Wage Theft and New York’s Wage Theft Prevention Act

By: Eugene Lin

Wage theft is a term used to describe situations where workers do not receive legally or contractually promised wages.[1] This can include non-payment of overtime, not giving workers their last paycheck after leaving a job, not paying for all hours worked, not paying minimum wage, or not paying the worker at all.[2] Wage theft may be a violation of the Federal Labor Standards Act (“FLSA”) as well as state laws such as the Wage Theft Prevention Act.

The National Employment Law Project published a guide to combat wage theft in 2011.[3] Among other things, it specified seven principles to stop wage theft:

  1. Raise the Cost to Employers for Violating the Law.
  2. Make Government Agencies Effective Enforcers of the Law.
  3. Better Protect Workers From Retaliation.
  4. End the Exclusions in Minimum Wage and Overtime Standards.
  5. Stop Independent Contractor Misclassification and Hold Subcontractors Accountable.
  6. Ensure Workers Are Paid for All Hours Worked.
  7. Guarantee that Workers Can Collect from Their Employers.[4]

Wage theft protections have historically been implemented in a spotty fashion: for instance in New York, such protections were first afforded to agricultural workers before other workers in New York State. The Migrant & Seasonal Agricultural Worker Protection Act was signed in 1983 and provided farm workers essential workplace rights.[5] Employee protections required employers to disclose terms and conditions of payment in employee understandable language, pay workers when due, and give workers an itemized pay stub. There was a protection against being fired for asserting rights under the statue and a private right of action the allowed the seeking of actual or statutory damages if employers violated the Act.

Other types of New York workers didn’t get similar protections until the Wage Theft Prevention Act (WTPA) in 2011. The Act addressed many of the principles from the National Employment Law Project. Employers were now required to provide employees with written pay notices.[6] These notices had to include: (1) the employee’s pay, including overtime pay; (2) the employee’s type of payment (e.g., hourly, shift, day, week, commission, etc.); (3) the regular payday; (4) the official name of the employer and any other names used for business; (5) the address and phone number of the employer’s main office or principal location; and (6) any allowances taken as part of the minimum wage (such as tips).[7] Much like the Migrant & Seasonal Agricultural Worker Protection Act, this notice has to be in English and if needed the primary language of the employee.[8]

The WTPA increases the damages recoverable by employees in civil lawsuits for employer payment violations. Specifically, unless the employer can prove a good faith belief that its underpayment was legally complaint, the WTPA provides for an increase from twenty-five percent of total underpayment to one hundred percent of total underpayment.[9] The WTPA also expanded non-retaliation provisions in the New York labor law and enhanced both enforcement by the Commissioner of Labor and criminal and civil penalties.[10]

It should be noted that the WTPA in the Southern District of New York does not apply liquidated damages retroactively.[11] In Wicaksono v. XYZ 48 Corp, the court found that “retroactive operation is not favored by [New York] courts and statutes will not be given such construction unless the language expressly or by necessary implication requires it.”[12] Additionally the court stated “There is no indication in the Act itself, nor in the Sponsor’s Memorandum or any previous drafts of the Act, that it was intended to have retroactive effect. . . .  Therefore, NYLL’s liquidated damages provisions will be applied as they existed at the time of the defendant’s violations.”[13]

The New York WTPA was amended and arguably strengthened in early 2015.[14] These amendments include elimination of the annual wage notice requirement  – the New York State Department of Labor stating that it would no longer enforce the requirement.[15] Additionally liability for employers was strengthened: the ten members with the largest percentage ownership of a limited liability corporation (“LLC”) are joint and severally liable for debts wages and salaries of employees for service to the LLC.[16] Provisions also prohibit the formation of alternate companies specifically for the purpose of avoiding liabilities.[17]

Unfortunately, despite these legislative protections, wage theft is still widespread and costly.[18] The Economic Policy Institute (“EPI”) found that though there were no specific numbers for national wage theft in the year 2012, they were able to retroactively study the amount of money recovered by victims in that year. Overall the amount was at least 933 million dollars,[19] almost three times the amount for robberies that year.[20] According EPI data, the U.S. Department of Labor recovered $280 billion, the state departments in 44 states recovered $172 million, state attorneys general in 44 states recovered $14 million, and private attorneys recovered $433 million. In New York State, the NY Department of Labor reported $30 million was recovered and disbursed to workers who were victims of wage theft in 2014.[21] Given these numbers it remains to be seen whether these amendments will have a significant impact on combating wage theft in the years to come.

[1] Frequently Asked Questions, Wage Theft, http://www.wagetheft.org/faq/.

[2] Id.

[3] The National Employment Law Project, Winning Wage Justice: An Advocate’s Guide to State and City Policies to Stop Wage Theft. http://www.nelp.org/content/uploads/2015/03/WinningWageJustice2011.pdf.

[4] Id.

[5] 29 U.S.C. §1801.

[6] N.Y. LAB. LAW § 195(1)(a).

[7] Id.

[8] Id.

[9] N.Y. LAB. LAW §§ 196,198, 663.

[10] N.Y. LAB. LAW §215.

[11] Wicaksono v. XYZ 48 Corp., 2011 WL 2022644 (May 24, 2011, S.D.N.Y. 2011).

[12] Id. at note 2.

[13] Id.

[14] New York amends Wage Theft Prevention Act: action steps for employers, DLA Piper, https://www.dlapiper.com/en/us/insights/publications/2015/02/new-york-amends-wage-theft-prevention-act/.

[15] Notice of Pay Rate, New York State Department of labor, https://labor.ny.gov/workerprotection/laborstandards/employer/wage-theft-prevention-act.shtm (The February 1 reporting requirement was eliminated but the notification to employees at the time of hire still remains).

[16] N.Y. L.L.C. LAW §609(c).

[17] A81806C, N.Y. State Assemb. 2013-2014 Regular Sessions (N.Y. 2014) http://assembly.state.ny.us/leg/?default_fld=&bn=A08106&term=2013&Summary=Y&Actions=Y&Memo=Y&Text=Y.

[18] Brady Meixell and Ross Eisenbrey, An Epidemic of Wage Theft Is Costing Workers Hundreds of Millions of Dollars Per Year, Economic Policy Institute, (Sept. 11, 2014) http://www.epi.org/publication/epidemic-wage-theft-costing-workers-hundreds/.

[19] Id.

[20] Table 23 Offense Analysis, FBI.gov, https://www.fbi.gov/about-us/cjis/ucr/crime-in-the-u.s/2012/crime-in-the-u.s.-2012/tables/23tabledatadecoverviewpdfs (292,074 robbery offenses at $1167 average per offense for a total of $340,850,358 for 2012).

[21] Wage Theft Recovery, New York State Department of Labor, http://labor.ny.gov/workerprotection/laborstandards/wage-theft-recovery.shtm.

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