On February 27, 2015, amendments to New York’s Labor Law, including the Wage Theft Prevention Act go into effect. On December 29, 2014, Governor Cuomo signed into law a bill (S5885-B, A8106-C) amending the labor law to eliminate the burdensome requirement on employers to have employees sign annual wage notices every January. However, the bill also provides for increased penalties for violations of wage payment provisions, expanding liability for contractors and successor employers, amending the limited liability company law as it pertains to liability of members, and amending the state finance law by establishing a wage theft prevention account consisting of moneys collected pursuant to the wage theft laws, to be used by the Commissioner of Labor (Commissioner) to offset costs of administration and enforcement.

Specifically, the amendments:

  • Eliminate Labor Law Section 195(1)(a)’s requirement that employers provide employees with annual pay notices in January (such notices are now required only at the time of hiring, but must be provided within ten business days of the employee’s first day of employment). Note that as a result the Department of Labor is not requiring annual statements in January 2015.
  • Increase penalties for violations of wage payment and pay notice requirements. Specifically:
    • The amount an employee may recover for a violation of Section 198 (payment of wages) will increase from $50/week to $50/day, with the maximum recoverable increasing from $2,000 to $5,000 plus costs and attorney’s fees, while the fines that the Commissioner may assess against the employer will increase from $50/week to $50/day, capped at a maximum of $5,000.
    • The amount an employee may recover for an employer’s failure to provide the statement required under Section 195(3) with every payment of wages will increase from $100/week to $250/day, with the maximum recoverable increasing from $2,000 to $5,000 plus costs and attorney’s fees, while the fines that the Commissioner may assess against the employer will increase from $100/week to $250/day, capped at a maximum of $5,000.
  • Require an employer who is found to have violated the provisions regarding payment of wages, minimum wage, day or rest or meal periods, and who has previous violations or if the violation is willful or egregious to provide a report to the Commissioner detailing how many employees the employer has, the hourly rates of those employees, and the number of hours worked by those employees.
  • Require that the Commissioner’s investigation into claims under Sections 198 (wage claims) and 663 (minimum wage) of the Labor Law cover the entire six-year status of limitations period unless the Commissioner otherwise notifies all affected employees.
  • Increase the civil penalty that may be assessed by the Commissioner for a violation of Section 215 (prohibiting retaliation and discrimination against employees who make complaints under the wage law) for employers who have previous violations within the preceding six years to a maximum of $20,000.

In addition, the amendments expand liability for wage violations for contractors, successor employers and members of LLCs. Specifically, the amendments provide that:

  • A successor employer that is “similar in operation and ownership to a prior employer which had been found in violation” and whose employees are “engaged in substantially the same work in substantially the same working conditions under substantially the same supervisors” or who has “substantially the same production process, produces substantially the same products and has substantially the same body of customers” shall be liable for the acts of the prior employer under Sections 218 and 219 (providing for civil penalties and interest for violations regarding payment of wages, minimum wage, day or rest or meal periods,).
  • A contractor or sub-contractor who is found to have failed to pay all wages must notify all employees of its violations via paycheck attachment in conformance with rules to be promulgated by the Commissioner.
  • The ten members of a LLC with the largest percentage ownership interest will be jointly and severally personally liable for all “debts, wages, or salaries due and owing to any of its laborers, servants or employees, for services performed by them for such limited liability company,” including liquidated damages, penalties, interest attorneys’ fees and costs. The employee is required to give notice to the member within 180 days after termination of services that the employee intends to hold the member liable, and any actions to enforce such liability must be commenced within 90 days after return of an unsatisfied execution against the LLC for judgment recovered against it.