Relief in sight: bill eliminating annual wage notice requirement passed by New York legislature



June 25, 2014

Employment Law Alert

Author(s): Tara E. Daub

The New York Senate and Assembly passed a bill on June 19, 2014, that eliminates the burdensome annual wage notice requirements imposed on employers under the Wage Theft Prevention Act, while increasing penalties for non-compliance with other requirements of the law, including failure to provide wage notices to new employees upon hire and failure to provide wage statements in compliance with the law. If Governor Cuomo signs the bill, the amendments will take effect 60 days after his signature.

The Wage Theft Prevention Act currently requires New York employers to distribute to each employee upon hire, and to all employees by February 1 of each year, written notice of wage information such as the rate of pay, method of pay (i.e., by the hour, shift, day, week or salary), regular pay day and employer contact information. The Department of Labor has published form notices that employers can use for this purpose. Furthermore, employers are required to obtain acknowledgments of receipt from employees, and keep the employees’ acknowledgments on file for a period of six years. If enacted, the amendment will eliminate the requirement of giving annual notice to all employees each January, while maintaining the requirement that employers provide this information to new employees upon hiring.

The bill increases penalties for employers who fail to provide the notice to employees upon hire. If employers do not provide the initial wage notice within 10 days of an employee’s first day of work, the employee may recover in a civil action damages of $50.00 per work day for each day of violation, not to exceed $5,000.00. This is an increase from $50.00 per work week, not to exceed $2,500.00.

Adjustments were also made to penalties an employee may recover from employers who fail to provide adequate wage statements with each payment of wages. With each payment, employers are required to provide employees with the dates of work covered by the wage payment, the rate of pay, the method of pay and employer contact information. Failure to provide adequate statements with each paycheck may subject the employer to damages of $250.00 for each work day that the violation occurred, not to exceed $5,000.00. This is an increase from $100.00 per work week, not to exceed $2,500.00.

The bill also contains amendments aimed at willful and repeat labor law offenders. An employer that has for a second time violated labor law provisions regarding wage payment, minimum wage, days of rest or meal periods, or has made a willful or severe violation of these provisions, will need to comply with new reporting requirements. A repeat violator must periodically provide to the Department of Labor with detailed information on the number and type of workers employed (i.e., full-time, part-time, temporary or permanent), the number of hours each employee has worked and each employee’s pay rate without identifying information. This information will be posted on the Department of Labor’s website.

In addition, repeat violators of the Wage Theft Prevention Act will face new penalties. The Commissioner of Labor may now penalize repeat violators up to $20,000.00 if a prior violation occurred within the past six years, as opposed to $10,000.00 for first-time violators. Furthermore, the maximum level of liquidated damages an employee may recover through a civil action or through a petition to the commissioner would be increased from $10,000.00 to $20,000.00.

Construction contractors and sub-contractors are also impacted by the bill. The amendment would require contractors and sub-contractors found to have committed wage violations to notify all employees of the violation. The notification must be in the form of an attachment to the employees’ paychecks, and must summarize the nature of the violation.

The bill adds new sections to the Limited Liability Company Law, similar to existing sections of the Business Corporation Law. Subsections would be added to Section 609, providing that the ten members with the largest percentage ownership in a limited liability company be personally liable for unpaid wages due to its employees. The employee must, however, provide notice of the employee’s intention to hold these members liable within 180 days of the termination of unpaid services and must bring an action within 90 days after the return of an execution unsatisfied against the limited liability company upon a judgment recovered against it for such services. The new subsections allow any member who has paid more than his or her pro rata share to recover the excess money paid from other liable members.

Notwithstanding the increased penalties, if this bill is signed into law by Governor Cuomo, most New York employers will welcome relief from the onerous and costly process of providing annual wage statements to all employees each January.

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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