Wage and Hour

Court Rules Wage Theft Prevention Act Liquidated Damages Provision Applies Retroactively

September 27, 2011

By Subhash Viswanathan

Late last year, we posted on the passage of New York’s Wage Theft Prevention Act (WTPA), noting that the Act changed the penalties for violating the New York Labor Law’s prohibition on failure to pay wages. Specifically, the Act increased the liquidated damages penalty for failure to pay wages from 25% of the wages found to be due, to 100% of the wages found to be due. In addition, the WTPA requires an award of those liquidated damages, unless the employer proves it had a good faith basis to believe the underpayment of wages complied with the law, making an award of liquidated damages more likely.

Now, a New York trial court has determined that this liquidated damages provision applies retroactively to claims arising before the Act’s April 9, 2011 effective date. The case involves, among other claims, an alleged failure to pay overtime. The plaintiffs moved to amend their complaint to add the remedies created by the WTPA. In its decision granting the motion, the Court noted that under New York law a remedial statute is applied retroactively unless it impairs vested rights or creates new rights. The parties agreed the WTPA is a remedial statute, and the court concluded that it does not impair vested rights or create new rights. It just changes the penalty imposed with respect to a violation of rights already existing in the Labor Law. As a result of the decision, claims for failure to pay wages which go back several years (the statute of limitations on unpaid wage claims is six years) will be subject to the heightened WTPA penalties.
 

Compensation for Travel Time: The Second Circuit Provides Some Clarity

August 17, 2011

By Subhash Viswanathan

The issue of whether to compensate an employee for commuting time can be a difficult one where the employee does not have a single standard work location to which he reports. When the employee’s home base is his home, and he performs work at home each day before he gets on the road, is he entitled to be compensated for all time spent commuting between his home and various work sites? The United States Court of Appeals for the Second Circuit recently held no – at least not when the employee is not required to perform the home tasks immediately preceding or following required travel to other work sites.

The case was brought by a former employee of Black & Decker whose responsibilities included merchandising and marketing Black & Decker products at six Home Depot stores which were located between 20 minutes and three hours from his home by car. Black & Decker’s travel policy, adopted pursuant to a USDOL opinion letter, only paid for travel time going to a first store of the day or returning home from the last store of the day in excess of 60 miles (converted in practice to travel in excess of 60 minutes). So travel of 1.5 hours at the end of the day would only be compensated with half an hour of pay.
 

The employee performed a variety of administrative tasks at his home such as sending and answering e-mails and voice mails, reviewing sales reports, organizing materials and making displays and signs. He claimed that he spent 15-30 minutes before he left home and 15-30 minutes after he returned home each day performing these administrative tasks. Black & Decker contended the tasks did not have to be performed at his home or at any particular time of the day. There was no dispute that the employee was compensated for performing the tasks.

The employee argued that he because he performed these tasks immediately prior to and immediately subsequent to traveling to the Home Depot stores, he was entitled to compensation for all time spent traveling under something known as the “continuous work day” rule. This rule defines the workday as the period between the start and completion on the same workday of the employee’s principal activities. Under this rule, once an employee commences principal activities, or activities which are integral and indispensable to principal activities, all time during the same work day is compensable. The employee argued that the continuous work day rule applied because his work at home prior to traveling to the first store of the day was a principal activity, or at least integral and indispensable to a principal activity, so he was entitled to be compensated for all morning travel time, not just that in excess of 60 minutes. He also argued that his end of day activities extended the continuous workday to include all travel time coming home from his last store of the day.

The Second Circuit disagreed, concluding that the continuous workday rule did not apply. Instead, the Court relied on the well-established general principle that home to job site travel is not compensable. The fact that the employee performed administrative tasks at home at his election, just before and just after traveling, could not turn otherwise non-compensable travel time into compensable time by invoking the continuous work day rule. The Court found no evidence that the employee was required to perform the activities either immediately preceding his morning travel or immediately following his afternoon travel, and that he was free to perform them whenever he wanted and to use time for his own personal activities after performing them rather than getting on the road to a store location. As a result, the employee was not permitted to make the choice himself to perform the activities immediately before and after traveling and then invoke the continuous workday rule to increase his travel time compensation.
 

