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Recent Amendments to the New York Labor Law

September 10, 2009

New York employers should take note of two recent amendments to the State Labor Law.

Enhanced Penalties for Overtime and Minimum Wage Violations

On August 26, 2009, Governor Paterson signed legislation amending the New York Labor Law to increase the penalties for unlawful retaliation and to enhance a worker’s entitlement to liquidated damages for violations of overtime pay and minimum wage requirements.  These amendments to Labor Law Sections 198, 215 and 663 will apply to violations occurring on and after November 24, 2009.

Under the new legislation, the civil penalties for an employer that is found liable for discharging or otherwise retaliating against an employee who exercises his or her rights to claim underpayment of overtime or minimum wages under the Labor Law have been increased.  The current minimum of a $200 civil penalty will now be $1,000, and the maximum penalty is increased from $1,000 to $10,000 for each violation.  These civil penalties are payable by the employer to the State and are in addition to the employer’s obligation to make the employee whole for compensation lost as a result of the discharge or other unlawful retaliation.

The overtime and minimum wage provisions of the Labor Law have also been amended to allow for the recovery of liquidated damages in the amount of 25% of the employee’s claim, unless the employer proves that it had a good faith basis for believing its underpayment of wages was in compliance with the Labor Law.  Under current law, the burden is on the worker to prove that the employer’s violation was “willful”; the amendment reverses the burden and requires the payment of liquidated damages unless the employer establishes a good faith basis for its failure to pay overtime or minimum wages as required by the Labor Law.

With these amendments, the Labor Law has become a more potent weapon in the hands of employees on both retaliation and overtime and minimum wage claims.  Notably, the New York Labor Law allows for recovery of unpaid overtime or minimum wages claims going back six (6) years, while the corresponding federal law, the Fair Labor Standards Act (FLSA), which also provides for minimum wages and overtime premium pay, has a maximum claim period of three (3) years.  FLSA includes its own liquidated damages provision of 100% of the unpaid wages.  In effect, with its new liquidated damages provision, the New York Labor Law will now allow underpaid employees to recover 125% of the unpaid wages for the first three (3) years of its six (6) year claim period, while FLSA, with its own 100% liquidated damages provision, will allow for recovery of 200% of unpaid wages for the last three (3) years of the claim period.  Both laws allow an award of the employee’s attorney’s fees on a successful claim.

New Requirement of Written Notice of Pay Information

New York State Labor Law Section 195 currently requires employers to notify employees at the time of hire of their rate of pay and the employer’s regular pay day.  On July 28, 2009, Governor Paterson signed legislation amending Section 195 to require that employers provide written notification to employees at the time of hire of: (1) the employee’s regular rate of pay; (2) the employer’s regular schedule of pay dates; and (3) for non-exempt employees, the employee’s regular hourly and overtime rates of pay.  Employers must also obtain written acknowledgment of the employee’s receipt of the required notification.  These amendments will take effect on October 26, 2009, and will apply to all employees hired on or after that date. 

The law also grants the Commissioner of Labor the authority to issue regulations regarding the form and the content of the required notice.  In the meantime, employers should prepare to meet the requirements of Labor Law Section 195 by amending existing forms and offer letters to include the requisite information or by creating new forms indicating the rate of pay, the employer’s regularly scheduled pay date and, for non-exempt employees, regular hourly and overtime rates.  For salaried, non-exempt employees, employers will need to establish the number of hours per week an employee is expected to work (typically 35 or 40) and divide the employee’s weekly salary by that number of hours to determine the hourly rate.  Finally, at least until the Commissioner of Labor prescribes a form of acknowledgment of receipt of the required information, employers may also consider including a brief statement acknowledging receipt on the notification form so that employees sign a single sheet of paper.