New York State Enacts New Wage Theft Prevention Act

On December 13, 2010, New York Governor David Patterson signed the Wage Theft Prevention Act (the “Act”).  The Act makes a number of critical changes to the New York Labor Law, adding a variety of increased employee protections and harsher penalty provisions.  The Act also significantly expands the authority of the New York Commissioner of Labor to remedy violations of the Labor Law.

Below is a summary of the Act’s key provisions, which take effect on April 12, 2011.

1. Notice and Language Requirement

The Act amends section 195 of the Labor Law to require that employers provide all employees, both at the time of hiring and on or before February 1 yearly, information about pay rates, the basis of the pay rate, how the employee is to be paid (e.g. hourly), and allowances.  The documentation provided to the employee must be both in English and in the employee’s primary language.  The employer must maintain these documents for six years.  The Commissioner of Labor is delegated the responsibility of establishing dual-language-based templates to be used as guidance for such notification.

If an employer fails to provide the appropriate documentation within ten business days of the employee’s initial date of employment, the employee may recover $50 a week until the violation is remedied, up to $2,500, in addition to costs and attorney’s fees.  The Commissioner may also bring an action to enforce the notice requirement.

2. Wage Statements

The Act amends Labor Law section 195 to require that employers provide pay statements that specify the applicable dates the wages cover, the rate and basis of pay, and other data.  For non-exempt employees, pay statements must also include the regular and overtime pay rates and the number of regular and overtime hours worked.  Employers must maintain these payroll records for at least six years.

Violations of these requirements can result in damages in the amount of $100 per week for the duration of the violation, up to $2,500, plus costs and attorney’s fees.  The Commissioner may also pursue legal action.

3. Liquidated Damages

The Act amends section 198.1-a of the Labor Law to permit increased liquidated damages where a violation is shown and the employer fails to prove that it had a good-faith basis for believing it was acting in compliance with the law.  Specifically, the Act now permits liquidated damages of up to 100% of the total amount of wages due, an increase from 25% under the current Labor Law.

4. Anti-Retaliation Provisions

The Act amends section 215 of the Labor Law to permit the Commissioner to order additional remedies in the event of retaliation, specifically enjoining conduct, liquidated damages not to exceed $10,000, reinstatement with back pay, and/or front pay instead of reinstatement.  Unlawful retaliation is also deemed a class B misdemeanor.

Under revisions to section 218, employers that engage in continuous or egregious violations may be subject to financial penalties in an amount no greater than double the total amount of wages, benefits, or wage supplements due.  Further, if an employer fails to make payments owed more than 90 days after an order by the Commissioner, it may be assessed an additional 15%.  The Commissioner may apportion the wages, interest, or liquidated damages to the employee in a separate order.

5. Miscellaneous Changes

(a) accounting of assets

Changes to section 196 vest the Commissioner with the authority to require an accounting of assets by the employer if it fails to comply with an order issued by the Commissioner.  Such assets include bank accounts, property (personal and real), accounts receivable and more.  If an employer fails to provide the accounting, the Commissioner may pursue legal action in New York Supreme Court and obtain a civil penalty not to exceed $10,000.

(b) civil penalties for failure to pay wages or wage payment discrimination

Amendments to section 197 expand the Commissioner’s jurisdiction in instances when the employer fails to pay wages or discriminates because of gender in the payment of wages.  The amendment permits the Commissioner to pursue any type of legal action, including administrative actions.

(c) liability of officers and agents

An amendment to section 198-a provides for an extension of criminal penalties to officers and agents of corporations, partnerships, or limited liability companies who knowingly allow wage payment violations to occur.

(d) notice of employer violations

The Act amends section 219-c to include posting requirements for employers that engage in Labor Law violations.  Such employers must post documentation explaining the violation for up to a year in an area visible to employees.

(e) criminal penalties for minimum wage and overtime violations

The Act imposes new criminal and monetary penalties against employers that fail to pay minimum wage or overtime compensation due.  Any employer that pays less than the amount owed may be guilty of a misdemeanor, and if convicted will be fined a minimum of $500 and a maximum of $20,000 or imprisoned for up to a year.  If a second violation occurs within six years of the first conviction, the employer will be guilty of a felony.

Section 662 also includes new penalties against employers that fail to maintain records.  Such a violation is deemed a misdemeanor, with fines between $500 and $5,000 or imprisonment for up to one year.  A subsequent violation and conviction within six years results in either a fine of $500 to $20,000 or imprisonment for a period not to exceed one year and a day, or both.

(f) tolling provisions

The New York labor law is also amended to include new tolling provisions for the applicable six-year statute of limitations.  The limitations period is tolled from the date of the employee complaint or the date of the Commissioner’s initiation of an investigation, whichever occurs first, until the Commissioner’s order is finalized or the Commissioner informs the employee that the investigation ended.

(g) civil action

Section 663 of the Labor Law is amended to require a court to award all reasonable attorney’s fees, prejudgment interest, and liquidated damages equal to 100% of the unpaid wages.  This amendment eliminates a court’s discretion to assess “such reasonable attorney’s fees as may be allowed by the court.”

The amendments to section 198 specify that the employee or Commissioner may obtain attorney’s fees and costs to enforce a court judgment in any civil action. If amounts remain unpaid after 90 days after the judgment order, or 90 days after the date for an appeal expires and no appeal is commenced, whichever occurs later, the judgment order automatically increases by 15%.

For more information, please contact the Seyfarth attorney with whom you work, or any Labor and Employment attorney on our website.