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May 2011

The New Requirements of New York's Wage Theft Prevention Act

The Wage Theft Prevention Act ("WTPA" or "Act") amends portions of Section 195 of Article 6 of the New York Labor Law, which addresses employers' notice and record-keeping requirements. This sweeping Act, which took effect on April 9, 2011, has been characterized as including "some of the nation's strongest protections against wage theft," after New York State had "lagged behind other states on the issues."1 The Act actually comes less than two years after the state legislature amended Section 195 in 2009, in order to impose increased notice requirements on employers as part of an effort to protect workers against underpayment. Expanding on the 2009 amendment, the WPTA adds rather expansive and onerous requirements that will apply to all private sector employers regardless of their size. It is imperative for all such employers operating in New York to be fully familiar with these new obligations.

The Written Notice Requirements
The WTPA significantly increases the notice requirements under Section 195(1) in terms of both the information employers must provide and the frequency with which they must provide it. The subsection will now require employers to provide newly-hired employees, at the time of hiring, written notice of the following: (1) the employee's rate of pay; (2) the overtime rate of pay, if the employee is subject to overtime regulations; (3) the basis for the employee's pay (e.g., hourly, daily, weekly, salary, commission, and so forth); (4) all allowances claimed as part of the minimum wage (e.g., tips, meals, or lodging allowances); (5) the employee's regular pay day; (6) the name of the employer, including whether the employer is "doing business as" under any other name; (7) the employer's address; and (8) the employer's telephone number. Not only must this notice be provided to newly-hired employees, but employers are now required to provide the notice to all existing employees on an annual basis on or before February 1 of each year.

Employers must continue to obtain a written acknowledgement of the notice signed by each employee and retain it for six years. A particularly glaring addition to the law, however, is that the form must be given to employees in English and the employee's primary language, if other than English. The New York State Department of Labor ("NY DOL") is authorized to prepare various template forms for employers to utilize, though employers are free to create their own document if they choose. The NY DOL has prepared such template forms in English, Spanish, Chinese and Korean, which can be found on the NY DOL's website. See for links to the forms (LS 50-59). It intends to prepare additional templates in Creole, Polish and Russian.

Additionally, if the employer makes any changes to any of the information contained in the written notice, the employer must notify the employee, in writing, of the change at least seven days prior to the change. If the change happens to be reflected in the employee's wage statement, the employer is relieved from having to provide the advanced written notice.

The Wage Statement Requirements
With the WTPA, Section 195(3) will now require each pay stub to include the following information: (1) the dates the payment of wages covers; (2) the name of both the employee and employer; (3) the employer's address and telephone number; (4) the rate and basis of pay; (5) gross wages; (6) deductions; (7) allowances (if applicable); and (8) net wages.  Additionally, if an employee is not exempt from overtime, the wage statement must include the employee's overtime rate, the number of regular hours worked, and the number of overtime hours worked. Employers will also now have to preserve these records for six years.

The New Penalties
The Act builds upon and enhances the penalties previously in the Labor Law. For example, the amount of liquidated damages available under the law has been increased from 25% to 100% of lost wages. In addition, if a violation is for something other than wages, benefits, or wage supplements, the NY DOL can assess civil penalties for each violation – up to $1,000 for a first violation, $2,000 for a second, and $3,000 for third and subsequent violations.

In addition, there are penalties for failure to comply with the new information requirements itemized above. Failure to provide the new written notice is a timely manner, both at the outset of employment and on an annual basis, can result in damages of $50 per each week it is not provided, per employee. Similarly, failure to comply with the new wage statement requirements can yield a weekly penalty of $100, per employee. Both violations also entitle the employee to costs, attorney's fees and injunctive relief. These damages are capped at $2,500 per employee in civil lawsuits but can be unlimited in an action brought by the Commissioner of Labor unless certain safe harbors are met.

The WTPA will undoubtedly have a significant impact on New York employers. Along with its new substantive requirements, in an effort to compel compliance, the WTPA also imposes stiff financial penalties for violating each subsection and allows employees to bring legal action for such violations. Given these changes and potential repercussions, it is imperative that employers, at a minimum, modify their policies to comply with the new law and avoid penalties. In addition, as a best practice, employers should regularly review the NY DOL's website for relevant information and guidance.

[1] Sam Dolnick, Worker's Safeguards Strengthened by N.Y. Law, NY Times (Dec. 13, 2010).

Employment Law

Employment Law