Wage & Hour Defense Institute Publishes State-By-State Survey

July 29, 2011

The Wage & Hour Defense Institute (WHDI) of the Litigation Counsel of America is an invitation only group comprised of highly talented and experienced wage and hour defense attorneys from across the United States. To further its goal of being a resource for employers, the WHDI annually updates its State-By-State Wage and Hour Law Summary. The Summary is an excellent reference tool for employers with employees in multiple states. The Summary  addresses multiple topics on a state-by-state basis, including whether each state: (1) follows the federal exemptions; (2) uses special overtime rules; (3) has a higher minimum wage rate; (4) accepts the fluctuating work week method for calculating overtime; and (5) has meal and/or rest period rules. A copy of the Summary is available here.

The WHDI serves as a nationwide network and meeting ground for top-tier practitioners to engage in professional development in what has become a highly nuanced area of the law, and to become an established resource for employers on wage and hour matters. Each attorney was selected for membership in the WHDI based on his or her individual skills and experience representing management in the defense of wage and hour litigation. WHDI members also actively counsel employers on classification determinations and payroll practices to proactively avoid litigation, using tools such as “audits” to examine an employees’ classification as exempt or non-exempt or whether certain activities are compensable or non-compensable and whether overtime has been properly calculated. The Institute holds periodic conferences, meetings and colloquia for purposes of advancing defense techniques, methods and approaches, and broadening its members’ role and influence in wage and hour law and policy.

NYSDOL Issues Additional Guidance on the Wage Theft Prevention Act

June 13, 2011

By Andrew D. Bobrek

The New York State Department of Labor (“NYSDOL”) recently published additional guidance on compliance with the Wage Theft Prevention Act (“WTPA”). This guidance supplements the NYSDOL’s previously-issued templates, instructions and FAQs on the WTPA. Specifically, the NYSDOL recently published a “sample” paystub, demonstrating how employers should comply with the WTPA’s amendments to New York Labor Law Section 195(3). As we reported previously the amended Section 195(3), requires employers to include the following information in all employee paystubs:

  • Dates of work covered by wage payment;
  • Name of employee;
  • Name of employer;
  • Employer’s address and phone;
  • Rate or rates of pay;
  • Basis of rate(s) of pay (hourly, shift, day, week, salary, piece, commission or other);
  • Gross wages;
  • Deductions;
  • Allowances, if any are claimed as part of the minimum wage (tips, meals, lodging); and
  • Net wages. 

Additionally, the following information must be provided in paystubs for non-exempt employees:

  • Regular hourly rate or rates;
  • Overtime rate or rates;
  • Number of regular hours worked; and
  • Number of overtime hours worked.

Also, for employees paid by piece rates, their paystubs must include the applicable piece rates and the number of pieces completed at each rate.

The NYSDOL’s sample paystub provides only basic guidance on how the required information should be displayed for a non-exempt, hourly employee. It does not illustrate how this information should be displayed for other employee classifications, such as employees who earn multiple rates in a given pay period or employees who are paid, in whole or in part, by commission. The sample paystub can be accessed here. In addition to its sample paystub, the NYSDOL also recently issued a “Fact Sheet,” summarizing the WTPA and, among other things, its various notice and record-keeping requirements for employers. However, employers are not required to post this Fact Sheet, or to otherwise distribute the document to employees in any manner.


 

New York State DOL Continues Attack on Deductions from Wages

June 9, 2011

Over the last couple of years the New York State Department of Labor has issued several opinion letters which significantly narrow its interpretation of New York Labor Law Section 193, the law governing permissible deductions from wages. We have discussed some of these interpretations in prior posts. To summarize, NYSDOL  takes the position that a deduction from wages is not permissible unless it is a deduction which is similar to those expressly recognized in the statute as lawful, e.g. payments for insurance premiums, pension or health and welfare benefits. This interpretation varies from the Department’s historical focus on whether the deduction was for the “benefit of the employee.” Based on the newer standard, NYSDOL has rejected suggestions that an employer may make deductions from wages for items such as an overpayment of wages, parking, or for wage-linked card purchases of food at an employer-subsidized cafeteria.

