New wage rules—and corresponding fines—now in effect

New York employers scrambled to avoid fines from the state Labor Department and comply with an essential Feb. 1 deadline of the Wage Theft Prevention Act, a new state law affecting the vast majority of New York employers.

The department said the WTPA, which went into effect last April, already “gives greater protection to workers, and makes changes in the way they are notified of their pay rates and receive wage statements.” Existing rules already required employers to notify employees of their wage rates at the time of hire, but the WTPA has beefed up that requirement: Employers must now give a written notice to each new hire and to all employees by Feb. 1 each year.

“This has not been well publicized at all by the Department of Labor, and I suspect most small employers (and their accountants) don’t know about it,” said Jeffrey S. Gold, vice chair of the NYSSCPA’s New York, Multistate and Local Taxation Committee. He emphasized that employers can be fined up to $50 per employee per week for failure to provide this notice.

Gold also noted that there are no employee exclusions to this rule. That is, employers have to provide the notice to professionals, executives and administrators, and others exempt from state overtime requirements must still receive a notice. The new requirement also applies to workers covered by a union contract.

All private-sector employers are covered by the WTPA, and the Labor Department stresses that charter schools, private schools and not-for-profit corporations are covered as well, since those are not public entities. But there are some exceptions: Employees who work in other states are not covered by the WTPA, nor are federal, state and local government employers.

The new law does not apply to independent contractors, either, said Gold, which makes the proper classification of workers as either independent contractors or employees even more critical.

“An employer who is deemed to have misclassified employees as independent contractors already has plenty of federal and state headaches,” Gold said. “He can now add ‘failure to comply with the new employee wage notification requirement’ to the list.”

What a “notice” means
The Labor Department has stated that the notice to the employee must contain the following information:

  • The employee’s rate(s) of pay;
  • The basis of the employee’s rate(s) of pay (e.g., by the hour, shift, day, week, salary, piece, commission or other);
  • Whether the employer intends to claim allowances as part of the minimum wage, including tip, meal or lodging allowances, and the amount of those allowances;
  • The employee’s regular pay day designated by the employer in accordance with the frequency-of-pay requirements in the labor law;
  • The name of the employer and any “doing business as” names used by the employer;
  • The physical address of the employer’s main office or principal place of business, and a mailing address, if different;
  • The telephone number of the employer; and
  • Any such other information as the commissioner deems material and necessary.

More information is available at www.labor.ny.gov/workerprotection/laborstandards/employer/wage-theft-prevention-act.shtm, including notice templates for use by employers.

rkoreto@nysscpa.org