United States: Changes To New York’s Wage Theft Prevention Act Eliminating The Annual Wage Notice Requirement

Last Updated: January 19 2015
Article by Adam R. Seldon

On December 29, 2014, Governor Andrew Cuomo signed a bill that amends the Wage Theft Prevention Act (the "WTPA") eliminating the burdensome annual wage notice requirement that was previously placed on employers (the "Amendments"). The Amendments also significantly increase penalties for wage payment violations, expand successor and personal liability for wage payment violations, and establish the wage theft prevention enforcement account. Each of the key Amendments  are further summarized below.

The text of the bill states that the new law is not effective until 60 days following enactment (i.e., February 27, 2015); however, Governor Andrew Cuomo also signed a chapter memorandum rendering the elimination of the annual wage notice requirement effective immediately.1

A. Eliminate the Annual Wage Notice Requirement

The Amendments eliminate the annual requirement that prior to February 1, employers provide all employees written wage notices containing certain wage-related information (i.e., pay rate, pay date, etc.) and obtain acknowledgments regarding receipt of such notices, thus removing an onerous administrative requirement for employers. Except for employers in the hospitality industry,2 the Department of Labor will not enforce the annual wage notice requirement for 2015 and beyond.

Despite the above, employers still must provide all newly hired employees with wage notices within ten (10) business days of their start date. Additionally, employers must provide wage notices to employees prior to implementing any changes to the information contained in the prior wage notice, excluding increases in pay rates if such increases are properly reflected in an employee's wage statement.

B. Increase Penalties for Wage Payment Violations

The Amendments substantially increase penalties for noncompliance with the WTPA. Under the prior version of the WTPA, if an employer failed to provide the required wage notice, the employee could recover a penalty of $50 for each week that he or she did not receive notice, up to a maximum of $2,500. The Amendments increased the penalty from $50 per week to $50 per day for a violation, and the maximum monetary penalty increased from $2,500 to $5,000. The Amendments also increased penalties for failing to provide paystubs from $100 to $250 per violation, up to a maximum of $5,000.

The Amendments also include enhanced penalties for repeat offenders, up to a maximum of $20,000 for employers found to have violated the Labor Law within the preceding six years. In addition, repeat, willful, or egregious violators may also be required to disclose certain wage data to the Commissioner of Labor for posting on the Department of Labor's website.

If the Commissioner obtains a judgment against an employer, a portion of the judgment must go to the employees who were harmed. Previously, the Commissioner had discretion whether to assign any portion of the judgment to the aggrieved employees.

C. Create Potential Successor and Personal Liability for LLC Members and Increase Contractor Accountability

The Amendments add two new subdivisions to the Limited Liability Company Law providing that the 10 members with the largest ownership share of an LLC are now jointly and severally liable for all debts, wages, or salaries due and owing to the LLC's employees for their services to the LLC.3 Employees may also recover liquidated damages, penalties, interest, and attorneys' fees or costs incurred in successfully pursuing such claims.

Before an employee can make a claim against an LLC member for "wages or salaries" due for the services he/she provided to the LLC under this provision, the employee must first notify the LLC member in writing of his or her intention to do so, within 180 days of the termination of such services.

The Amendments also include language intended to prevent employers from avoiding their liabilities by forming alter ego companies. Thus, an employer with ownership, employees, products, and customers similar to those of a prior employer will be liable for its predecessor's violations of the Labor Law.

The Amendments also increase contractor and subcontractor accountability under the WTPA. As such, construction industry contractors and subcontractors that have failed to pay wages must now provide written notice of such violations to all their employees as an enclosure with the employees' wage statements.

D. Increase the Commissioner of Labor's Enforcement Authority and Create the Wage Theft Preventions Enforcement Account

The Amendments require that any investigation by the Commissioner of any alleged wage payment violation will cover the entire six-year statute of limitations period unless the Commissioner notifies all affected employees otherwise. Additionally, the Amendments create the "Wage Theft Prevention Enforcement Account" designed to offset the costs with respect to the administration and enforcement of the New York Labor Law, which will be funded by fines and penalties collected by the Department of Labor.

Footnotes

1.http://www.labor.ny.gov/workerprotection/laborstandards/employer/8106-C.pdf

2.The Department of Labor's Hospitality Industry Wage Order requires that employees receive written notice prior to any changes in the employee's hourly pay rate. 12 NYCRR § 146-2.2(b). Because the hourly minimum wage in New York increased to $8.75 per hour on December 31, 2014, and will increase to $9.00 per hour on December 31, 2015, employers in the hospitality industry are still required to issue pay notices in 2015, 2016, and any subsequent year in which a statutory wage change occurs.

3.The term "wages or salaries" is defined broadly to include salaries, overtime, vacation, holiday and severance pay, employer contributions to pension or annuity funds, and any other money properly due or payable for services rendered.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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