CLIENT ALERT – New York Imposes New Wage and Hour Requirements

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New York’s recently enacted Wage Theft Prevention Act (WTPA), which goes into effect April 12, 2011, amends the New York Labor Law’s requirements regarding notifications to employees of their wage rates and related information. The law creates greater protections for employees and subjects employers to increased penalties for non-compliance.

Annual and New Hire Wage Rate Notifications

The WTPA amends N.Y. Labor Law section 195 by requiring employers to provide employees with the following information in writing both at the time of hire, and annually by February 1:

  • employee’s rate(s) of pay, including overtime rate for non-exempt employees
  • basis of pay (whether paid by hour, shift, day, week, salary, piece, commission or otherwise)
  • allowances employer plans to claim from minimum wage (including tip, meal, lodging)
  • regular designated pay day
  • employer’s identifying information (such as employer’s name, address and telephone number)
  • any other information the Commissioner deems “material and necessary”

The notice must be provided in English and in each employee’s designated primary language. Each time the notice is provided, the employer must obtain a signed and dated written acknowledgement from the employee affirming, among other things, that the notice complied with the statutory requirements. Employers must maintain these forms for at least six (6) years. The Commissioner of Labor will be preparing templates that are compliant with the Act.

Pay Period Wage Statements and Payroll Records

The WTPA incorporates prior N.Y. Department of Labor regulations requiring notification of wage-related information with each wage payment. As with the annual notification, this notice must include the employee’s rate of pay, the basis of payment, and any allowances. This notice must also state (i) employee’s name; (ii) dates of work covered; (iii) number of regular and overtime hours worked; (iv) any applicable piece rate and number of pieces completed; (v) gross wages; (vi) deductions; and (vii) net wages. Upon request, employers must furnish a written explanation of how wages were computed. Finally, payroll records must also be maintained for six (6) years.

Increased Penalties Apply to Violations

The WTPA maintains employer liability for all unpaid wages (plus interest) and reasonable attorneys’ fees. However, the amendment raises the liability for liquidated damages from an additional 25% to an additional 100% of any underpayment (in both civil and administrative actions), unless the employer can show a “good faith basis” for believing it was in compliance. In administrative actions, willful or egregious violations may result in a fine of twice the underpayment. The WTPA also increases penalties for retaliation against whistleblowing employees. Further, employers found to have violated the law may be required to post notices of the violation in the workplace. The statute of limitations for actions to recover unpaid wages is six (6) years, which is tolled when an employee files an administrative complaint.

Failures to provide the required notices also carry penalties: $50 or $100 per week in which the violation occurred, capped at $2,500 plus costs and reasonable attorneys’ fees, for each type of violation. Finally, violation of the minimum wage and overtime laws remain subject to criminal penalties.

Conclusions and Recommendations

The WTPA creates important notification requirements and substantially increases penalties for violations of wage payment laws, providing plaintiffs’ counsel with a potent tool for challenging New York employers’ pay practices. Employers should work to create the required notifications and review their wage payment and recordkeeping practices early in 2011 to ensure compliance by the statute’s effective date.