New York State Legislation: Updates to the Wage Theft Prevention Act

By: Jacqueline B. Jones

The amendments to the 2011 Wage Theft Prevention Act (“WTPA”) were signed into law on December 29, 2014. This legislation contains items that we think are important for the business community.

Annual Notice Revoked. The WTPA, since 2011, has required New York employers to provide all employees a notice at the time of hire and annually specifying wage information. Legislators listened to employer complaints, and the Amendments and the Governor’s signing memorandum revoke the annual notice requirement for 2015 and suceeding years. Employers are still required to provide written notice of wage rates at the time of hire.

Minimum Wage Increase triggers Hospitality Employer’s New Pay Notices. An existing special rule for Hospitality Industry employers requires that they provide a new notice of wage rates each time the employee’s rate of pay changes. The minimum wage in New York increased effective Jan. 1, 2015, to $8.75 an hour and the tip credit for food service workers increased to $3.75 an hour. Effective Jan. 1, 2015, food service workers receiving tips must be paid a wage of at least $5.00 per hour and a tip credit shall not exceed $3.75 an hour (as long as the total of the hourly wage rate plus tips received equals or exceeds $8.75 per hour). Accordingly, those Hospitality employers that are increasing their employees’ wage rate or tip credit due to the minimum wage increase must provide a new notice of wage rates to comply with the special rule for the Hospitality Industry.

Increased Penalties and DOL website publication. The amendments provide increased penalties for an employer’s failure to comply with certain sections of the WTPA. For example, an employer’s failure to provide a new hire notice increases from a maximum of $2,500/employee to $5,000/employee. Employers who previously committed “wage theft” (the new term for employers who, whether purposefully or not, failed to comply with the wage payment provisions of the Labor Law) or who commit willful violations of the wage requirements will have to report certain employee wage data including number of employees and rates of pay to the New York Department of Labor (“DOL”) which will publish that data on its website. The amendments also authorize greater civil penalties for those employers who have committed wage theft within the past six years and who do so again.

Successor Employer Liability Expended. A successor employer, defined under the amendments as an employer with both similar operation and ownership to a prior employer who had previously committed “wage theft,” will be liable for the acts of the prior employer for purposes of orders directing payment of wages. Anyone who acquires a business or the assets of a business and retains the employees should be mindful of this definition of successor employer when drafting the documents associated with the acquisition.

DOL investigation period increases. Another significant change is that the amendments require the DOL when investigating a wage claim, to cover the entire six year New York statute of limitations unless affected employees are otherwise notified. It has been the practice of the New York Department of Labor when an employee makes a complaint to only investigate a wage claim for the preceding two years. This change will significantly increase the liability for employers under investigation by the DOL for wage claims.

LLC Member Liability. The amendments modify the Limited Liability Company law as well. Beginning on February 27, 2015, the ten members of a New York LLC with the largest percentage ownership interest are now personally and individually liable for the entire sum of any unpaid wages of the LLC. This provision is similar to the preexisting law applicable to New York Business Corporations that provide for personal liability for unpaid wages for the corporation’s ten largest shareholders. Under this new law, wages include all compensation and benefits payable to employees of the LLC, including, but not limited to salaries, overtime pay, severance pay, the employer’s share of any insurance premiums, and the employer’s share of any pension or annuity contributions. This revision, while good news for employees of LLCs, presents yet another source of potential liability for business owners and investors.



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