Last week, Governor Cuomo finally signed a bill into law that amends the Wage Theft Prevention Act (“WTPA”), six months after it was passed by the New York legislature. The new law eliminates the employer’s obligation to provide annual wage notices to employees prior to February of each year. However, the amendments also impose increased penalties, stronger enforcement measures and a larger scope of liability.
Elimination of Annual Wage Notices
Prior to the amendments, the WTPA required employers to provide employees with a Rate of Pay form during January of each year. Due to the delay in delivering the bill to the Governor, employers were unsure whether they would be required to provide these forms for 2015, since the law goes into effect 60 days from the Governor’s signing of the bill.
Recognizing this conundrum, Governor Cuomo approved a “chapter amendment” to make the elimination of the notice requirement effective immediately. The DOL has since posted on its website that “given the pending enactment of this chapter amendment, the Department will not require annual statements in 2015.”
Despite the elimination of annual wage notices, employers are still required to furnish notices to all new employees. In addition, the six-year record retention requirement continues to apply to all notices provided to an employee.
Increased Penalties for Wage Notice Violations
Although the onerous annual wage notice is no longer mandatory, employers cannot afford to be lax with WTPA requirements. The amendments increase penalties for failing to provide notices from $50 dollars per week to $50 per day per employee, with a cap of $5,000 (up from $2,500). Additionally, failing to provide inadequate wage statements will cost $250 per day (up from $100 per week), for a maximum of $5,000 per employee (up from $2,500).
DOL Civil Penalties Doubled
In addition to increasing penalties assessed and collected for the employee, the amendments double the amount of civil penalties the DOL may issue for wage and hour violations. The new law increases the maximum amount it can collect for the Department from $10,000 to $20,000.
DOL Now Required to Look Back Six Years
Claims for wage and hour violations have a six-year statute of limitations. In wage and hour lawsuits, attorneys almost always look into the entire six-year period, but this was not always the case for DOL investigations. The new amendments require the DOL to review the entire six-year period in their investigations. The law also establishes a special account called the “Wage Theft Prevention Enforcement Account,” which will be funded by the new increase in civil penalties. The goal is to use this newfound money to enable the DOL to review the entire statutory period.
Imposition of Successor Liability
The new law makes it clear that successor entities – entities that are similar in operation and ownership to a prior entity – may be held liable for the former entity’s wage and hour violations. The law states that a successor is deemed to be the “same employer if the employees of the new employer are engaged in substantially the same work in substantially the same working conditions under substantially the same supervisors” of the previous employer and has “substantially the same production process, produces substantially the same products and has substantially the same body of customers.”
Personal Liability for Certain LLC Members
Prior to the amendments, the New York Corporate law imposed liability on the top 10 shareholders of corporations for wage and hour violations involving debts, wages or salaries due to an employee. The new law expands the same liability to the top 10 members with the largest percentage ownership interest in a LLC. The LLC members can be held jointly and severally liable for such violations.
It is now clear that employers do not have to supply their existing employees with wage notices in 2015 and beyond. Although this means one less requirement for employers, the amendments to the WTPA press employers to maintain their compliance with the law or face higher scrutiny and increased penalties.