New York Wage Theft Prevention Act Amendments Awaiting Governor's Signature

by Proskauer Rose LLP
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On June 19, 2014, both houses of the New York State Legislature passed a bill that would amend the N.Y. Wage Theft Prevention Act of 2010 (the "Act"). The amendments eliminate the annual wage rate notice requirement and increase the penalties for violations of the wage payment laws. It is expected that Governor Cuomo will sign the amendments and they will take effect 60 days after his approval.

The Amendments Repeal the Annual Notice Requirements

Of greatest interest to most employers, the amendments repeal the annual requirement for employers to issue a wage rate notice to each employee between January 1 and February 1, in English and in the employee's primary language, and obtain a signed certification that must be maintained on file for 6 years. This annual requirement was widely viewed as an unwarranted administrative burden on employers that did not provide substantial benefit to employees. If the legislation is signed by Governor Cuomo, employers will not need to issue these annual wage rate notices to employees in 2015 and in future years.

Nevertheless, the requirement to issue a wage rate notice to all new hires and the Act's document retention requirements are unchanged. Therefore, private employers should continue to timely provide all newly-hired employees with wage rate notices in their primary languages at the time of hire. Employers also should continue to maintain copies of all previously issued notices and acknowledgements, including those for any annual notices issued between 2011 and 2014, for at least six (6) years in accordance with the Act.

Amendments Create New and Increased Penalties for Wage and Hour Violations

The amendments awaiting the Governor's signature also create new liability and increase the current penalties for certain wage payment violations.

Most significantly, the amendments add two new subdivisions to the N.Y. Limited Liability Company Law, making the ten (10) members with the largest percentage of ownership interest in a limited liability company ("LLC") jointly and severally personally liable for all debts, wages or salaries due and owing to the LLC's laborers, servants or employees for services performed for the LLC. The percentage of ownership is to be determined as of the beginning of the period during which the unpaid services were performed. For purposes of this amendment, wages or salaries are defined as "all compensation and benefits payable by an employer to or for the account of the employee, servant or laborer, for services performed by them for such [LLC]." This includes, but is not limited to, salaries, overtime, vacation, holiday and severance pay, employer contributions to pension or annuity funds, and any other money properly due or payable for services rendered by such employee, servant or laborer, "including any concomitant liquidated damages, penalties, interests, attorneys' fees or costs." The amendments require that before an employee, servant or laborer can bring a charge against any of the ten (10) largest members of the LLC under the amendments, the members must be provided with 180 days' advance written notice. In addition, any of the ten (10) largest members who pays more than his or her pro rata share of wages or salaries may obtain a pro rata contribution from the other members with respect to any excess debts, wages, or salaries paid over that member's pro rata share.

In addition, the amendments:

  • increase the penalties for failures to comply with the Act (i.e., failure to provide timely notice) to $50 to $200 per day from $50 to $200 per week;
  • establish penalties of $1,000 to $20,000 for repeat offenders of the Act;
  • add provisions holding employers similar in operation or ownership to a prior employer liable for violations of the Act committed by the prior employer, which will prevent employers from evading the law by operating under a different name;
  • permit the Commissioner of Labor (the "Commissioner") to investigate alleged retaliation against an employee reporting wage violations for a six (6) year period;
  • require, rather than allow, the Commissioner to assign money due for certain violations of the Act to an employee;
  • require that if a contractor is found to have violated the Act, it will be required to notify all of its employees and subcontractor's employees of the violations; and
  • create a Wage Theft Prevention Enforcement Account under the custody of the NYS Comptroller to hold money collected for certain violations of the Act to be used to offset costs incurred by the Commissioner for the administration and enforcement of certain sections of the Act.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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