Keywords: wage theft prevention, wage-payment statutes, requirements, California, New York
US states have long had wage-payment statutes on their books that establish the frequency and method by which private employers must pay wages due to their employees.1 Such statutes typically require employers to pay wages and tips accruing to the employee on a regular payday, which generally occurs daily, weekly, bi-weekly, semi-monthly or monthly. Payment may include cash, check, direct deposit to the employee's bank account or another method, subject to authorized deductions and legal withholdings.
While such state wage-payment requirements are not new, a series of state laws known as "wage theft" statutes have recently become a hot topic in state legislatures and city governments around the country as many jurisdictions have recently moved to tighten up existing laws, give workers and government agencies new tools and strengthen public and private enforcement. The term "wage theft" is broadly used to describe violations of wage-payment laws. These statutes do not change the basic requirements that employers must pay wages in a timely manner and through a proper method; instead, these statutes contain notice or written-disclosure provisions requiring employers at designated times to provide employees with specific details about the frequency, calculation and method of their wage payments. These changes can mean new recordkeeping and disclosure requirements for employers as well as enhanced civil and even criminal liability for employers that are found guilty of infringements.
The first half of 2013 has seen developments to wage theft laws at the state and local level. This Legal Update outlines some of the recent history in this fast-changing area. Employers should be aware of these developments and ensure that they continue to comply with all applicable state and local laws.
The New York and California Wage Theft Prevention Acts
Two significant laws in California and New York exemplify these developments. On January 1, 2012, California's Wage Theft Prevention Act went into effect. It requires most employers to provide new employees with a written notice at the time of hire describing various wage information. This law followed closely on the heels of similar legislation in New York, whose own Wage Theft Prevention Act became effective on April 9, 2011. In both states, the notices must contain for the most part the same information, as summarized in the table below:
|Rate or rates of pay (including overtime)||✓||✓|
|How the employee is paid (e.g., by the hour, shift, day, etc.)||✓||✓|
|Employee's regular payday||✓||✓|
|Official name of the employer and any other names used for business||✓||✓|
|Any allowances taken as part of the minimum wage||✓||✓|
|Employer's principal address and phone number||✓||✓|
|Information about workers' compensation insurance carrier||✓|
|Frequency||At time of hire and annually thereafter (by February 1)||At time of hire and within seven days of any changes to the information set forth|
|Language||English & the employee's primary language||Whatever language the employer normally uses to communicate employment-related information to the employee|
Employers that fail to make these disclosures may be liable for penalties of up to $50 per employee per week in New York, and $100 per employee per pay period in California. (Civil penalties in California may rise to $200 per employee per pay period for subsequent violations.) Although these statutes have not yet generated significant litigation, employers should remain alert to the potential for individual and class-action claims made under these statutes along with other wage-and-hour violation claims.
With this new legislation, California and New York join about a dozen other states—including Connecticut, Delaware, Illinois, Maryland, North Carolina and Utah—that currently require employers to disclose wage rates, hours worked, deductions and the like at the time of hire. Many states also require employers to provide pay stubs or similar documents each pay period.4
Wage Theft Prevention Developments In 2013
Wage theft has continued to be addressed in state capitals in 2013, although no new measures have been signed into law. Among the bills that have been considered so far this year are:
- HB 2004 in Arkansas, which would combat wage theft after termination of employment and require employers to provide regular pay stubs;
- HB 13-1227 in Colorado, which would make "knowing" wage theft a criminal misdemeanor or, if the amount is greater than $1,000, a felony;
- HF 38 in Iowa, which would require time-of-hire wage notice and regular paystubs, and combat retaliation; and
- LB 560 in Nebraska, which would combat retaliation and make wage theft a criminal misdemeanor.
Additionally, on the local level, in January 2013 the City of Chicago passed Ordinance 2012-8533, which permits the commissioner of business affairs to deny or revoke a business's license if it admitted guilt or was found liable for wage violations within the past five years. The Chicago ordinance took effect on July 1, 2013.
Employers should review their policies and procedures for hiring new workers, classifying existing ones, and paying regular wages to make sure that they are complying with all wage laws, old and new. They should also keep a close watch on any new activity in this area in case the requirements change yet again.
Originally published September 9, 2013
1 For a summary of state wage-payment laws, see Payment of Wages/Direct Deposit Law,Soc'y for Human Res. Managers (June 2013).
2 For the full requirements, see Notice of Pay Rate—New York Dep't of Labor, NY.gov.
3 For the full requirements, see Wage Theft Protection Act of 2011—Notice to Employees, CA.gov.
4 The New York and California laws also ushered in other important changes in addition to notice requirements. For example, New York now gives employees who make wage theft claims stronger protections against retaliation, codifies recordkeeping requirements and raises the amount of damages and penalties the New York State Department of Labor may seek when an employer fails to pay wages. The California Wage Theft Prevention Act makes it a misdemeanor to willfully fail to pay wages after a court judgment or administrative order, expands the statute of limitations for wage-related violations to three years and allows employees to recover attorneys' fees and costs to enforce a judgment for unpaid wages. Along these same lines, Illinois recently made wage theft a criminal misdemeanor and authorized employees to bring civil suits for retaliation in addition to filing a claim with the Illinois Department of Labor.
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