The attack on deductions which are not similar to deductions for traditional employee benefits continued earlier this year when NYSDOL issued an opinion letter finding that deductions for overpayment of wages from a “paid time off” bank would also violate Section 193. In reaching this conclusion, the Department determined that paid leave time constitutes “wages,” so deducting from that time would be a deduction from wages covered by Section 193. Significantly, this interpretation runs counter to the long-time general rule in New York that an employer is required only to abide by the terms of its paid leave policy, because it is not required to provide paid time off at all. For example, “use it or lose it” polices are permissible in New York as long as the policy is clear and unambiguous. Under that rule, a paid time off policy which clearly states that accrued paid time off may be reduced by the amount of overpaid wages should also be permissible. NYSDOL’s most recent opinion letter on the subject serves as a reminder to employers that unless the deduction from wages is one that is actually listed in Section 193, the NYSDOL will probably view it as impermissible.

US DOL Makes It Easier For Employees To Gather Evidence

May 11, 2011

By John M. Bagyi

On Monday, the United States Department of Labor (DOL) released a smartphone App that is essentially a timesheet to help employees independently track the hours they work and determine the wages they are owed. The App is available here.

With this App (available in English and Spanish), employees can track regular work hours, break time and any overtime hours. As promoted by the DOL - "This new technology is significant because, instead of relying on their employers’ records, workers now can keep their own records. This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records."
 

While this App is currently compatible with only the iPhone and iPod Touch, the DOL plans to explore updates that could enable similar versions for other smartphone platforms, such as Android and BlackBerry, and other pay features not currently provided for, such as tips, commissions, bonuses, deductions, holiday pay, pay for weekends, shift differentials and pay for regular days of rest.

While this may seem inconsequential to some employers, bear in mind that in wage and hour audits/litigation, employees routinely seek to undermine the validity of employer time records by asserting that the employer's time records are inaccurate or that supervisors have instructed them to falsify their time records. Should the employee succeed in advancing such an allegation and make use of this new App, the DOL (in its current employee-focused mindset) would undoubtedly turn to the employee's time records and may rely on them to establish the actual hours worked by the employee.
 

Wage and Hour Division Issues Revised FLSA Regulations

May 10, 2011

By Katherine R. Schafer

Recently, the United States Department of Labor’s Wage and Hour Division (“DOL”) published final revisions to its Fair Labor Standards Act (“FLSA”) regulations. The long-awaited amendments, which became effective on May 5, 2011, are based on a proposed rule originally published in the Federal Register on July 28, 2008. For the most part, the final rule does not impose new requirements on employers, but instead clarifies existing rules and changes outdated information.

Some of the more noteworthy amendments relate to “tipped” employees. Specifically, the final rule clarifies that: (1) tips are the property of the employee, whether or not the employer has taken a tip-credit; (2) the employer is prohibited from using an employee’s tips for any reason other than a tip-credit or a valid tip pool; and (3) prior to utilizing the tip-credit, the employer must inform its tipped employees of the tip-credit requirements contained in section 3(m) of the FLSA. The final rule also clarifies that a valid tip pooling arrangement may only include those employees who customarily and regularly receive tips, even if the employer takes no tip-credit and instead pays the tipped employee the full minimum wage. The amendments further state that while the FLSA does not impose a maximum contribution percentage on mandatory tip pools, an employer must notify its employees of any required tip pool contribution amount and may only take the tip-credit for the amount of tips each employee ultimately receives.
 

The final rule also revises the overtime regulations to exclude stock options from the computation of the regular rate of pay. This change reflects the amendments to the FLSA made by the Worker Economic Opportunity Act of 2000. The regulations also reflect provisions of the Small Business Job Protection Act of 1996, by permitting employers to pay an hourly “youth opportunity” wage of $4.25 per hour to employees under the age of 20 during the first 90 consecutive calendar days of their employment. The revised regulation, like the statutory language on which it is based, explicitly prohibits employers from displacing employees or reducing hours in order to hire workers at the youth opportunity wage rate.

