In the last 10 years, New York and federal law designed to protect workers from wage and hour exploitation by employers has been expanded and, with increasing frequency, workers have been bringing and winning cases against employers for wage and hour law violations. Several high profile restaurants in New York have paid large awards or significant settlements in cases brought by waiters, bus boys and other non-managerial employees claiming, among other things, illegal tip sharing and minimum wage violations. In some of these cases, the restaurants failure to keep good records severely limited their ability to defend the lawsuits.

The Wage Theft Prevention Act, signed by former Governor Paterson on December 13, 2010, imposes additional record keeping and notice duties on employers, and provides for significant civil penalties for failure to do comply. It also increases sanctions for violation of New York wage and hour laws generally. The new law became effective April 12, 2011.

Employers are well advised to learn about and come into compliance with the new law. Workers’ lawyers will no doubt seek out unwary employers. Because the new law is complex and must be interpreted in light of pre-existing state and federal law, as well as judicial opinions and state and federal Labor Department regulations, it is important that employers consult counsel experienced in wage and hour law.

Below we summarize the Act’s major provisions.

NOTICE TO EMPLOYEES

➢ SUBSTANCE OF NOTICE:

The Wage Theft Prevention Act requires businesses to notify employees of, among other things:

• the rate of pay and whether payment is by the hour, day, week, salary, piece, commission or other;

• allowances, if any claimed as part of the minimum wage, including tip credit, meal credit, or lodging allowances;

• the regular pay day designated by the employer; and

• he employer's name, address of principal place of business, telephone number; and other information that may be required by the labor commissioner.

➢ TIMING AND LANGUAGE OF NOTICE:

The Wage Theft Prevention Act requires that the above notice be given:

• to all employees upon commencement of employment and to existing employees annually; and

• in both English and the employee's designated language.
  
  

➢ PROOF THAT NOTICE WAS GIVEN

The Wage Theft Prevention Act requires employers to obtain a signed and dated written acknowledgment from each employee confirming that the notice was provided.

➢ CIVIL PENALTY FOR VIOLATON OF NOTICE RULES

The Wage Theft Prevention Act provides civil damages of $50 per workweek for failure to give the above notices until proper notice is given, with damages capped at $2,500 per employee, plus costs and attorneys' fees.

WAGE AND HOUR STATEMENT TO EMPLOYEES

➢ CONTENTS OF STATEMENT

The Wage Theft Prevention Act requires employers to provide employees with a statement whenever an employee is paid, stating, among other information,

• the dates for which the employee is being paid;

• the employee’s rate or rates of pay and the basis thereof;

• whether the employee is being paid by the hour, shift, day, week, salary, piece, commission or otherwise;

• allowances, if any, that the employer claimed as part of the minimum wage;

• the employee’s gross wages; deductions from the employee's wages; overtime hours worked and pay; and

• the employee’s net wages. 
  
  

The Wage Theft Prevention Act provides civil damages of $100 per violation for failure to provide the wage and hour statement as required, with damages capped at $2,500 per employee, plus costs and attorneys' fees.

DUTY TO KEEP RECORDS FOR 6 YEARS

An employer must maintain copies of all the above records for six years.

INCREASED LIQUIDATED DAMAGES AND CRIMINAL SANCTIONS

➢ CIVIL

Under pre-existing New York state law, a successful employee-plaintiff is entitled to actual damages proved, plus liquidated damages (that is, an additional recovery) equal to 25% of actual damages. The new law increases liquidated damages to 100% of actual damages unless the employer can show a good faith and reasonable basis for believing that its conduct was legal. The new law also carries increased penalties for employers who retaliate against employees for complaining about conduct that they reasonably believe violates New York’s wage and hour laws, including front pay, back pay, and liquidated damages of up to $10,000.

➢ CRIMINAL

The Wage Theft Protection Act extends the criminal penalties currently applicable to violations of wage and hour laws to violations of the new law. First-time offenders are guilty of a Class-B misdemeanor, with a fine between $500 and $20,000 and/or imprisonment up to one year. Subsequent offenses within six years of the first constitute felonies with significantly higher fines and incarceration terms.

For more information visit the Department of Labor main site for the Wage Theft Prevention Act at www.labor.ny.gov/workerprotection/laborstandards/workprot/lshmpg.com.

About Freeman Lewis LLP
Freeman Lewis LLP is a boutique firm founded in 2002 by Jennifer Freeman and Robert Y. Lewis who together have more than 40 years of experience helping clients resolve business disputes through litigation, arbitration, mediation and negotiation. Often the firm works with clients to resolve cross-border legal problems. Among other things, Ms. Freeman has substantial experience practicing in employment law, and Mr. Lewis, a former federal prosecutor, in white-collar criminal and regulatory law. For more information, visit http://www.freemanlewis.com.