Labor & Employment Law

New York Wage Theft Prevention Act

Oh boy.  We can thank our former Governor Patterson for this latest record keeping nightmare.  While it is true that there are a slew of evil employers out there, the good ones are going to be annoyed about the new Wage Theft Prevention Act which may well turn your employees into mini litigators. There has been a great deal of discussion (and confusion) on the new law, and I've waited until now to post on it so that most of confusion has been sorted out.

The New York Wage Theft Prevention Act amends New York State Labor Law Section 195. The new law is effective April 9, 2011. The goal of the new law is intended to protect employees from wage theft by their employers. The new law applies to all private employers and there is no minimum employee threshold.

The law requires that a notice be given to NEW HIRES and another ANNUAL NOTICE to be given to all other existing employees. New hires must receive the notice at the time of hire. Existing employees must receive the notice annually on or before February 1 of each year. The New York State Department of Labor should be issuing template notices; however, as of this time, it has not issued samples.

THE NOTICE
Specifics of the Notice:
1. It must be written (not verbal) and in a separate document.
2. It must be written in English AND in the employee's 'primary language' as defined in the statute.
3. It must be provided to the employee IN DUPLICATE so that the employee can keep a copy.
4. The employer must retain an original SIGNED acknowledgement of the notice and retain the signed acknowledgement for six years. An email reply is INSUFFICIENT.

The notice must contain the following:
1. Rate of pay.
2. Basis of pay (hourly, etc.).
3. Allowances claimed as part of the minimum wage.
4. The employer's regular pay day.
5. The name of the employer and any d.b.a. names.
6. The physical address of the main office or primary place of business of the employer.
7. The mailing address, if different from the physical address.
8. Telephone number.
9. For nonexempt employees, the hourly rate of pay and the overtime rate of pay – presumably even if these nonexempt employees are not paid on an hourly basis.
10. Any additional items that the Commissioner of the Department of Labor deems material and necessary.

Some information that the Commissioner may deem material and necessary could include, for example, the employer's tax identification number, the preparer's name and signature, the exemption status claimed (i.e. executive, administrative, etc.).

THE ACKNOWLEDGEMENT
Specifics of the Acknowledgement:
Specifics of the acknowledgement requirement (separate and apart from the notice requirement) include:
1. An acknowledgement must be obtained each and every time an employee is provided with a notice.
2. The acknowledgement must be written and must be its own document (i.e. it cannot be incorporated into other employer forms).
3. The acknowledgement must be English and in the employee's primary language.
4. The acknowledgement must be signed and dated by the employee.
5. The new law does not specify a deadline by which the acknowledgement must be signed but an employer cannot rely solely upon proof that the employee received the notice.
6. The law permits electronic notice and acknowledgements (assuming the proper web-based forms are available for the employer to comply with the strict notice and acknowledgement requirements).
7. If an employer provides the notice electronically, the employee must be able print a copy of the notice at any time without cost.

Contents of the Acknowledgement:
1. The employee must acknowledge receipt of the notice.
2. He/she must affirm that he/she accurately identified his or her primary language to the employer.
3. He/she must affirm that the notice provided was in his/her primary language.
4. The statute permits the Commissioned to require additional contents.

ADDITIONAL NOTICE PROVISIONS
1. Written notice of changes in the items identified above (i.e. those contained in NYS Labor Law Section 195.1) unless those changes are reflected in a wage statement. In other words, if an employee receives a raise, one would likely be compliant if the new rate of pay was reflected in the employee's pay stub.
2. Notice of other policies in writing or by posting such as vacation, sick, personal, holidays, and work hours.
3. The '5-day letter' which requires employers to notify a terminating employee of the exact date of the cancellation of his/her health insurance benefits.

WAGE STATEMENTS
Certain employers may have to modify their payroll systems in order to comply with the law. The law also requires that employer's provide a written explanation of how wages were computed if requested by the employee. Wage statements, which must be provided with every payment of wages, must include:
1. The employees name
2. The employer's name, address and telephone number.
3. The dates of work or pay period covered by that specific payment of wages.
4. The rate(s) of pay and the basis of pay.
5. Gross wages.
6. Deductions.
7. Allowances claimed as part of the minimum wage.
8. Net pay.
9. Nonexempt employees – the regular hourly rates of pay, the overtime rates of pay, the number of regular hours worked and the number of overtime hours worked.
10. For piece rate employees – the number of pieces completed at each piece rate.

RECORD KEEPING REQUIREMENTS
1. The burden remains on the employer to maintain and preserve records.
2. Acknowledgements must be retained for six years.
3. Payroll records containing the information required under Wage Statements above, must be retained for six years.

PENALTIES
Failure to Provide Notices
1. For new hires, the employee may bring a private civil action against the employer in the event proper notice is not provided by the employee within 10 days of the employee's first day of employment. The employee may recover a maximum of $2500 plus attorney's fees and costs.
2. The Commissioner may also bring legal action against an employer for failure to provide any notice required under Section 195.1.

Failure to Provide Wage Statements
1. Employees are permitted to bring a private civil action against the employer which is capped at $2500 plus attorneys fees and costs.
2. The Commissioner may also bring legal action against the employer.
3. There is a six month statute of limitations.

Underpayment of Wages
1. The Commissioner may commence civil action against the employer for the full amount of the underpayment of wages plus a liquidated damages amount of 100% unless the employer can demonstrate a good faith belief that he/she was in compliance. This is an increase from the current level of 25%. Also, attorney's fees and prejudgment interest may be granted.
2. There is a six year statute of limitations.
3. Upon finding of a first violation, the Commissioner can order the payment of unpaid wages plus the liquidated damages amount of 100%.
4. Upon the finding of a subsequent violation or a willful or egregious violation, the Commissioner can order a liquidated damages amount of FOUR TIMES the amount of unpaid wages.
5. The Employer (certain senior officers) may be subject to criminal penalties including misdemeanor and felony violations depending upon the offenses.

Remedial Penalties
1. The Commissioner can require notice of violations to be posted either in the employer's premises or to the public.

As if you didn't have enough to do.....

Full post as published by Strategic HR Lawyer on March 28, 2011 (boomark / email).