The regulatory package is also noteworthy for the proposals rejected by the DOL, including a proposed change which would have made the fluctuating workweek method of calculating overtime compatible with the payment of bonuses and premiums; a proposal allowing employers to apply a meal credit toward an employee’s minimum wage, even where the meal was not actually accepted; and a provision clarifying whether and how service advisers working for dealerships can qualify for an exemption under the FLSA. The DOL also declined to include specific examples clarifying an employer’s obligation to compensate employees for time spent commuting to and from work in an employer-supplied vehicle.
 

NYS DOL Issues Wage Theft Prevention Act Templates, Instructions & FAQs!

April 4, 2011

By John M. Bagyi

Eight days before the Wage Theft Prevention Act goes into effect, the New York State Department of Labor finally released the notification templates and related information which will assist New York employers in complying with the Act. The documents were posted on the Department’s website Friday.

The Department issued notification templates for the following groups of employees: (a) Hourly Rate Employees; (b) Multiple Hourly Rate Employees; (c) Employees Paid a Weekly Rate or a Salary for a Fixed Number of Hours (40 or Fewer in a Week); (d) Employees Paid a Salary for Varying Hours, Day Rate, Piece Rate, Flat Rate, or Other Non-Hourly Basis; (e) Prevailing Rate and Other Jobs; and (f) Exempt Employees. The templates are available here.

The Department also issued Guidelines for Written Notice of Rates of Pay and Regular Payday, as well as instructions related to the templates. While the Guidelines state that dual language templates are available in Chinese, Haitian-Creole, Korean, Polish, Russian, and Spanish, as of this writing, only the Chinese, Korean and Spanish templates are available.

Finally, the Department also issued a document titled, “Frequently Asked Questions About the Wage Theft Prevention Act,” which provides answers to many of the most common questions employers have about the Act.
 

The information issued by the Department contains few real surprises. Some points of interest:

General

  • Though the legislature authorized the Commissioner to expand the required contents of the Section 195 notices to contain "other information" she "deems material and necessary," the notice templates essentially track the requirements set forth in the statute.

Notices

  • Employers are NOT required to use the DOL-issued templates and can develop their own, as long as the employer-prepared notices contain all the required information. Notably, the Department expressly states that it "reserves the right to require use of DOL forms in the future, if employer notices do not meet the requirements."
  • While the Department states that the New Hire Notice may be "included in" letters and/or employment agreements provided to new hires, it states the notice itself must "be on its own form." This is a significant requirement as many employers had previously satisfied Section 195's requirements by including the necessary information in new hire letters or employment agreements and did not use a separate form.
  • Interestingly, the Department backed off its prior position that notices issued to exempt employees must specify the exemption that applies to the employee. The Department now states that employers "may state the specific exemption that applies," but are not required to.
  • Annual notices must be provided between January 1 and February 1 with the first notice required before February 1, 2012. The annual notice requirement CANNOT be satisfied by giving notice at some other point in the year (e.g., when annual increases are implemented). Many employers had hoped the Department might recognize that many employers implement annual rate changes in months other than January and allow employers to issue the annual notices when those rate changes occur, rather than in January of each year. Unfortunately, the Department is requiring all employers to issue annual notices in January.
  • Employers must issue annual notices even if there have been no changes.
  • If employees are paid at multiple hourly or piece rates, the notice should disclose the all the rates that may apply (either on the notice itself or on an attached sheet).
  • Notices may be given electronically but there must be a system for the employee to acknowledge receipt of the notice and print out a copy of the notice.
  • If an employee refuses to sign the acknowledgment, the Department advises that "the employer should still give the notice and note the worker's refusal on its copy of the notice."

Notice of Changes

  • Except for hospitality industry employers, a separate notice is not required when there is an increase in an employee's pay rate, if the increase is reflected on the corresponding wage statement.
  • For any reduction in pay rate, the employer must notify the employee in writing before the reduction is implemented.

Wage Statements

  • If a retroactive wage increase is implemented, the amount of the retroactive increase must be separately noted on the wage statement in the period in which it is paid.
  • Wage statements may be provided electronically, if employees can access and print their statements on a computer provided by the employer.
  • The Department will prepare a sample wage statement showing the types of entries which may be necessary, but has not said when it will do so.

