United States: Wage Theft Now A Form Of Larceny In New York

Seyfarth Synopsis: New York Governor Kathy Hochul has signed legislation that, effective immediately, adds wage theft to the definition of "larceny" under the state's penal code, creating potentially harsh penalties for the state's employers.

Under a recently enacted New York statute, wage theft is considered a form of "larceny" under the state's penal law. The statute adds to existing criminal penalties for wage theft and allows prosecutors to seek even stronger penalties against violators.

Expanding the Definition of Larceny

Governor Hochul signed the Wage Theft Accountability Act (S2832-A/A154-A) on September 6, 2023. Effectively immediately, the Act amends the Penal Law to include "wage theft" in the definition of "larceny."

Under the Penal Law, "[a] person steals property and commits larceny when, with intent to deprive another of property or to appropriate the same to himself or to a third person, he wrongfully takes, obtains or withholds such property from an owner thereof." Penal Law § 155.05(1). The recent amendment revises the definition of "property" to include "compensation for labor or services." Id. § 155.00(1). It further adds a definition for "workforce," which "means a group of one or more persons who work in exchange for wages." Id. § 155.00(10).

Most significantly, the Act adds a subsection that defines larceny by wage theft to mean the following:

Although the bill's sponsors fixated on the vulnerability of low-income earners—including non-union construction workers and undocumented immigrants—the new law potentially impacts all employers in the state. It does not include any carve-out provisions or exemptions for particular positions or industries.

An open question is whether the law applies to compensation paid to independent contractors in addition to employees. The Act is not part of the Labor Law, which generally governs the employer-employee relationship, and refers generically to "hir[ing] a person to perform services," rather than hiring "employees." But it refers to "wages" and "wage theft"—concepts that derive from the Labor Law and assume an employer-employee relationship—and not to "fees" or the like, which suggests that it is limited to employment and not independent contractor arrangements.

The new law allows for the aggregation of nonpayments or underpayments to one victim employee and for the aggregation of victims, which has two distinct effects. Prosecutors may now (1) seek stronger penalties against employers who steal wages from workers, and (2) try incidents of wage theft committed by the same employer in multiple counties in a single venue. The ability to aggregate claims could result in harsh penalties for both corporate and individual employers. Under the Penal Code, petit larceny includes theft of up to $1,000 and is a Class A misdemeanor. See NY Penal Law § 155.25. A corporation can be fined up to $5,000 for conviction of a Class A misdemeanor. Id. § 80.10(1)(b). Theft of $1,000 or more constitutes grand larceny of varying degrees—the lowest of which, Grand Larceny in the Fourth Degree, constitutes a Class E felony. Id. §§ 155.30-155.42. An individual could face a maximum prison sentence ranging from four to twenty-five years depending on the amount stolen. Id. § 70.00(2)(b-e). For corporations, conviction of a felony carries a fine of up to $10,000. Id. § 80.10(1)(a).

The Labor Law already provides for criminal penalties for wage theft. See Labor Law § 198-a (listing certain offenses as misdemeanors or felonies). The addition of wage theft to the definition of larceny does not appear to alter, replace, or repeal these existing criminal penalties.

The Act, which passed with near unanimous majorities in both chambers of the Legislature, is the latest in an ongoing effort to combat wage theft in New York. According to the bill's sponsors, beginning in December 2017, the Wage Theft Initiative—a collaboration among seven District Attorney's Offices, including the five in New York City as well as Westchester and Nassau Counties; the Department of Investigation; the New York City Comptroller's Office; the New York State Department of Labor; and the New York State Attorney General's Office—has led the prosecution of ten criminal cases accounting for more than $2.5 million in stolen wages affecting over 400 construction workers. On February 16, 2023, the Manhattan District Attorney announced the creation of the Worker Protection unit to investigate and prosecute wage theft, among other offenses.

According to a co-sponsor, Assemblymember Catalina Cruz, wage theft accounts for almost $3.2 billion in lost wages each year—affecting over 2 million New Yorkers. Cornell University's Worker Institute sets forth a more conservative estimate, asserting wage theft in New York to account for nearly $1 billion in lost wages affecting tens of thousands of workers.

Outlook for Employers

New York is taking an expansive approach to protect employees and their wages. Failure to properly navigate the State's complex wage and hour laws now carries potentially harsher outcomes than the already existing criminal and civil penalties. While criminal prosecutions for these offenses will likely be rare and limited to the most egregious violators, all employers are well advised to pay close and careful attention to compliance with their wage payment obligations, and to consult with wage-and-hour counsel if they have any concerns about the administration of their payroll.

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