• New Law Regarding Rates of Pay in New York: A New Obligation for New York Employers and a Message for Employers Everywhere
  • September 24, 2009 | Authors: Norman A. Jenkins; Evan H. Pontz
  • Law Firms: Troutman Sanders LLP - New York Office ; Troutman Sanders LLP - Atlanta Office
  • New York State has enacted a new law requiring that employers provide newly hired employees with specific written notification regarding their pay.  If your Company employs people in New York, you need to understand this new law.  But even if you have no employees in New York, this new law should prompt you to consider important issues regarding how you are paying and classifying your employees in other states.

    Under a bill recently signed into law by New York Governor Paterson, New York employers must provide employees hired on or after October 26, 2009 with written notification of (i) their rate of pay, (ii) the employer's regular pay date and, for non-exempt employees, (iii) their regular hourly rate and overtime rate of pay as well.  Employers are also required to obtain a written acknowledgement from employees confirming receipt of this information.  The law provides that the acknowledgement must comply with any requirements established by the Commissioner of Labor, but the Commissioner has not yet promulgated any requirements.

    The purpose of the new law’s requirements is to make sure that non-exempt employees understand their overtime rate of pay, especially where the employees are paid a weekly salary, making it difficult for them to discern what the overtime rate should be.  As always, employers should make sure that employees are properly classified for purposes of overtime, are being paid overtime when appropriate, and that all hours worked are accurately tracked.

    While no specific penalty is tied to the acknowledgement requirement, New York Labor Law contains a general penalties provision stating that a violation of the Labor Law may result in a misdemeanor and small fine.  Violation of the written notice requirement may also have evidentiary consequences in cases where employees claim that their employer has failed to pay wages or overtime hours as required.  Pending the issuance of guidance by the Commissioner of Labor, employers should integrate into their new hire materials a simple form containing the pertinent information that should be signed by employees hired on or after October 26, 2009.

    For New York employers, this new law provides another compliance requirement at the hiring stage.  But even for employers without operations or employees in New York, this law serves as a timely reminder of how important it is to pay employees as required, particularly paying non-exempt employees overtime when required under federal or state law.  Lawsuits for not paying wages for hours worked or for not paying overtime wages at time-and-a-half the employee’s regular hourly rate have exploded over the past few years, and there is no end in sight for these claims.  These claims are expensive and time-consuming, yet they can often be avoided with proper legal compliance and recordkeeping.  Likewise, this law also emanates from the effort of many states (and the federal government) to crack down on employers that improperly classify employees as exempt under state and federal wage laws (such as the Fair Labor Standards Act) in order to avoid paying overtime.  Further, this new law should also remind all employers that the states they operate in may now have laws, or may in the future pass new legislation, that affects employees working in those states.  For employers with employees in many states, they need to keep on top of the varying legal responsibilities from state to state.