion to seek liquidated damages, pursuant to the WTPA, he/she now must seek liquidated damages and must seek recovery of the full amount of underpayment. Failure to pay minimum wages or overtime compensation may also result in a misdemeanor conviction, with a minimum fine of $500 and a maximum of $20,000, or imprisonment up to one year. A second violation within six years may be prosecuted as a felony.

Penalties for Retaliation Against Employees:

The act also stiffens penalties against employers for retaliation against employees who make complaints regarding conduct the employee reasonably and in good faith believes is a violation of the wage payment laws. In addition to reinstatement, back pay and front pay, retaliation victims can also collect liquidated damages of up to $10,000. Repeat offenders and employers whose violations are found to be “willful or egregious” are now subject to treble damages (double the wages due, plus liquidated damages of 100 percent).

What Employers Should Keep In Mind:

It is important for employers to keep the above notice and payment requirements in mind, and to ensure that all employees are properly and timely notified and paid for their services. And, employers should not wait for complaints from their employees regarding notice violations. While an employer may be able to avoid the penalties discussed above if it made complete and timely payment of all wages to the employee(s) in question or the employer reasonably believed in good faith it was not required to provide the notice, employees aware of violations are incentivized to not report notice violations until months after the fact, in order to allow for the weekly damage amounts to accrue. An organized human resources department and timely reminders from legal counsel can make all the difference in the world in ensuring compliance with such a strict wage theft prevention act.