To avoid strict penalty provisions, all New York employers must act now to comply with the new requirements established by the New York Wage Theft Prevention Act (the “Act”), which is effective as of April 9, 2011. The Act amends the New York Labor Law to impose specific workplace notice and recordkeeping obligations on employers with employees in New York. The Act substantially increases the cost of non-compliance through enhanced civil and criminal penalties. The Act also creates financial incentives for private attorneys as well as the State Department of Labor to aggressively pursue compliance actions against employers. All employers should, therefore, take immediate steps to ensure that their pay and recordkeeping practices comply with the Act.

New Hire And Annual Notice Requirements

A key provision of the Act amends section 195 of the New York Labor Law to require employers to provide written notice to each employee, exempt as well as non-exempt, at the time of hire and every year between January 1st and February 1st (even if nothing has changed), regarding:

  • the employee’s pay rate(s);
  • the employee’s basis of pay (i.e., hourly, salary, etc.);  
  • the employee’s overtime and hourly rate (if applicable);  
  • allowances, if any, claimed as part of the minimum wage (i.e., tips, meals, lodging);  
  • the regular payday;  
  • the employer’s name and any “doing business” names used by the employer;  
  • the physical address of the employer’s main office and mailing address (if different);  
  • the employer’s telephone number; and  
  • any other information required by the Labor Commissioner.  

Employers are now required to give employees seven calendar days advance written notice of any pay changes unless those changes are reflected in the wage statement accompanying the employee’s paycheck. The Act also requires that these notices be given in English and in the language identified by the employee as his or her “primary language.” This means that employers must ask employees at hire to identify their primary language.

Each time a notice is issued, employers are required to secure a signed and dated written acknowledgement from each recipient that states that the employee has been given the required disclosures. The acknowledgement form for new hires must be separate from the offer letter and any other materials included with an offer letter to ensure that the employee directly acknowledges the receipt of that form. The acknowledgement must be in English and, if different, the employee’s primary language and must also contain an affirmation by the employee that states that the employee accurately identified his or her primary language to the employer and that the notice provided by the employer was in the language so identified. Employers must maintain the signed acknowledgement form for six (6) years.

The Department of Labor recently posted several Notice and Acknowledgement templates for employees with different pay arrangements. These templates are available on the Department of Labor’s website at www.labor.ny.gov. At this time, the templates are available in English, Spanish, Chinese and Korean. In the future, templates will also be available in Creole, Polish and Russian. According to the statute, where the Commissioner has not issued a template for a specific language identified by an employee as his or her primary language, employers will be deemed to be in compliance “by providing that employee an English-language notice or acknowledgement.” Employers will not be penalized for errors in templates provided by the Commissioner. Employers do not have to use the Department’s templates and may use their own notices as long as they contain the required information.

According to opinion letters issued by the Department of Labor in 2009 and 2010 (pre-amendment), employers were permitted to provide required notice to employees, and written acknowledgement, electronically (as opposed to providing a “wet” signature on a hard copy document) under the following conditions:

  1. the employee has access to a computer with printing capabilities and is able to access and print a copy of the notice at the time of hire and throughout his or her employment relationship with no fee (either direct or indirect) for accessing or printing the notice;
  2. the notice is in a format that the employee is able to review at the computer in which he or she has access (i.e., a web page, word processing document); and  
  3. the form of the acknowledgement is sufficient to guarantee that the employee received and reviewed the notice and that the employee is aware that his or her actions have legally significant consequences.  

The opinion letters give the following examples of satisfactory electronic acknowledgement:

  • an acceptable electronic signature under the New York Electronic Signature and Records Act (NYS Technology Law § 301 et seq.);
  • an electronic response through e-mail containing a notification of pay rate which positively states that the employee acknowledges receipt of the notice (evidence of delivery of such notification alone is insufficient);  
  • in instances where notice of the statutory required information is provided through a “hiring terminal,” or an employer internet page, instantaneous acknowledgement is acceptable if the employee is required to affirmatively indicate receipt of the notice; and  
  • a scanned or faxed image of the signed notice and acknowledgement.

These opinion letters were issued before the new Act, but the amendments do not appear to prohibit the use of electronic notices and acknowledgements. Moreover, the Department of Labor recently stated that notice under the new Act can be electronic if there is a “system where the worker can acknowledge the receipt of the notice and print out a copy of the notice.”

New Wage Statement Requirements

The Act also amends section 195(3) of the New York Labor Law to require that the statements that must accompany each paycheck contain additional information. Such statements must now provide the following:

  • dates of work covered by that payment of wages;
  • name of employee;  
  • name, address and phone number of the employer;  
  • rate or rates of pay and the basis thereof (i.e., whether paid by the hour, shift, day, week, salary, piece, commission or other basis);  
  • deductions;  
  • allowances (if any, claimed as part of the minimum wage);  
  • net wages;  
  • for non-exempt employees, the regular hourly rate of pay, the overtime rate of pay, the number of regular and overtime hours worked;  
  • for employees paid on a piece rate, the applicable piece rate or rates and the number of pieces completed at each piece rate; and  
  • upon the request of an employee, a written explanation of how such wages were computed.  

The Department of Labor has advised that employers may provide wage statements electronically to employees that have access to a computer and are capable of printing such statements without “undue delay or effort and while on company time.” To comply with the law, employees may not be charged a fee (either direct or indirect) for accessing or printing wage statements. Employers using electronic delivery should ensure that all electronic statements are securely transmitted and stored to protect against the release of the confidential information on these statements.

Recordkeeping Requirements

Employers are now required to keep on file their employees’ signed acknowledgement forms, as well as contemporaneous payroll records and wage statements, for six years. These records must be made available to the Department of Labor upon request.

Employer Action Items

To avoid liability, employers must take immediate action to ensure compliance with the Act. Among other things, employers should:

  • Review and revise new hire forms and periodic wage statements;
  • Develop appropriate notice and acknowledgement forms to be distributed to current employees annually;  
  • Review (or design) the company’s system for distributing notice and acknowledgement forms, at the time of hire and annually, and for storing them for six years; and  
  • Train human resources personnel and payroll processing agents to ensure that the correct procedures are in place to comply with the Act.  

The Department of Labor recently issued guidelines and answers to frequently asked questions about the Act, which are available on the Department of Labor’s website at www.labor.ny.gov.