The following are recent changes to the New York Labor Law of which employers should be aware:

New Employees Must Receive Written Notice of Pay Information

Effective October 26, 2009, the New York Labor Law will require that employers provide newly hired employees with written notice of: (i) their rate of pay; (ii) the overtime rate for non-exempt employees; and (iii) their regular payday. In addition, the law requires employers to obtain a written acknowledgement from employees confirming receipt of the notification. At this time, the Commissioner of Labor has not issued any regulations regarding the content and form of the notice.

Employers should prepare to meet these new requirements by ensuring their existing hiring forms and offer letters include the required information. As the new law will require non-exempt employees to be provided with written notice of their overtime rate at the time of hire, it is even more important that employers promptly determine whether employees are exempt from the overtime pay requirements of federal and state law. To be exempt, an employee must satisfy the requirements for both a duties and a salary test. For more information on overtime pay exemptions, see generally the discussion below and our previous Alert found here.

New Minimum Wage Rate: $7.25

Effective July 24, 2009, the federal minimum wage was increased to $7.25 per hour. New York law provides that New York’s minimum wage is the higher of $7.15 or the minimum wage under federal law. Accordingly, New York State’s minimum wage is now $7.25 per hour. N.Y. Lab. Law § 652(1). As a result, the salary requirements to be exempt from the overtime requirements of the law as an executive, professional or administrative employee have been increased to $543.75 per week under New York law. Even with the increase in the minimum salary requirements for overtime purposes, the New York Labor Law provides that executive, professional or administrative employees need their weekly earnings to exceed $900 per week to be excluded from other provisions of the Labor Law. For instance, executive, professional or administrative workers who earn under $900 per week must be paid not less often than semi-monthly. N.Y. Lab. Law § 191(1)(d). In addition, the Labor Law provides that employers shall not be liable for certain benefits or wage supplement violations with respect to executive, professional or administrative employees who earn over $900 per week. N.Y. Lab. Law § 198-c.

Employers should ensure that their payroll reflects the new minimum wage rate of $7.25 per hour, if applicable, and that employees who are considered exempt for overtime pay purposes have salaries in excess of $543.75 per week. In addition, employers should consider whether their executive, professional and administrative employees also meet the Labor Law’s $900 threshold. Employers must post the provisions of the state and federal minimum wage laws reflecting the new minimum wage hourly rate. A copy of the new minimum wage poster for New York State is available here and a copy of the new federal minimum wage poster is available here.

Commission Arrangements Must Be In Writing

Employers need to ensure that commission arrangements with commission salespeople are in writing. The New York Labor Law defines a “commission salesperson” as “any employee whose principal activity is the selling of any goods, wares, merchandise, service, real estate, securities, insurance or any article or thing and whose earnings are based in whole or in part on commissions. The term ‘commission salesperson’ does not include an employee whose principal activity is of a supervisory, managerial, executive or administrative nature.” N.Y. Lab. Law § 190(6). Employers are required to reduce to writing the agreed upon terms of employment with their commission salespersons. The written terms of employment must include a “description of how wages, salary, drawing account, commissions and all other monies earned and payable shall be calculated.” Where the writing provides for a recoverable draw, the frequency of reconciliation must be included. Additionally, the writing must also provide details regarding the payment of earned amounts upon termination of the commission salesperson’s employment.

The Labor Law provides that “failure of an employer to produce such written terms of employment, upon request of the commissioner, shall give rise to a presumption that the terms of employment that the commissioned salesperson has presented are the agreed upon terms of employment.” N.Y. Lab. Law § 191(1)(c). Employers who employ commission salespersons should immediately ensure their commission arrangements have been reduced to writing consistent with the Labor Law. Additionally, employers that contract with commissioned “sales representatives” as independent contractors must ensure that they provide the sales representative with a written contract setting forth the method by which the commission is to be computed. N.Y. Lab. Law § 191-a(d) and § 191-b.

Enhanced Penalties Under Wage and Hour Provisions of the New York Labor Law

On August 26, 2009, Governor Paterson signed legislation amending the New York Labor Law to increase penalties for wage and hour violations, and making it clear that partnerships and limited liability companies are covered.

  • Significantly, the law now expressly recognizes that a partnership or limited liability company can be liable for violations of the Labor Law. N.Y. Lab. Law § 215. Personal individual liability also is possible for an officer or agent of a corporation, partnership, or limited liability company. In the most egregious cases of violations of wage and hour laws, criminal prosecution is also possible.
  • Labor Law §§ 198(1-a) and 663 were amended to allow for the recovery of liquidated damages of 25% of an employee’s claim, unless the employer can prove a good faith basis for believing that the underpayment of wages was in compliance with the Labor Law. Previously, the employee was required to show the employer’s failure to pay wages was “willful.” Section 663 also provides that the Commissioner of Labor may bring any legal action, including administrative actions, against an employer to collect wage underpayments and liquidated damages for employees.
  • Labor Law § 215 was amended to increase the civil penalties for retaliation against employees who invoke their rights under the Labor Law to a minimum of $1,000 and a maximum of $10,000. The Commissioner also is authorized under § 215 to award lost compensation to employees in addition to imposing civil penalties for violations of the Labor Law.

These amendments will apply to violations occurring on or after November 24, 2009.