New York Wage Theft Prevention Act Increases Penalties for Wage and Hour Violations

This post was written by David Weissman, Cindy Minniti and Daniel Schleifstein.

On December 13, 2010, New York Governor David A. Paterson signed the Wage Theft Prevention Act (“Act”). The New York Labor Law currently requires employers to notify employees in writing, at the time of hiring, of their rate of pay, pay date, and overtime rate (if applicable). The Act amends the law to significantly increase the penalties for wage payment violations, particularly for repeat offenders, and now requires employers to provide additional information regarding the payment of wages to employees. All New York employers must revise their pay practices by the Act’s effective date, April 12, 2011.

Increased Notice Requirements       

  • Notice Obligation Now Continuous
    • Employer must issue new employees notices at the time of hiring describing their rate of pay, pay date, and overtime rate (if applicable).
    • Employer must issue all employees noticeswith the same type of information by February 1 of every subsequent year after hiring.
  •  More Content Required in Notices
    • Notices must now include detailed wage statements specifying the applicable dates the wages cover, regular and overtime hours worked (if applicable), the rate(s) of pay (regular and overtime, if applicable), and other data, including:
      • The basis of the wage payment (e.g., whether the employee will be paid by the hour, shift, day, week, salary, piece, or commission, or on another basis)
      • The employer’s intent to claim allowances (e.g., tip or meal allowances) as part of the minimum wage
      • The employer’s main address and phone number
      • Additional information about the employer, including any d/b/a names
  • Timing of Notices
    • Employers must notify employees of any changes to the foregoing information seven days before the changes take effect, unless the employer reflects the changes in the information to be required with every wage payment. 
  • Notices Must Be Signed
    • Notices must be signed and acknowledged by the employee each time they are received, in English or in the employee’s language. 
  • Recordkeeping Requirement
    • Employers must now maintain payroll records for at least six years.


Increased Penalties for Wage Payment Violations and Retaliation

  • Significantly Increased Damages
    • An employer’s failure to provide the notice within 10 business days of an employee’s hire date subjects the employer to an action for damages of $50 per work week, to a maximum of $2,500, plus costs, attorneys’ fees and injunctive relief. 
    • Strong penalties are also imposed on employers who fail to provide employees with the wage information in each payroll statement, which includes damages of $100 per work week, to a maximum of $2,500, plus costs, attorneys’ fees and injunctive relief.
    • Increased penalties may be levied against employers for retaliation against an employee who complains about conduct the employee reasonably and in good faith believes is a violation of the wage payment laws. In addition to reinstatement, back pay, and front pay, retaliation victims can collect liquidated damages of up to $10,000. 
    • While an employer can avoid these penalties if it made complete and timely payment of all wages to the employees in question, or if the employer reasonably believed in good faith it was not required to provide the notice, employees aware of violations, by allowing damages to grow each week, may have the incentive to not report notice violations until months after the fact.
    • Furthermore, the New York Commissioner of Labor can now seek attorneys’ fees and liquidated damages of 100 percent of the total unpaid wages due (up from 25 percent). Whereas the Commissioner of Labor previously had discretion to seek liquidated damages, s/he now must seek liquidated damages and must seek recovery of the full amount of underpayment.
    • Repeat offenders and employers whose violations are found to be “willful or egregious” are now subject to treble damages: double the wages due, plus liquidated damages of 100 percent. 
  • Other Penalties
    • Violations of the New York wage payment law now may now result in the offending employer being required to post a notice of the violation in the workplace and, if the violation was willful, the notice must be posted in an area visible to the general public for up to 90 days. 
    • New York’s Commissioner of Labor may now require an accounting of assets by the employer if it fails to comply with an order.
  • Criminal Fines and Imprisonment
    • Officers and agents of corporations, partnerships or LLCs who knowingly allow wage payment violations to occur may now be held criminally liable and are subject to fines of up to $20,000 and/or imprisonment of up to one year and one day.

Going Forward

Wage and hour violations will be more costly than ever in New York. Reed Smith can assist you in ensuring compliance and mitigating harm to your business from New York Department of Labor investigations. Please contact David Weissman, Cindy Schmitt Minniti, or Daniel Schleifstein to discuss questions you may have about this or any other employment issue.

New Law Forces Employers to Think Twice Before Hiring and Firing Employees in New York

This post was written by David Weissman, Cindy Schmitt Minniti, and Daniel Schleifstein.

The New York Legislature recently passed a new law that requires greater communication and transparency from employers in the hiring and firing process. Employers who fail to comply risk incurring penalties and unwanted scrutiny of labor and employment policies and practices. The Labor & Employment team at Reed Smith is here to help employers comply with this new statute and avoid undesirable consequences.

Pursuant to McKinney’s Labor Law § 195, New York employers must now provide any new employee hired on or after October 26, 2009, with information on the following subjects:

  • Rate of Pay: Employers must provide the employee with the employee’s regular hourly rate of pay, overtime rate of pay (if applicable), and regular payday at the time the employee is hired.
  • Written Acknowledgement: Employers must obtain written acknowledgment of the rates of pay and the regular payday from each employee at the time the employee is hired. The form and content will be provided by the Commissioner of Labor at a later date.
  • Payday Changes: Employers must notify employees of any change in paydays before the change.
  • Wage Statement: Employers must provide each employee with every payment of wages, listing gross wages, deductions and net wages, and must, at the employee’s request, explain how the wages were computed.
  • Recordkeeping Requirements: Employers must establish, maintain and preserve records showing the hours worked, gross wages, deductions, and net wages for each employee, for not less than three years.
  • Time-Off Policies: Employers must notify employees in writing or by publicly posting the employer’s policy on sick leave, vacation, personal leave, holidays and hours.
  • Termination: Employers must notify any employee terminated from employment – in writing – of the exact date of termination, as well as the exact date of cancellation of employee benefits connected with the termination. Notice must be provided within five working days of the actual date of termination. Failure to notify an employee of cancellation of accident or health insurance subjects an employer to penalties, including a fine of up to $5,000 paid to the Commissioner of the New York State Department of Labor, as well as potential liability in a civil action brought by the employee in which damages may include reimbursement for medical expenses that were not covered by the insurer because of the termination of the employee without notice.