Recent Changes to New York Labor Laws Regarding Written Notice and Acknowledgment Requirements and Penalties for Wage and Hour Violations

Employers should be aware of the following changes to the New York Labor Law as a result of recent state legislation. Failure to comply with these requirements will put employers at a distinct disadvantage in any dispute over employment terms.

1. New Written Notice And Acknowledgment Requirements For Employees Hired On Or After October 26, 2009

New York Labor Law § 195 now requires New York employers to obtain written acknowledgement from employees hired on or after October 26, 2009 that they have received written notice of their: (1) rate of pay; (2) regular payday; and (3) for non-exempt employees, their overtime rate. The law previously required notice of pay rate and pay day. The written acknowledgement requirement and the notice of the overtime rate were added by amendment. While the new law requires that the written acknowledgment conform to standards set by the Commissioner of Labor, the Commissioner has yet to issue regulations or a model form. Note that these added requirements only apply to employees hired on or after October 26, 2009.

Many employers already use offer letters that comply with these new requirements. Employers who are revising existing forms or creating new ones should be careful that they do not include language that alters the at-will employment relationship. Indeed in most cases it will be best to include in the form an acknowledgment by the employee that he or she is employed at-will. This caution applies equally to a second notice and acknowledgment requirement described below in number 2.

2. Commission Plans: Written Notice And Acknowledgment Required

Remember that New York Labor Law § 191(c)(3) now requires employers to reduce to a writing signed by both the employer and the employee the "agreed terms of employment" with their commissioned salespersons. (This requirement became effective October 16, 2007.) A "commissioned salesperson" is defined as "any employee whose principal activity is the selling of any goods, wares, merchandise, services, real estate, securities, insurance, or any article or thing and whose earnings are based in whole or in part on commissions." N.Y. Lab. Law § 190(6). Excluded from this definition are employees "whose principal activity is of a supervisory, managerial, executive, or administrative nature." The required writing must include, "a description of how wages, salary, drawing account, commissions, and all other monies earned and payable [are] calculated." If the employment arrangement provides for a recoverable draw, the writing must also set forth the frequency of reconciliation. The writing must also set forth details regarding payments of earned amounts when the salesperson's employment is terminated.

3. Enhanced and Clarified Penalty Provisions For Wage & Hour Violations

Governor Paterson has also signed legislation that clarifies and enhances the penalty provisions in the New York Labor Law for violations occurring on or after November 24, 2009. The new legislation: (1) clarifies that the law provides for liability for partnerships and limited liability companies in addition to corporations (see N.Y. Lab. Law § 215); (2) increases the civil penalties for retaliation against employees who invoke their rights under the Labor Law to a minimum of $1,000 and a maximum of $10,000 (in addition to actual damages)(see N.Y. Lab. Law § 215); and (3) shifts a key burden of proof to the employer. In order to avoid payment of liquidated damages of an additional 25% of the amount of the employee's unpaid wages, the employer must prove it had a good faith basis for believing that the underpayment of wages was in compliance with the labor laws. (See N.Y. Lab. Law §§ 198(1-a) and 663.)