NY Legislature Passes Significant Amendments to the Wage Theft Prevention Act: Employers No Longer Required to Distribute Annual Pay Notices

by FordHarrison
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Executive Summary: On June 19, 2014, the New York Legislature passed a bill to eliminate the requirement that New York employers must distribute annual wage notices to all employees. While employers may be relieved by this change, the bill also increases reporting liabilities and civil penalties for wage violations. The bill will take effect 60 days after Governor Cuomo's expected signature.

Here are the key features of the bill:

  1. Increased Penalties for Violation of Wage Notice Requirements: While the Bill repeals the annual wage notice requirement, failure to provide new employees with wage notice within 10 days of hire will expose an employer to a $50 penalty per work day, up to a maximum of $5,000 (up from the previous $50 per work week up to a maximum of $2,500). In addition, failure to provide wage statements will result in a penalty of $250 per work day up to a maximum of $5,000 (up from the previous $100 per work week up to a maximum of $2,500).
  2. Extension of Liability to Successor Entity with Similar Operations: The Bill makes it difficult for successor entities to avoid wage violation liability. For example, if the new entity has substantially the same operation, employees, working conditions, products and customers as the old entity, it will be held liable for its predecessor's liability.
  3. Increased Penalties for Repeat Offenders: The Bill doubles the maximum civil penalty, from $10,000 to $20,000, for employers with a previous wage violation within the past six-year period.
  4. Explicit Six-year Statute of Limitations: The Bill clarifies that the DOL's investigation of wage violations will automatically cover the entire six-year statute of limitations period, unless the Commissioner otherwise notifies all affected employees.
  5. Contractors' Accountability to Disclose Violations: The Bill requires contractors or subcontractors to disclose wage violations to employees.  The notification must be made through an attachment to pay checks summarizing the nature of the wage violation.
  6. Members' Liability for Wage Violations: As an amendment to the New York LLC law, the Bill will hold the 10 members with the largest ownership of an LLC personally liable for all unpaid wages due to the LLC's employees. To enforce this section, an employee must first provide timely notice to the LLC members, and then the employee has a limited window to pursue the members. LLC members' potential liability will be calculated pro rata according to each member's ownership percentage.  If any LLC member has paid more than its pro rata share of liability under this section, it may sue the other members to enforce contribution.

 

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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