Wage Theft Prevention Act Update

We are writing to remind you about your obligations pursuant to New York’s Wage Theft Prevention Act and to inform you that the Act has just been amended, effective on February 27, 2015. The amendments, among other changes, eliminate an employer’s obligation to provide annual wage notices to employees. The amendments also provide for stricter penalties for an employer’s violation of the Act. This memorandum addresses your current and new obligations pursuant to the Act.

I.     Current Obligations

For a summary of an employer’s current obligations pursuant to the Act, please see the attached client memorandum dated December 28, 2012.[1] When the Governor signed the new legislation, however, he stated that the Legislature had agreed to further amendments, including one that would eliminate the notice requirement for the 2015 calendar year. As a result, the Department of Labor posted a statement on its website stating, in part, that it “will not require annual statements in 2015.” We will continue to monitor the status of 2015 amendments to the Act and, if necessary, provide you with further updates regarding your obligations.

II.     Summary of Amendments to the Act

Changes to Wage Notice Requirements

An employer’s obligation to provide annual wage notices to its current employees has been eliminated. Employers still will be required to provide initial wage notifications to new hires and notify employees of changes to this information. In addition, the legislation does not affect the employer’s responsibility to provide a wage statement (or pay stub) to each employee with each payment of wages. See the attached memorandum for the initial wage notification and wage statement requirements.

Increased Penalties for Failure to Provide Initial Wage Notification and Wage Statements

Penalties will increase for an employer’s failure to provide employees with the required wage notification or wage statements. The newly amended Act will, however, cap the total amount of damages that may be assessed against an employer in an action brought by the Commissioner of Labor.

The following table summarizes the changes in monetary penalties that may be assessed against an employer in a legal proceeding brought by an employee or the Commissioner for violating the initial wage notification requirement.

The following table summarizes the changes in monetary penalties that may be assessed against an employer in a legal proceeding brought by an employee or the Commissioner for violating the wage statement requirements.

New Reporting Penalty for Repeat Offenders and Willful/Egregious Violators

In addition, the newly amended Act permits the Commissioner to issue an order to an employer previously found in violation of certain Labor Law provisions, or whose violation is willful or egregious, directing the employer to report: (1) the number of permanent full-time employees, temporary full-time employees, permanent part-time employees, temporary part-time employees and temporary staffing agency employees performing work for the employer; (2) the number of employees who earn hourly rates in certain designated categories;[2] and (3) the number of employees who regularly work a certain number of hours per week during the relevant calendar period.[3]

Increased Penalties for Retaliation

Prior to the amendments, the following penalties could be assessed against an employer for a violation of the Act’s anti-retaliation provisions:

• a civil penalty from $1,000 to $10,000;
• an injunction against the conduct of the employer or other person;
• liquidated damages of up to $10,000;
• requiring the employer to rehire or reinstate the employee;
• lost compensation or front pay; and
• costs and reasonable attorneys’ fees (if a court action is commenced).

Liquidated damages may now be assessed up to $20,000. In addition, the Commissioner may increase civil penalties to $20,000 for repeat violators (employers who have engaged in retaliatory conduct in the preceding six years).

Creation of Successor Liability

The newly amended Act creates successor liability for some employers; i.e., it holds an employer similar in operation and ownership to a prior employer liable for violations of various provisions of the Labor Law committed by the prior employer if: (1) the employees of the subsequent employer are engaged in substantially the same work pursuant to the substantially same working conditions and supervised by the substantially same supervisors; or (2) the new entity has the substantially same production processes, produces the substantially same products and has the substantially same body of customers.

Changes to the New York Limited Liability Company Law

The recently enacted legislation also amends the New York Limited Liability Company Law by making the 10 members with the largest percentage ownership interest in the company (determined as of the beginning of the period during which the unpaid services were performed) jointly and severally personally liable for all debts, wages or salaries due and owing to any of its laborers, servants or employees.

Creation of Wage Theft Prevention Enforcement Account

A new State Finance Law provision will create a Wage Theft Prevention Enforcement Account in the custody of the State Comptroller. Money in the fund will consist of amounts collected due to violations of various provisions of the Labor Law and be used to offset costs incurred by the Commissioner for administration and enforcement.

Notification of Violation to Employees by Contractors

A new provision is added to the New York State Construction Industry Fair Play Act requiring a contractor or subcontractor that is engaged in construction and found to have not paid all wages required by certain articles of the Labor Law to notify all of its employees of the violation by attaching a written notification to a paycheck.

Please do not hesitate to contact us if you have any questions regarding your current obligations pursuant to the Wage Theft Prevention Act or the amendments to the Act.

THIS MEMORANDUM IS MEANT TO ASSIST IN GENERAL UNDERSTANDING OF THE CURRENT LAW. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. THOSE WITH PARTICULAR QUESTIONS SHOULD SEEK THE ADVICE OF COUNSEL.

© Lamb & Barnosky, LLP 2015

[1] The forms and sample wage statement referenced in this memorandum can be found on the New York State Department of Labor’s website at http://www.labor.ny.gov/formsdocs/wp/ellsformsandpublications.shtm.

[2] The wage categories for reporting are: (a) State minimum wage to $9.99; (b) $10 to $11.99; (c) $12 to $14.99; and (iv) $15 or more.

[3] The hour categories for reporting are: (a) at least 60 hours; (b) at least 50, but fewer than 60 hours; (c) at least 40, but fewer than 50 hours; (d) at least 35, but fewer than 40 hours; (e) at least 30, but fewer than 35 hours; (f) at least 25, but fewer than 30 hours; (g) at least 20, but fewer than 25 hours; (h) at least 10, but fewer than 20 hours; (i) at least five, but fewer than 10 hours; and (j) fewer than five hours.