New York’s New Wage Law – Are You in Compliance? as appeared in New York Employment Law Letter

As appeared in New York Employment Law Letter, Vol. 18, No. 2 (Feb. 2011).

Last fall, we reported on proposed legislation that would crack down on wage theft by increasing awareness of rights and penalties for noncompliance. (See "Crackdown on wage theft: If you don't pay the time, you might be committing a crime," in our October 2010 issue.) Well, it's now official. The law passed. On December 13, 2010, Governor David A. Paterson signed New York state's Wage Theft Prevention Act (WTPA) into law. The law, which essentially overhauls New York state's Labor Law, becomes effective April 12, 2011. By then, you must understand the law's requirements and make the necessary changes to your notification and pay practices. Failure to do so could result in substantial monetary — and even criminal — penalties.

What is the new wage law?

The WTPA strengthens several aspects of the Labor Law. Among other things, it:

  • clarifies and adds new requirements to notice of pay rates and days;
  • amends statutory payroll and wage statement (pay stub) requirements;
  • increases liquidated damages for violations of the Labor Law;
  • provides statutory damages and a private right of action when an employer fails to properly notify employees of wage payment information;
  • facilitates the collection of wages ordered to be paid;
  • explicitly prohibits threats of retaliation and increases the damages available to employees;
  • provides criminal penalties for the nonpayment of minimum wages; and
  • generally provides the New York state labor commissioner with greater latitude to enforce wage and hour laws.

Employees must get notice of pay rates and pay dates

Before the WTPA was signed into law, Labor Law Section 195.1 required employers to provide written notice of their pay rate and regular paydays to all employees hired on or after October 26, 2009. Nonexempt employees were required to receive notice of their hourly and overtime pay rates, and all employees had to acknowledge receipt of the notices in writing. The employer maintained all of the information. In addition to these general requirements, the labor commissioner had provided some rules in the form of guidelines and instructions.

The WTPA significantly expands the scope of Section 195.1. Employers are now required to provide written notice of certain items pertaining to pay rates and paydays — not only to new employees, but also to all employees on or before February 1 of each year. Since the Act isn't effective until April 12, you need not worry about providing annual notice in 2011.

Another new requirement is that the notice must be provided in English as well as the language identified by each employee as his "primary language" (other than English). Forms will be provided in several languages on the New York State Department of Labor's (NYSDOL) website. If the form isn't available on the department's website in an employee's "primary language," you may provide the form in English only.

The WTPA also increases the number of items that must be included in the notice. Specifically, you must now include the following:

  • the rate or rates of pay and the basis for the rate - i.e., whether the employee is paid daily or weekly based on hours or shifts worked, pieces produced, salary, or commission;
  • for nonexempt employees, the regular rate and overtime rate of pay;
  • if applicable, allowances (e.g., for tips, meals, or lodging) claimed as part of the minimum wage;
  • the regular payday designated by the employer;
  • the employer's name and telephone number;
  • any "doing business as" names used by the employer;
  • the physical address of the employer's main office or physical place of business and a mailing address, if different; and
  • "other information as the Commissioner deems material and necessary."

The provision for "material and necessary" information isn't new and confirms that the additional requirements included in the commissioner's "Guidelines for Written Notice of Pay Rates and Regular Payday" and instructions still apply. Thus, for exempt employees, the notice should specify the applicable exemptions.

You must obtain and maintain for six years a signed and dated written acknowledgment each time notice is provided. The acknowledgment must be both in English and the primary language designated by the employee. It must affirm that the employee accurately identified his primary language to the employer and that the notice was in that language (unless the language isn't identified by the NYSDOL, in which case English is sufficient). The Act also states that the acknowledgment must conform to any additional requirements established by the commissioner with regard to its content and form.

Finally, if proper notice isn't provided within 10 business days of an employee's first day of employment, he may file a civil claim. The employer may be liable for $50 per workweek of noncompliance, up to $2,500, plus costs, attorneys' fees, and other relief (e.g., injunctive and declaratory) deemed appropriate by the court. Further, the labor commissioner may initiate legal action on behalf of an employee who isn't provided notice (including preemployment and annual notices) under Section 195.1. That includes administrative actions, in which available remedies include costs, attorneys' fees, and other relief (e.g., injunctive and declaratory), as well as $50 for each workweek of noncompliance (without limitation).

Your payroll and pay stubs must contain required information

The WTPA amends Labor Law Section 195.3 to include additional payroll and wage statement (pay stub) requirements. Each pay statement must list the following:

  • the dates of work covered by the applicable payment of wages;
  • the employee's name;
  • the employer's name, address, and phone number;
  • the rate or rates of pay and the basis for the rate - i.e., whether the employee is paid daily or weekly based on hours or shifts worked, pieces produced, salary, or commission;
  • gross wages;
  • deductions;
  • allowances claimed as part of the minimum wage, if applicable; and
  • net wages.

