WAGE THEFT PREVENTION ACT

Daniel W. Morris

New York Governor David Paterson recently signed the Wage Theft Prevention Act this week. It goes into effect on April 12, 2011. The new law significantly expands a New York employer’s obligation to provide information to its employees about their wage rate and calculation. It also expands and increases the penalty provisions of the New York Labor Law.

As a result, New York employers should:

(1) review their payroll practices to see what additional information they will need to provide to employees in their wage statements. If additional information will be required, they should develop a system to insure that all required information is provided in the notices by the effective date of the Wage Theft Prevention Act.

(2) become familiar with the Act’s changes to the notices employers must provide to their employees about their wage rates. The Department of Labor is responsible for developing templates for the new notices, which should be published prior to the effective date of the Wage Theft Prevention Act.

The Act’s new penalties highlight the importance of compliance with all provisions of the wage-and-hour laws. An employer's regular review of its pay and recordkeeping practices continues to be an important part of its wage-and-hour compliance.

The Wage Theft Prevention Act's changes to the New York Labor Law include:

Notice to All Employees. Last year, New York required employers to provide notices to new employees that informed them of their pay rate and whether they were entitled to overtime pay. The Wage Theft Prevention Act will require 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.
More Information in the Notice. The notices will still need to include the employee's rate(s) of pay, regular pay day, and exempt status. When the law goes into effect the notice will also need to include the basis of the employee's pay rate. That is, it will need to explain whether the wage rate is calculated by hour, shift, day, week, salary, piece, commission, or something else. If the employer claims deductions—such as meals or lodging it provides—those allowances will need to be disclosed in the notice. The notice will also need to provide the employer's address and contact information.
Employee must Acknowledge the Notice. The employer will need to have the employee acknowledge receipt of the Notice and will need to maintain a record of the employee's acknowledgment.
Employer Must Provide the Notice in the Employee's Native Language. The Wage Theft Prevention Act will require the employer to provide the notice in English and an employee’s primary language. The statute requires the Department of Labor to develop the templates for non-English notices.
Penalties. Employers will need to retain the notices and acknowledgements for six years. An employee will be able to bring an action against an employer if the employer does not provide a notice within 10 days of hiring the employee. The employee will be able to recover $50 for every week he or she did not receive the notice, up to $2,500.
More Information Required in Wage Statements. Wage statements 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. Employers will also need to provide to non-exempt employees the regular rate(s) of pay, the overtime rate(s) of pay, non-overtime hours worked, and overtime hours worked. Many employers currently provide some or all of this information in their wage statements. All employers should review their wage statements to insure they will be in compliance with the Wage Theft Prevention Act.
Additional Penalties for Labor Law Violations. Liquidated damages for unpaid wages will increase to 100% from the current 25%. This will make the penalty under the New York Labor Law the same as the penalty under the Federal Fair Labor Standards Act. The Act provides criminal misdemeanor sanctions for a failure to pay minimum wage. In a retaliation proceeding brought by the Department of Labor, the Department of Labor will be able to enjoin conduct, order liquidated damages, reinstate the employee with back or front pay. The Wage Theft Prevention Act will also toll the statute-of-limitations for any violation investigated by the Department of Labor from the start of the investigation.

This Update is not intended to be legal advice, but rather is intended to inform the reader of problem areas and recent developments in labor and employment law. If legal advice is required concerning a particular matter, your attorney should be consulted.