On June 19, 2014, both the New York State Assembly and Senate passed a bill to amend the New York State Wage Theft Prevention Act (the WTPA), eliminating the need for employers to provide annual wage notices to their existing employees. The bill also imposes harsher penalties for wage law violations and imposes new liability on certain groups. The bill, which is presently awaiting Governor Cuomo's signature, will take effect 60 days after it is signed by the Governor.
As we reported in our January 19, 2011 Labor and Employment Law Bulletin, the WTPA was enacted in response to perceived employer abuse of wage and hour laws, including misclassification of employees. Since 2011, employers in New York State have been required by the WTPA to provide existing employees with annual written notices containing certain wage-related information, including the basis for the wage payment (i.e., hourly, daily, weekly, by commission, per piece, etc.), and whether the employer intends to claim any wage deductions (e.g., meal or lodging allowances). In what is sure to be welcome news for employers, such annual notices will no longer be required once the amendments to the WTPA are effective. However, employers will still be required to provide all newly hired employees with a wage notice, and the WTPA's requirements regarding earnings statements will also remain intact.
The amendments to the WTPA will also increase the penalties for employers that fail to provide new employees with the required wage notice within 10 days of hire, from $50 per worker, per workweek, to $50 per worker, per workday, up to a maximum penalty of $5,000. Employers will also face increased penalties for failing to provide employees with wage statements along with each wage payment. Under the amended WTPA, the employee and the New York State Department of Labor (NYSDOL) may each recover up to $250 from an employer for each work day it does not comply with the wage statement requirement, up to a maximum of $5,000. An employer may avoid liability for these penalties by proving that it still made all payments to employees in a timely manner, or that it reasonably believed in good faith that it did not have to provide the notice.
The new bill also creates new potential successor liability and individual liability for certain LLC members. Successor entities engaged in substantially the same operation and ownership, and with the same employees, products and customers will be liable for the acts of the predecessor entity. This provision makes it more difficult for employers to avoid liability for wage law violations by simply restructuring or renaming the business. The bill also amends the New York State LLC law in such a way that the 10 individuals with the largest ownership shares of an LLC may be held personally liable for unpaid wages owed to that LLC's employees. To recover, the employee must first provide notice to the LLC members and pursue the claim in a timely manner.
Other changes reflected in the amendments to the WTPA include enhanced penalties for repeat offenders. The bill would double the penalty to $20,000 for employers with a Labor Law violation in the preceding six-year period. Additionally, contractors or subcontractors must disclose any wage violations to employees through an attachment to paychecks that summarizes the nature of the violation. Finally, the bill clarifies that, unless otherwise specified, the Department of Labor's investigation of a wage and hour complaint will automatically cover a six-year period (because the applicable statute of limitations for claims brought under the state's wage and hour law is six years).
In short, the anticipated amendments to the WTPA will bring some welcome administrative relief for employers, while raising the stakes for employers that violate the WTPA and/or New York's wage and hour laws more generally.