Additionally, for nonexempt employees, the overtime rate of pay, number of regular hours worked, and number of overtime hours worked must be included on the pay stub. For employees paid on a piece-rate basis, the statement must include the applicable piece rate or rate of pay and the number of pieces completed at each piece rate. Upon request, the employer must furnish a written explanation of how the wages were computed. The Act requires that payroll records be kept for six years.

The WTPA also requires you to provide employees with written Section 195.1 notices (notices of pay rates and pay dates) if any of the information included in the previous paragraph changes. The only exception is if the applicable changes are reflected in pay stubs that comply with each and every requirement set forth in the previous paragraph.

Employees who are not provided proper wage statements may recover damages in a civil case against the employer. Workers can recover $100 in damages for each workweek that the violations occur or continue to occur, up to $2,500. Additionally, they may receive costs and reasonable attorneys' fees. However, an employer may defend itself by showing that it paid all wages due to the employee.

If you don't comply, you will be subject to damages and penalties

In addition to the specific damages and penalties already discussed, the WTPA generally stiffens the penalties available for violations of the Labor Law. Under the Act, employees may recover the full amount of any underpayment of wages and prejudgment interest in addition to attorneys' fees in any court action. The amount of liquidated damages available in court and administrative actions on unpaid wage violations has increased significantly — from 25 percent to 100 percent. There are now additional penalties if the employer fails to abide by administrative orders or pay judgments.

While the Labor Law previously provided criminal penalties for failure to pay wages or keep records, the WTPA additionally provides criminal penalties for failure to pay minimum wages and overtime compensation. The Act also includes criminal penalties for (1) employers that fail to properly keep records and (2) violations of the Labor Law's retaliation provisions. Finally, the Act expands the reach of the Labor Law's criminal penalties to include not only corporations, but also the officers and agents of partnerships and limited liability companies.

Don't retaliate — it's against the law

The WTPA strengthens the Labor Law's antiretaliation protections by clarifying that "threatening" an employee who engages in protected activity constitutes prohibited retaliation. Additionally, the law clarifies that the two-year statute of limitations for filing a retaliation claim begins to run on the date the retaliation occurs, not the dates of the worker's employment. In addition to existing remedies, employers that violate the statute's retaliation provision will be ordered to pay liquidated damages up to $10,000 for every employee aggrieved. The Act further authorizes the labor commissioner to remedy retaliation by ordering appropriate relief, including reinstatement or front pay, injunctions, liquidated damages, costs, and reasonable attorneys' fees.

This is serious — there are new powers for investigations and enforcement

The WTPA provides the labor commissioner with additional authority when investigating wage and hour violations. For example, you must now allow the commissioner or a representative to question employees about the terms and conditions of their employment (1) without interference (2) in a private location at the place of employment (3) during working hours. Previously, the Labor Law made no reference to employer interference or the location of such interviews. Further, the Act provides the commissioner with the authority to post notices of wage violations at the applicable work site. Employee-visible notices may be posted for a maximum of one year. For willful violations, notices may be visible to the general public for up to 90 days.

Bottom line — what you should do now

To be in compliance by April 12, New York employers should take the following actions:

Section 195.1 notice requirements. There are several things you would be wise to do now to ensure compliance with the new law, including the following:

  • Either modify your existing Section 195.1 notices to include all required items or use forms provided by the labor commissioner. The forms can be accessed on the NYSDOL's website.
  • Use the required notices and acknowledgments for all new employees.
  • Notify all employees of the applicable information on an annual basis on or before February 1 of each year, and obtain written acknowledgment of the notification.
  • Keep all acknowledgments for at least six years.
  • The WTPA is silent on preemption when a collective bargaining agreement (CBA) exists. Therefore, if your workforce is unionized, you should comply with the WTPA, even if your CBA includes all applicable information.

Additional Section 195.3 requirements. Make changes to wage statements or contact your payroll providers to ensure that their wage statements include the required information.

The WTPA's retaliation provisions. You are prohibited from retaliating against or threatening to retaliate against employees who engage in protected activities. Protected activities may include making a complaint that you have engaged in conduct that the employee reasonably and in good faith believes violates a provision of the Labor Law or any order issued by the commissioner. Employees may also be protected for providing information, testifying, and initiating complaints, among other things.

The WTPA increases employers' administrative obligations and stiffens penalties for noncompliance. Accordingly, compliance by the effective date — April 12, 2011 — is essential.