Wage Theft Prevention Act Signed Into Law

Last week New York’s Governor Patterson signed into law the Wage Theft Prevention Act. The Act is a comprehensive piece of legislation which will increase wage violation penalties, increase penalties for retaliation, as well as add additional enforcement tools that the Department of Labor and courts can use to investigate cases and collect monies.

First, the Act makes significant changes to section 195 of the Labor Law which was amended just last year to require employers to give employees written notice of their regular and overtime rates. The Act will require employers to provide even more information to employees. It requires that the notice be issued to all employees (1) upon their hire, (2) when their wages change, and (3) by February 1 of each year. Additionally, the notice will need to include the basis of the employee’s pay rate (whether the wage rate is calculated by hour, shift, day, week, salary, piece, commission, or something else.) If the employer claims deductions—such as for meals or lodging—those allowances will need to be disclosed in the notice. The employer’s address and contact information also must now be included. The Act also requires that the employer provide the notice in English as well as an employee’s primary language, and further requires the Department of Labor to develop the templates for non-English notices. Failure to provide notice as required by section 195 within ten business days of the employee’s first day of employment permits either the Commissioner of Labor or the employee to bring an action to recover damages of $50 for each work week that the violation occurred, plus costs and reasonable attorney’s fees. Damages recoverable for prevailing employees are capped at $2,500 however no such maximum applies for actions brought by the Commissioner.

The Act also requires enhancements to employee wage statements. Specifically, they will need to provide the employee’s name; the employer’s name, address, and phone number; the dates covered by the wages; the rate(s) of pay; the basis for calculating wages (hourly, piece, etc.); deductions from wages; allowances claimed by the employer; and net wages. Non-exempt employees’ wage statements must have the additional disclosure of the regular rate(s) of pay, the overtime rate(s) of pay, non-overtime hours worked, and overtime hours worked.

Failure to pay wages will now come with increased penalties. Previously, an employee who prevailed in court on a failure to pay wages claim received the total amount of the underpayment, costs, attorney’s fees, and, if there was a finding that the employer acted willfully, liquidated damages equal to 25% of the underpayment. Under the new law a prevailing employee can recover payment of all wages due, costs, attorney’s fees, prejudgment interest, and potential liquidated damages equal to 100% of the total wages due. The Act also increases the amount of a judgment by 15 percent if an employer refuses to pay for 90 days after being found to owe money for stolen wages (aka wages not paid). Additionally, the Act provides criminal misdemeanor sanctions (up to a year in prison and five thousand dollar fine) for a failure to pay minimum wage. And, let’s not forget that an award of unpaid wages can go as far back as six years.

The new law also provides for more rigid whistleblower, or anti-retaliation, sanctions. Penalties for retaliating against an employee who complains or voices concerns about wage payments can be assessed against “any person” found to have engaged in unlawful retaliation and requires such person(s) to pay liquidated damages of up to $10,000, along with costs and attorney’s fees. In addition, retaliation is now listed as a class B misdemeanor

Although the Act takes effect in April 2011, employers would be wise now to review all payroll policies and practices, employee classifications and document retention policies to make sure that when these new requirements become effective, they are ready and able to be compliant.


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