 Retaliation

  • Employees are protected from retaliation if they complain to their employer, the Department, or the Attorney General about a possible labor law violation.
  • If employees believe in good faith that "there is a problem in the workplace, their activities are protected," even if the employer has not actually violated the labor law.
  • Even threatening an employee can be considered retaliation. This makes it essential that employers educate supervisors about the Act, and the retaliation provisions in particular.

Remember - the Wage Theft Prevention Act is effective this Saturday, April 9.
 

The 10 Most Pressing Employment Law Issues in 2011 - and What To Do About Them

March 3, 2011

By John M. Bagyi

As challenging as 2010 was, 2011 promises to be even more challenging for employers trying to remain in compliance in an ever-changing legal and regulatory environment. While coming into full compliance may seem daunting, addressing the ten concerns discussed below will be a meaningful step in that direction.

1.  Meal Periods. New York State requires employers to provide employees who work shifts in excess of six hours a meal period of not less than 30 minutes. Penalties for noncompliance start at $1,000 per offense and increase with each offense. In addition, if an employer automatically deducts meal periods from working time and such deductions do not accurately reflect the meal periods taken, the employer may not be paying employees for all time worked – resulting in far greater legal exposure.

What To Do: Employers should develop and enforce a meal period policy, requiring employees to take their meal periods (which cannot be waived). Employers should also require employees to leave their work area and prohibit employees from performing any work during meal periods. If employees’ meal periods are frequently interrupted, they should be paid for the entire meal period. Employers should also maintain accurate records demonstrating that they are complying with meal period obligations. Employers who automatically deduct for meal periods should have a policy notifying employees of this practice, a mechanism for employees to report when they have worked during a meal period, and should require employees and their supervisors to certify the accuracy of time records. Employers should also train supervisors on the legal obligations associated with meal periods.
 

2.  Exempt Status. With Fair Labor Standards Act litigation outpacing discrimination suits, and New York’s recently enacted Wage Theft Prevention Act taking effect in April 2011, overtime compliance is essential.

What To Do: Before classifying a position as exempt, employers must insure the duties test, salary basis test and salary level test are satisfied. Because many employers give little thought to exempt classifications, employers should review all positions currently classified as exempt and insure these tests are satisfied. If an employer discovers it has misclassified a position as exempt, legal counsel should be sought.

3.  Other Wage and Hour Concerns. Employers must also be mindful of limits on deductions from wages (e.g., overpayment of wages, debts to the employer), the need to pay nonexempt employees for all hours worked, including those worked remotely (e.g., via Blackberry or other mobile device), and the proper way to calculate regular rate of pay for overtime purposes.

What To Do: Employers should review their wage and hour practices and work with legal counsel to develop appropriate guidance on each of these subjects.

4.  Misclassification of Workers. The United States Department of Labor has identified combating employee misclassification as a priority in 2011 and with a recent study finding 1 in 10 private sector New York employers having not properly classified workers, the potential exposure is clear. Misclassification of an employee as an independent contractor carries with it a broad range of liability, including: unemployment insurance, workers’ compensation, social security, tax withholding, temporary disability, and minimum wage and overtime.

What To Do: Employers should review their relationship with any worker identified as an independent contractor. In doing so, particular attention should be paid to whether the individual is in the business of providing these services, the duties performed, the control exercised over the work performed, the method of payment, and how payments are reported. These relationships should be memorialized in a written agreement (while understanding that labeling an individual an independent contractor does not end the analysis) that has been reviewed by counsel and accurately reflects the relationship between the parties.

5.  Reasonable Accommodations/Leaves. With the recently adopted Americans with Disabilities Act Amendment Act (ADAAA) and employers still working toward complying with the last round of regulatory changes to the Family Medical Leave Act (FMLA), reasonable accommodations and leaves will remain a focal point in 2011.

What To Do: Covered employers should review their FMLA policy and forms and, if necessary, update them. Employers should also adopt a policy detailing the reasonable accommodation obligation and the procedure for requesting accommodation, and insure supervisors can identify accommodation requests. Finally, employers must be aware that an employee requiring leave for a medical condition may not be limited to the 12-week FMLA entitlement given the availability of leave as a reasonable accommodation under the ADA and New York Human Rights Law.

