Download a PDF of this piece

Epstein Becker Green Labor and Employment

A recently proposed amendment ("Amendment") to New York's Wage Theft Prevention Act ("WTPA" or "Act") would provide less burdensome employer reporting obligations but increase penalties under the Act. The Amendment passed the New York State Legislature on June 19, 2014, and is currently awaiting the governor's signature. The Amendment will take effect 60 days after it is signed by the governor.

The Act is designed to prevent employers from failing to pay workers' wages, in two ways. First, it requires written statements setting forth employees' pay rates and pay dates. Second, the Act provides for penalties, including a civil cause of action against employers that fail to properly disclose or pay wages.

What Would the WTPA Amendment Do?

  • Increase Penalties: Under current law, an employee may sue to recover $50 for every week that he or she was not provided a wage notice, up to a maximum of $2,500 (together with costs and attorneys' fees). The Amendment would increase the penalty from $50 a week to $50 a day and increase the maximum monetary penalty to $5,000. The Amendment would also provide for additional penalties of up to $20,000 for repeated violations of the Act as well as additional penalties for construction contractors.
  • Increase Enforcement: The Amendment would increase the Commissioner of Labor's authority in connection with investigating claims of retaliation for reporting violations of the Act. Further, the Commissioner will be required (currently, the Commissioner is simply permitted) to assign a portion of a judgment against an employer to the employees who were harmed.
  • Create Successor Liability: An employer with similar ownership, employees, products, and customers will be liable for its predecessor's violations of the Act. Indeed, if members of a control group close down and subsequently start a new business, they must pay out all outstanding obligations to employees of their former business or such liabilities will fall to the successor.
  • Establish Personal Liability for Members of an LLC: Under current law, members of a limited liability company ("LLC") may not be held liable for company debts absent a specific provision to the contrary in the company's articles of organization. The Amendment would make the 10 members with the largest ownership share of an LLC liable for the LLC's debts to employees. In the event that an LLC defaults on its obligations to its employees, the employees will have 90 days to inform the 10 largest members of the employees' intent to hold those members personally liable.
  • Create an Enforcement Account: The Amendment would reduce the Department of Labor's discretion in deciding whether or not to investigate particular violation allegations. In order to pay for the increased investigatory burden, the Amendment would create a "Wage Theft Prevention Enforcement Account" to be funded by fines and penalties assessed for violations of the Act.
  • Eliminate the Annual Wage Notice Requirement: Finally, and most significantly for employers, starting in January 2015, the Amendment would eliminate the annual requirement for employers to provide every employee with a written notice of pay rates and pay dates. Employers must still provide the wage notice within 10 business days of a new employee's start date, as well as "at least seven calendar days prior to" implementing any changes to the information contained in the prior notice (excluding pay increases if such increases are properly reflected in the employee's wage statement).

What Employers Should Do Now

  • For now, await the governor's signature.
  • If the governor signs the Amendment, employers should:
    • review payment and onboarding policies and procedures to ensure compliance with the Act in order to avoid the significantly increased penalties;
    • ensure that, in connection with any change of business structure, all obligations to former employees are satisfied (if not, such obligations may pass along to the company's successor(s)); and
    • cease providing annual WTPA notices to existing employees as of January 1, 2015.

* * * *

For more information about this Advisory, please contact:

Susan Gross Sholinsky
New York
212-351-4789
sgross@ebglaw.com
William J. Milani
New York
212-351-4659
wjmilani@ebglaw.com
Jeffrey M. Landes
New York
212-351-4601
jlandes@ebglaw.com
Nancy L. Gunzenhauser
New York
212-351-3758
ngunzenhauser@ebglaw.com

*Daniel J. Green, a Law Clerk – Admission Pending (not admitted to the practice of law) in the firm's New York office, contributed significantly to the preparation of this Advisory.

Jump to Page

Privacy Preference Center

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about you, your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalized web experience. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer.

Strictly Necessary Cookies

These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.

Performance Cookies

These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.