New Amendments to Wage Theft Prevention Act

The Wage Theft Prevention Act (WTPA) eliminating the burdensome annual wage notice requirement that was previously placed on employers and few other changes are remarkable and has brought certain relief. It was on December 29, 2014 when Governor Andrew Cuomo signed a bill (A 8106-C, S5885-B) that intends to bring amendments into the State’s Labor Law grossly including Wage Theft Prevention Act (the WTPA) and the law’s application to limited liability companies, contractors and successor employers. The text of the bill states that the new law is not effective until 60 days following enactment (i.e., February 27, 2015); however, Governor Andrew Cuomo also signed a chapter memorandum rendering the elimination of the annual wage notice requirement effective immediately.

The remarkable changes that come in to effect after this amendment are listed below:

Eliminate the Annual Wage Notice Requirement –  

Previously, the WTPA required that each employee receive the notice at time of hire and every year before February 1.  After succumbing to pressure from employers and legislators, Governor Cuomo signed into law an amendment to the WTPA abolishing the annual requirement to issue WTPA wage notices.  This change is effective immediately for 2015 and beyond. The Amendments eliminate the annual requirement that prior to February 1, employers provide all employees written wage notices containing certain wage-related information (i.e., pay rate, pay date, etc.) and obtain acknowledgments regarding receipt of such notices, thus removing an onerous administrative requirement for employers. However, employers still must provide all newly hired employees with wage notices within ten (10) business days of their start date. Additionally, employers must provide wage notices to employees prior to implementing any changes to the information contained in the prior wage notice, excluding increases in pay rates if such increases are properly reflected in an employee’s wage statement.

Penalties increased for Wage Payment Violations –

Under the prior version of the WTPA, if an employer failed to provide the required wage notice, the employee could recover a penalty of $50 for each week that he or she did not receive notice, up to a maximum of $2,500. The amendment comes forward with a gross increase in it imposing change in penalty from $50 per week to $50 per day for a violation, and the maximum monetary penalty increased from $2,500 to $5,000. The Amendments also increased penalties for failing to provide paystubs from $100 to $250 per violation, up to a maximum of $5,000. The Amendments also include enhanced penalties for repeat offenders, up to a maximum of $20,000 for employers found to have violated the Labor Law within the preceding six years. Adding to it, if the Commissioner obtains a judgment against an employer, a portion of the judgment must go to the employees who were harmed. Previously, the Commissioner had discretion whether to assign any portion of the judgment to the aggrieved employees.

Create Potential Successor and Personal Liability for Limited Liability Company

The amendments broaden the reach of the Act to impose individual liability for certain LLC members and liability on a “successor” business, such that a successor company will be liable for any WTPA violations caused by the predecessor company. Also, the new amendment mandates that 10 members with the largest percentage ownership interest in a limited liability company (LLC) are now jointly and severally liable for all debts, wages or salaries due and owing to the LLC’s employees for their services to the LLC. If in any case the employee successfully pursues his/her claim them he may also recover liquidated damages, penalties, interests or attorney’s fee.

Accountability of Contractor Increased –

The Amendments also increase contractor and subcontractor accountability under the WTPA. As such, construction industry contractors and subcontractors that have failed to pay wages must now provide written notice of such violations to all their employees as an enclosure with the employees’ wage statements.

 Increase authority of Commissioner of Labor’s Enforcement and Create the Wage Theft Preventions Enforcement Account –

The Amendments require that any investigation by the Commissioner of any alleged wage payment violation will cover the entire six-year statute of limitations period unless the Commissioner notifies all affected employees otherwise. Additionally, the Amendments create the “Wage Theft Prevention Enforcement Account” designed to offset the costs with respect to the administration and enforcement of the New York Labor Law, which will be funded by fines and penalties collected by the Department of Labor.

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