6.  Caregiver Discrimination. As women now outnumber men in the U.S. workforce and mothers of young children are twice as likely to be employed as their counterparts 30 years ago, caregiver discrimination has gained greater attention and, in 2010, was described as an issue that would be “front and center” for the EEOC.

What To Do: Employers should educate supervisory personnel on what constitutes caregiver discrimination and insure those involved in the hiring process know what can and cannot be asked about caregiving responsibilities. In addition, parental/caregiving leave policies should be reviewed to ensure they do not discriminate on the basis of gender.

7.  Harassment. While harassment has been a long standing concern for employers, recent statistics demonstrate that workplace harassment is evolving - with more than 50% of harassment claims based on a protected status other than gender (e.g., disability, race, national origin) and sexual harassment charges filed by men increasing significantly.

What To Do: Employers should review their harassment policy to ensure it covers to all forms of harassment, describes/provides examples of what constitutes harassment, references conduct outside the work environment (including on social media), provides multiple avenues of complaint (directing victim to someone other than the harasser), presents an overview of the complaint procedure, and insures that the parties will be notified of the outcome of investigations. Employers should also train all those identified as avenues of complaint, as well as supervisors and managers, and should consider training all personnel.

8.  Retaliation. With EEOC charges alleging retaliation increasing 45% from 2006 to 2009 and retaliation now tied with race as the most common form of discrimination alleged, concerns related to retaliation are self-evident.

What To Do: Employers should develop or review their policy on retaliation and insure it accurately reflects recent legal developments and provides a complaint mechanism. Employers should educate supervisors on what constitutes retaliation and, when a complaint of harassment or discrimination or other violation of law is received, employers should address retaliation concerns with the source of the complaint, the person about whom the complaint was made, and any witnesses. Employers should also show sensitivity to the timing of adverse actions in relation to employee complaints and involve human resources and/or legal counsel in decisions impacting employees who recently engaged in protected activity.

9.  Employee Relations. While the Employee Free Choice Act (“EFCA”) appears to be dead, the underlying goal of EFCA – to increase unionization of the private sector workforce - will be advanced through National Labor Relations Board decisions and regulatory action. These potential changes -- commonly referred to as “EFCA 2.0” -- include narrowing the National Labor Relation Act’s definition of supervisor, expanding the protection of employee use of employer provided e-mail to solicit support for unionization, accelerating the speed of union elections, expand union access to employer property, and banning “captive audience” employee meetings.

What To Do: Given the likelihood at least some of these changes will be implemented, employers should pro-actively take steps to assess and, if necessary, improve employee relations. Employers should confirm that their supervisors satisfy the NLRA’s definition of supervisor (and are therefore excluded from NLRA protection and cannot unionize), educate supervisory personnel on the importance of open communication and positive employee relations and give supervisors the tools to succeed in this area. Employers should also take steps to address employee concerns that might otherwise lead to widespread employee dissatisfaction.

10.  Technology-Related Issues. With technology evolving at an unprecedented pace and social media use expanding rapidly, technology-related concerns are vast and problematic. While not every technology-related concern can be anticipated, let alone avoided, there are common sense steps employers can take to limit potential exposure.

What To Do: Employers should adopt, and distribute a policy concerning the use of the employer’s technological resources, and obtain employee consent to accessing, intercepting and monitoring of their use thereof. Employers should also adopting a policy addressing social media use, both at and outside work, and ensure that social media concerns are addressed in other non-technology policies (e.g., workplace harassment, references). Finally, employers should determine if and how they will use social media in the hiring process and put policies and procedures in place to ensure hiring managers do not inadvertently gain access to applicants’ protected status (e.g. age, national origin) in the process.

A version of this post was previously published in the Saratoga Business Journal.

New York Labor Law Section 195 Requirements, Effective April 9, 2011

February 24, 2011

By Subhash Viswanathan

We have posted previously on the amendments to New York Labor Law Section 195, the so-called Wage Theft Prevention Act, which creates certain employer obligations to notify employees of their wage rates and other information. As the April 9, effective date approaches, employers should be preparing to provide the following notifications and information.

