New Protections for Paychecks: The Wage Theft Prevention Act

March 17, 2011

Author: Peter Dellinger

Combating Wage Fraud in Agriculture

When the federal  Agricultural Worker Protection Act (AWPA), 28 U.S.C. §1801 et seq., was signed into law by President Reagan in 1983, farmworkers finally obtained several very basic and essential workplace rights. Congress recognized that migrant farmworkers were the most economically exploited group of workers in the nation, in large part caused by unscrupulous  employers who routinely cheated them out of earned wages. 

To remedy some of the worst swindling and exploitive employer practices, the Act requires:

• employers to disclose in writing the terms and conditions of pay in the language spoken by the workers;
• mandates that all farmworkers be paid their wages “when due”, and;
• requires employers to give each worker an itemized paystub describing all deductions.

Under AWPA, farmworkers also obtained a federally protected right to not be fired or retaliated against if they asserted their rights under the statute. 

Most importantly, AWPA includes a private cause of action permitting farmworkers to sue for actual or statutory damages against any employer who violates these federally protected employment rights.  When AWPA statutory protections were applied through forceful legal services advocacy, farm labor employment conditions began to improve throughout the country.  

Wage Fraud Moves to the City

Ironically, for the next 28 years following the passage of AWPA, farmworkers were the only employees in New York State who could protect themselves from these forms of employer fraud.  Meanwhile, wage cheating and swindling moved to other industries and businesses.  According to a recent study by the National Employment Law Project (NELP), “wage theft” now occur with alarming frequency to 300,000 employees in New York City who work in retail restaurants, grocery stores and drug stores, dry cleaning, industrial laundries, car washes, car repair shops, parking lots, beauty and nail salons, construction, janitorial and security guard services, and who provide home health care, child care, and domestic work.  Some of these employees are now being paid less than minimum wages, while others are being paid less than their agreed upon wages.  Substantial numbers of other employees are frequently owed overtime pay, and other employees receive no  information on their rate of pay, deductions, or benefits.  Another segment of employees are   subjected to illegal deductions from their wages. NELP estimates that as a result of employer wage fraud and theft, these workers are cheated out of $18.4 million in wages every week, totaling $1 billion annually.

New York Wage Theft Prevention Act

Fortunately, this is about to change. On April 12, 2011 the newly enacted “Wage Theft Prevention Act” (WTPA) goes into effect, which will require private employers in New York State to provide many of the same wage payment and disclosure protections to their employees that are now required in agriculture.  Some of the highlights of the WTPA include:

• required employer disclosure of basic wage information;
• mandatory issuance of employee paystubs;
• an anti-relation provision protecting employees asserting their rights to be paid accurately and fairly and;
• increased employer damages for failure to pay wages. 

Significantly, the WTPA contains a private cause of action which permits employees to sue for damages and recover attorneys fees from employers for violations of the statute. 

Required Wage Disclosure Information

WTPA requires each employer to disclose in writing to every employee certain important information:

1. the employee’s rate or rates of pay (including the overtime rate of pay for non-exempt employees), and the basis of pay;
2. whether the employee will be paid by the hour, shift, day, week, salary, piece, commission or otherwise;
3. whether the employer will claim any allowances as part of the minimum wage (e.g., tip, meal or lodging allowances); and
4. the employer’s regular pay day.

Employers must provide each employee with this written information at the time of hiring, and again to each employee by February 1 in each subsequent year of employment.  To help insure that this information is adequately disclosed to non-English speaking workers, employers are required to provide this information in English, as well as in the language identified by the employee as his/her primary language.

Under the WTPA, if an employer fails to provide an employee with this information within ten business days of the employee’s first day of work, the employee may recover $50 for each work week during which the violation occurred (or continues to occur) up to a maximum of $2,500, together with attorneys’ fees and costs.  For existing employees, the employer may be liable for damages of up to $100 per week and an aggrieved employee may recover up to $2,500, plus attorneys’ fees.

 Required Paystub Information

When employees are paid, WTPA require employers to  provide each worker with a paystub containing important basic wage information:

1. the dates of work covered by that payment of wages;
2. the employee’s rate of pay and the basis for the rates;
3. whether the employee is being paid by the hour, shift, day, week, salary, piece, commission or otherwise;
4. deductions and allowances, if any, that the employer claimed as part of the minimum wage;
5. the employee’s gross wages; and
6. the employee’s net wages.

Moreover, for those employees who are covered by overtime, the statements must also include the employee’s overtime pay rate and the number of regular and overtime hours that the employee worked.

If an employer fails to comply with these paystub disclosure requirements, WTPA permits an aggrieved employee to recover $100 for each work week during which the violations occurred or continues to occur, up to a maximum of $2,500, together with attorneys’ fees and costs.

Expanded Anti-Retaliation Protections

WTPA expands the existing New York anti-relation protections for employees by amending Labor Law §215 to create a more satisfactory remedy.  Under this new law, employees are now protected from retaliation when making any complaint to “any person” (including their employer) “that the employer has engaged in conduct that the employee, reasonably and in good faith, believes violates any provision of this chapter...”  Further, an employee complaint “need not make explicit reference to any section or provision of this chapter to trigger the protections of this section”.

An employee has a private cause of action against his/her employer for violations of the anti-retaliation provisions, and aggrieved employees may now be entitled to reinstatement, back pay and front pay, attorneys fees and costs. An aggrieved employee may also recover up to $10,000 in liquidated damages.

Increase in State Wage Law Liquidated Damages

For many years under New York law, liquidated damages for failing to properly pay wages were limited to 25 percent of wages due. In contrast, the federal Fair Labor Standards Act (FLSA), 29 U.S.C. §216(b) provides that employees who are owed minimum wages or overtime are entitled to “an equal amount in liquidated damages”, unless the employer acted in good faith, 29 U.S.C. §260.

The new state wage law increases the amount of liquidated damages to align with federal wage and hour liquidated damages law, and also provides a new potent remedy for underpaid employees.  Under the WTPA, the potential liquidated damages is increased to 100 percent of wages due, unless the employer is able to show that it had a “good faith basis” that the method of payment was lawful.  Unlike FLSA, which protects only the right to be paid for hourly work at the minimum wage rate, and when applicable, unpaid overtime pay, New York State Labor Law protects an employee’s right to be paid “wages” above or below the minimum wage rate and to recover any “underpayment of wages”. N.Y. Labor Law § 198(1-a). By providing employees with the statutory right to recover double the amount of wages owed to them, employers will have a powerful incentive to timely, accurately and fairly comply with their wage payment obligations.

For additional information please contact Peter Dellinger, pdellinger@empirejustice.org.