The New York Wage Theft Prevention Act (the "Act") was signed into law today by Governor Paterson. The Act, effective April 12, 2011, amends the New York Labor Law to provide new protections for employees in New York, as well as stiffer penalties for employers who fail to pay their employees overtime or the minimum wage.
Tougher Civil Penalties
The Act increases the amount of liquidated damages an employee can recover in cases where a violation is shown and the employer fails to prove that it had a good-faith basis for believing it was acting in compliance with the law. Specifically, the Act now permits liquidated damages of up to 100% of the total amount of wages due, an increase from 25% under the existing law. This means that employees may be entitled to recover twice what they are owed in wages or overtime.
The Act also provides for the recovery of prejudgment interest and attorneys' fees in any civil action to recover unpaid wages brought by an employee.
The new law also gives employees expanded protections against employers who have been found to have violated the law, but still fail to pay. If an employer loses in court and still fails to pay within ninety (90) days, the employee can now collect an extra 15% of the judgment owed, as well as attorneys' fees and costs for enforcing the judgment.
Employee Notice of Wages
The New York Labor Law already requires employers to notify all newly hired employees at the time of hiring, in writing, of their regular rate of pay, regular pay day, and overtime rate of pay if they will be eligible for overtime. The Act now also requires employers to include the basis of the wage payment (e.g., whether paid by the hour, shift, day, week, salary, piece, or commission, or on another basis) as well as the employer's intent to claim allowances (e.g., tip or meal allowances) as part of the minimum wage.
Under the Act, the notice must be updated and provided again to the employee at least seven (7) calendar days prior to any changes to the employee's pay or other terms contained in the notice (unless such changes are reflected in the employee's wage statement).
Lastly, the Act requires that all employers obtain from each employee a signed and dated written acknowledgment, in English and in the primary language of the employee, of receipt of the notice.
If an employer fails to provide the required notice of wages within ten (10) business days of the employee's first day of employment, the employee may bring an action in court to recover damages of $50 for each workweek that the violation occurred or continues to occur (not to exceed a total of $2,500), plus costs and reasonable attorneys' fees.
Employers are now required to preserve and maintain the employee's acknowledgment(s) of the notice for a period of six (6) years.
Pay Statements
The Act requires that employers provide pay statements that specify the applicable dates the wages cover and the rate and basis of pay. For non-exempt employees, pay statements must also include the regular and overtime pay rates and the number of regular and overtime hours worked.
If an employer fails to provide the required pay statement, the employee may bring an action in court to recover damages of $100 for each workweek that the violation occurred or continues to occur (not to exceed a total of $2,500), plus costs and reasonable attorneys' fees.
The Act also increases the length of time an employer must preserve and maintain payroll records and/or pay statements from three (3) to six (6) years.
Anti-Retaliation Provisions
The Act also increases protections for employees who complain about employer violations, as well as for workers the employer merely believes has complained about violations. The Act permits the Commissioner to order additional remedies in the event of retaliation, specifically enjoining conduct, liquidated damages not to exceed $10,000, reinstatement with back pay, and/or front pay instead of reinstatement.
Criminal Penalties
The Act imposes new criminal penalties against employers that fail to pay minimum wage or overtime compensation. Any employer that pays less than the amount owed may be guilty of a misdemeanor, and if convicted will be fined a minimum of $500 and a maximum of $20,000 or imprisoned for up to a year. If a second violation occurs within six (6) years of the first conviction, the employer will be guilty of a felony.
The new law also includes new criminal penalties against employers that fail to maintain records. Such a violation is deemed a misdemeanor, with fines between $500 and $5,000 or imprisonment for up to one year. A subsequent violation and conviction within six (6) years will result in either a fine of $500 to $20,000 or imprisonment for a period not to exceed one year and a day, or both.
In sum, although the new law does not radically change the duties of New York employers, the Act does impose significant civil and criminal penalties for employers that fail to comply with the law. If you have any questions with respect to these new requirements, we recommend speaking with a New York overtime attorney as soon as possible.