New York Passes Unpaid Wages Prohibition Act

On September 18, 1997, New York Governor Pataki signed into law amendments to the State Labor Law which significantly enhance the statutory penalties for underpayment or non-payment of wages. The new law, entitled the Unpaid Wages Prohibition Act, increases the minimum fine for underpayment or non-payment of wages from $100 to $500, and the maximum fine from $10,000 to $20,000. The legislation makes a second violation of the wage payment law a felony.

Perhaps more significantly, the new law also increases the civil damages available to an employee who sues for a violation of the statute. Previously, the civil penalty for willful violations of the law was attorney fees and costs, plus liquidated damages in the amount of twenty-five percent of the wages deemed to be owed to the employee. The new law provides that an employee may recover liquidated damages in the amount of two hundred percent of the wages owed.

The statute of limitations applicable to claims for unpaid wages remains six years. Thus, an employee has the right to recover back wages for the six-year period prior to the time he or she filed a claim.

Now more than ever, New York employers must be careful to comply with the specific terms of the State Labor Law provisions relating to the payment of wages. The statute governs the timing of wage and commission payments, the form of payments, the deductions which may be made from wages, and the notice and record-keeping procedures required of employers.