Starting in 2015, New York employers will no longer have to provide annual wage notices to existing employees – assuming Governor Andrew Cuomo signs a bill passed on June 19, 2014 (Bill) by the New York State (NYS) Assembly and Senate, as he is expected to do. Elimination of the annual wage notice (Wage Notice) requirement will come as welcome news for employers, but it is also accompanied by related perks for employees and increased penalties for repeat offenders of the NYS wage and hour laws.
The annual Wage Notice duty was imposed on employers as part of the Wage Theft Prevention Act (WTPA or Act), passed in 2010 to remedy supposed abuses of the state’s wage payment laws. As enacted, the WTPA required, among other things, that, between January 1 and February 1 of each year, all NYS employers provide written notice to existing employees detailing certain wage-related information, including the basis for the employee’s pay rate, whether the employer intended to claim an allowance, the employee’s regular payday, and identifying information about the employer. The Bill eliminates this cumbersome requirement. Pundits expect Gov. Cuomo to approve the Bill in the coming days.
But the remaining WTPA provisions remain intact, and the Bill actually bolsters several other wage-related safeguards. For one, the Bill increases the penalties on employers that fail to distribute a Wage Notice to new employees. The original Act authorized the NYS Department of Labor (DOL) to levy a $50 penalty – per workweek, per worker – on an employer that failed to provide a proper Wage Notice. As amended by the Bill, the Act now authorizes the DOL to impose a $50 penalty – per workday, per worker – on an employer that fails to provide a proper Wage Notice within the first 10 days of employment, up to a maximum of $5,000. Newly hired employees may also now recoup up to $5,000 – doubled from that permitted in the original incarnation of the Act – from employers that fail to distribute WTPA-compliant Wage Notices (although an employer may still evade such liability by proving that it made complete and timely payment of all wages to the affected employee(s)).
Template, DOL-approved Wage Notice forms for distribution to new hires, in a multitude of languages, can be found here.
The Bill also proposes other changes to protect employees against wage theft, including:
- An amendment to the New York Limited Liability Company Law specifying that the 10 members of an LLC with the largest ownership interests may be held personally liable for any unpaid wages. This provision mirrors a similar provision in the Business Corporation Law, pursuant to which employees may recover unpaid compensation from the 10 largest shareholders of a corporation.
- New successor employer liability, whereby an entity similar in operation and ownership to an entity that previously violated the Labor Law will be held accountable for the acts and liabilities of its predecessor. This provision effectively precludes companies from re structuring an entity, or dissolving and creating a new entity with the same business purpose, to sidestep wage-related liability.
- A provision requiring an employer to report specific employee and wage data to the DOL (to be published on the DOL’s website), in cases where the DOL issues an order directing payment of wages to an employer who has previously been found in violation of the Labor Law, or whose violation is deemed willful or egregious.
- A provision doubling the maximum civil penalty, from $10,000 to $20,000, for employers that commit a second Labor Law violation within a six-year period.
- A requirement that construction contractors and sub-contractors that violate the Labor Law must notify all their employees of the violation(s).
- A provision clarifying that the DOL’s investigation of an administrative wage and hour complaint will automatically cover the six-year period preceding such complaint, unless the DOL states otherwise.
- The creation of the Wage Theft Prevention Enforcement Account to allocate monies collected from certain wage and hour violations.
What Does This Mean for My Company?
The Bill presents a mixed bag for employers. While eradication of the annual Wage Notice requirement is a boon, employers must now, more so than ever, ensure that new hires receive a Wage Notice in a timely fashion. And the amendment to the Limited Liability Company Law expands the universe of individuals who can be held personally liable for unpaid wages or other compensation. Given that the Bill takes effect a mere 60 days after Gov. Cuomo signs it into law, employers should consult with counsel immediately about their new wage-related obligations and any necessary revisions to company policies and practices.