Notification at Time of Hire

Whenever a new employee is hired, Section 195 now requires employers to provide the following information to each new hire before the new hire begins work:

  • Rate or rates of pay
  • Basis of pay (e.g. hourly, shift, day, week, salary, piece, commission, or other)
  • Allowances, if any, claimed against the minimum wage (e.g., tips, meals, lodging)
  • Identification of the regular pay day.
  • Name of employer (including any doing business as name)
  • Address and phone of employer
     

Acknowledgement of Receipt by Employee

In addition, the statute requires employers to obtain an employee acknowledgement of receipt of the information. That acknowledgement must be in English and the employee’s primary language. The acknowledgement must include an affirmation by the employee that the employee accurately identified to the employer his/her primary language, and that the notice was in the language so identified. In order to comply with this requirement, the employer will have to ask each employee what his/her primary language is before the notice is provided. Due to non-discrimination concerns, employers should not obtain this information before an offer of employment is made.

Commissioner’s Templates

The statute requires the Commissioner of Labor to prepare dual language templates for the notice and acknowledgement. The statute does not state that employers must use them, but if they do, they will not have any liability for mistakes made in the primary language. As of this date, the templates are not available.

Electronic Notices

According to a 2010 New York Department of Labor opinion letter on the pre-amendment Section 195, notice and acknowledgement may be electronic if:

  1. the employee can access a computer and print a copy of the notice at any time and at no cost;
  2. affirmative steps are required by the employee to acknowledge receipt of the notice (i.e., an employer cannot rely on passive receipt of an e-mail); and
  3. the acknowledgement includes statements ensuring that the employee has received and reviewed the notice and that the employee is aware that his/her actions have legally significant consequences.

Annual Notices

The statute also requires employers to provide notices to all employees on or before February 1 of each subsequent year of employment. The annual notice content and acknowledgement requirements are identical to the requirements for a new hire notice.

Wage Statement Requirements

The amendments to Section 195 also mandate the inclusion of certain information in all employee wage statements. Nothing in the statute prohibits an electronic statement. There are no acknowledgement or primary language requirements.

For all employees the following information is required with every payment of wages

  • Name of employee
  • Name of employer
  • Employer’s address and phone
  • Rate or rates of pay
  • Basis of rate of pay (hourly, shift, day, week, salary, piece, commission or other)
  • Gross wages
  • Deductions
  • Allowances, if any are claimed as part of the minimum wage (tips, meals, lodging)
  • Net wages

For non-exempt employees, the following additional information must be provided.

  • Regular hourly rate or rates
  • Overtime rate or rates
  • Number of regular hours worked
  • Number of overtime hours worked

Notification of Changes

Finally, whenever any of the information provided in either the new hire notice or the annual notice is changed, the employer must notify the employee in writing at least 7 calendar days before the change. This notification is not necessary if the changed information is reflected in the employee wage statement described above. Nothing in the statute prohibits electronic notification of changes, and there is no primary language requirement.
 

Effective Date of Wage Theft Prevention Act is April 9

February 7, 2011

By Subhash Viswanathan

On December 15, 2010, we reported that former New York Governor David Patterson signed the Wage Theft Prevention Act (the “Act”) into law on December 13, 2010. Because the Act states that it shall take effect 120 days after it is signed into law, we reported the effective date as Tuesday, April 12, 2011. However, it appears that Governor Patterson signed the Act twice – first on December 10, 2010 and then again during a public ceremony on December 13. Because the Act was first signed into law on December 10, 2010, the effective date is actually Saturday, April 9, 2011. As a result, employers must implement the Act’s new notice, employee acknowledgment and record retention requirements by April 9, 2011. Because implementation may require significant changes in current policies and procedures, employers should begin a review of payroll and wage notification practices now.

