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December 16, 2010

New York Passes Wage Theft Prevention Act

On December 13, 2010, Governor David Paterson signed into law the “Wage Theft Prevention Act” (“the Act”).  The Act expands the notice requirements of the New York Labor Law, increases penalties for wage and hour violations, and expands the enforcement powers of the New York State Department of Labor.  The Act becomes effective on April 12, 2011. 

New York Labor Law Section 195 currently requires employers to inform new hires in writing of their rate of pay, overtime rate, and designated pay date.  Our October 13, 2009 Client Alert discussing the current notice requirements is available at  The Act amends Section 195 by requiring this notice to be provided at the time of hiring and on or before February 1st each year.  As before, the notice must provide the rate of pay, regular pay day, and overtime rate.  In addition, the notice must state how the employee’s salary will be paid (i.e., hourly, yearly), any allowances against the rate of pay, such as tip, meal, or lodging credits, as well as certain identifying information about the employer.  As with the prior requirements, the Department of Labor has been tasked with the responsibility for providing model forms.  This notice must be signed by the employee each time it is received.     

Section 195 has also been amended to require employers to provide additional information with the wage statement that accompanies each paycheck, including the dates for which the payment is issued, the rate of pay, how the paycheck is calculated, and any allowances that are made against the minimum wage.    

The Act creates a private right of action for employees to bring a lawsuit for the failure to comply with the amended provisions of Section 195, which can result in damages of up to $2,500, plus costs and attorney’s fees.  The Commissioner may also institute legal action.    

The Act also increases the penalties for non-compliance.  For example, liquidated damages of up to 100% of the amount owed are now permitted for wage violations, instead of the current law’s liquidated damages provision of 25%.  In addition, the Act provides for new civil and criminal penalties for minimum wage and overtime violations.  The Act also provides for civil and criminal penalties for retaliating against an employee that complains of a wage violation, including liquidated damages of up to $10,000.

Significance for Employers

To comply with the increased reporting requirements, employers will need to revise their notification policies and wage statements prior to the effective date of the Act.  Given the addition of a private right of action and the potential for increased penalties for violations of many aspects of the Labor Law, employers will need to remain especially vigilant.

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If you have any questions regarding the Wage Theft Prevention Act, please do not hesitate to contact us.