In our December 2010 Employment Alert, we informed you of the passage of the Wage Theft Protection Act, which became effective in April 2011. The New York State Department of Labor has now issued the new Notice of Pay Rate forms, which currently are available in Chinese, Korean and Spanish.  The law requires that employers issue these new Notices to employees upon hire and by February 1 of every subsequent year. In addition, the information that must be provided to employees has expanded to include, for example, the employer's name, any other name under which it is doing business, the address of the employer's principal office and other relevant information.

In addition, the new law imposes penalties for non-compliance with requirements that were previously required by regulation to be provided on an employee's pay stub. The information includes dates of work covered, employer address and telephone number, rate of pay and manner paid (hourly, salary, commission), gross wages, net wages, deductions, overtime rate, and number of regular and overtime hours. Severe penalties can be imposed for failure to abide by the notice and pay stub requirements - $50 per workweek for each week the employer does not provide notice, up to $2,500 per employee, plus attorneys' fees. The law also provides substantially increased penalties for all wage and hour penalties for all wage and hour violations.

Because the stakes are now much higher, we urge all employers who have not already done so to review your wage-related policies and recordkeeping protocols to ensure that they are in compliance by the effective date. Your failure to do so could cause substantial financial damage to your business.

New Regulations for the Hospitality Industry 

In addition to the obligations imposed on all employers by the Wage Theft Protection Act, we want to ensure that all of our friends and clients in the hospitality industry are also in compliance with the new New York Department of Labor Wage Order that came into effect n March 2011. The new Wage Order, which has the effect of law, significantly alters the way in which employers compensate employees in the hospitality industry. The hospitality industry includes places of lodging, restaurants and restaurant concessions.

Perhaps one of the most significant changes involves hourly pay. Non-exempt employees may no longer be paid on any basis other than hourly. Employees may be not be paid on a salary basis, nor on a weekly or daily basis.

In addition, the tip credit has been reduced. The tip credit allows the employer to reduce the minimum wage payable to a covered employee. For a food service worker, the tip credit is now a maximum of $2.25 per hour. Therefore, food service workers must be paid a base wage of at least $5.00 per hour.

Further, tip sharing (where employees share only a certain percentage of their tips) as well as tip pooling (where the entirety of tips are pooled and then redistributed) is permitted, whether voluntary or employer-mandated. However, employers are required to provide employees with written notice of their policies, as well as maintain records of the tips received and distributed. Additionally, where an employer adds a gratuity to a bill, that amount must be provided in full to the employee.

A summary of the Wage Order can be obtained by clicking on the following link:  Wage Order Summary

For those to whom this new Wage Order applies, it is imperative that you obtain guidance in order to come into compliance as soon as possible. 

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.