Department of Labor Implements Hospitality Industry Wage Order

January 19, 2011

By Subhash Viswanathan

The New York State Department of Labor’s Hospitality Industry Wage Order, which is intended to combine and replace the Wage Orders formerly applicable to the Restaurant Industry and Hotel Industry, became effective on January 1, 2011. The Department of Labor has issued a notice to employers that it will exercise discretion with regard to enforcement until February 28, 2011, in order to allow employers sufficient time to come into compliance, but expects that employees covered by the Wage Order will be paid any additional wages owed to them by March 1, 2011 or the next regularly scheduled pay day after March 1, 2011. The additional wages must be computed retroactively to January 1, 2011. Employers covered by the Wage Order are required to post a notice to employees regarding the implementation period and their right to retroactive payment of wages.

The Wage Order makes several changes to the rules governing the payment of wages to employees in restaurants and hotels. Some of the significant changes are described below.
 

Tip Credit

Under the former Restaurant Industry Wage Order, employers were required to pay food service workers at least $4.65 per hour, as long as the tips received by those workers added to their hourly wages equaled or exceeded the minimum wage of $7.25 per hour. Under the new Hospitality Industry Wage Order, food service workers must receive an hourly wage of at least $5.00 per hour, as long as the amount of their tips added to their hourly wages is sufficient to equal or exceed the minimum wage. Service employees who do not work in resort hotels must be paid at least $5.65 per hour (up from a minimum of $4.90), as long as the amount of their tips added to their hourly wages is sufficient to equal or exceed the minimum wage. In resort hotels, service employees may be paid a minimum of $4.90 per hour (up from $4.35) as long as the weekly average of their tips is at least $4.10 per hour.

In order to pay the reduced minimum wage to a tipped employee, employers must notify the employee of any tip credit that will be taken as part of its new hire notice. If any changes are made to the employee’s hourly wage, a new notice must be provided containing the same information.

If a tipped employee works in a non-tipped occupation for two hours or more in a day, or for more than 20% of his or her shift during a day, the employer is not entitled to take any tip credit for any hours worked during the day, and must pay at least the full minimum wage of $7.25 per hour for all hours worked.

Tip Pooling and Tip Sharing

Employers covered by the Wage Order may require directly tipped food service workers to share their tips with other food service workers who participated in providing the service to customers and may set the percentage to be given to each occupation. Employers may also require food service workers to participate in a tip pooling arrangement. Only certain types of employees are eligible to receive shared tips or distributions from a tip pool. Those occupations include: (1) wait staff; (2) counter personnel who serve food and beverages; (3) bus persons; (4) bartenders; (5) service bartenders; (6) barbacks; (7) food runners; (8) captains who provide direct food service to customers; and (9) hosts who greet and seat guests. Employers are required to keep detailed records relating to tip sharing or tip pooling arrangements for at least six years.

Call-In Pay

The Wage Order provides that an employee who reports for duty by request or permission of the employer must be paid at his or her “applicable wage rate” for at least three hours if called in for one shift, six hours if called in for two shifts, or eight hours if called in for three shifts. The phrase “applicable wage rate” is defined as the employee’s regular or overtime rate of pay, whichever is applicable, minus any customary and usual tip credit. This is a change from the former Wage Orders, which required payment at the “applicable minimum wage rate.”

Spread of Hours

Under the Wage Order, any employee whose spread of hours from the beginning to the end of the work day exceeds ten is entitled to an additional hour of pay at the basic minimum hourly wage rate, regardless of the employee’s regular rate of pay. Therefore, employers are no longer permitted to a take a credit toward this spread of hours payment for wages paid to an employee in excess of the minimum wage for the other hours worked in the day.

Uniforms

The uniform maintenance allowance amounts remain the same under the Wage Order, but two exceptions have been created. First, under the “wash and wear” exception, an employer is not required to provide any uniform maintenance allowance if the uniforms: (1) are made of “wash and wear” materials; (2) can be washed and dried with other garments; (3) do not require ironing, dry cleaning, daily washing, commercial laundering, or other special treatment; and (4) are furnished in sufficient number consistent with the average number of days per week worked by the employee. Second, an employer is not required to provide any uniform maintenance allowance if it informs the employee in writing that it will launder the uniforms free of charge and the employee chooses not to use the employer’s laundry service.

Meal Credit

The amount of credit that an employer in the hospitality industry may take for providing an employee with a meal has been increased from $2.10 to $2.50 per meal.