Governor Patterson Signs Wage Theft Prevention Act

December 15, 2010

By: Subhash Viswanathan

On Monday, December 13, 2010, Governor Patterson signed the Wage Theft Prevention Act, which broadens greatly the Department of Labor’s enforcement powers, imposes new and expanded notification requirements on employers, and increases significantly employers’ potential liability for violations of the Labor Law. A summary of the major changes, which take effect on April 12, 2011, is provided below.

Notice Requirements

The Act makes significant changes to section 195 of the Labor Law by requiring employers to provide even more information to employees, both upon hire and on or before February 1 of each following year. Required information now includes, among other things: pay rates, basis of pay rate, how the employee will be paid (e.g., hour, shift, week, salary, etc.), any allowances claimed as part of the minimum wage, the regular pay day, and “such other information as the commissioner deems material and necessary.” Employers must provide this documentation in both English and in the employee’s primary language and maintain accurate records for six years. The Commissioner of Labor will establish dual-language templates for purposes of complying with these changes.

Failure to provide notice as required by section 195 within ten business days of the employee’s first day of employment allows either the Commissioner or the employee to bring an action to recover damages of $50 for each work week that the violation occurred, plus costs and reasonable attorney’s fees. Damages recoverable for prevailing employees are capped at $2,500. No such maximum applies for actions brought by the Commissioner.
 

Wage Statements

Section 195 is further amended to require employers to provide employees with a detailed wage statement with every payment of wages. Required information includes, among other things: the dates of work covered by that payment, the rate and basis of pay (e.g., whether by hour, shift, week, salary, etc.), and any allowances claimed as part of the minimum wage. For non-exempt employees, employers must also provide the employee’s regular hourly rate, overtime rate, the number of regular hours worked, and the number of overtime hours worked.

The Act allows both employees and the Commissioner to bring legal action for failure to provide such information. Damages include $100 per week for each week the violation occurs, not to exceed $2,500 for employee-initiated legal action, plus costs and attorney’s fees.

Liquidated Damages

Another significant change to the Labor Law is the increase in available liquidated damages. Previously, an employee who prevailed in a court action alleging a failure to pay wages received the total amount of the underpayment, costs, attorney’s fees, and, in some instances, liquidated damages equal to 25% of the underpayment. As amended, section 198.1-a now permits a prevailing employee to recover payment of all wages due, costs, attorney’s fees, prejudgment interest, and (unless the employer proves a good faith basis to believe the underpayment was lawful) liquidated damages equal to 100% of the total wages due.

Anti-Retaliation Protection

Several key changes to the Labor Law’s anti-retaliation protections have been made, such as requiring “any person” found to have engaged in unlawful retaliation to pay liquidated damages of up to $10,000, along with costs and attorney’s fees. In addition, retaliation is now listed as a class B misdemeanor.

While the Act does not take effect until next April, employers should begin reviewing their payroll practices to determine what they will have to change to comply with the new notice and wage statement requirements.