Labor & Employment N.Y. ("LENY")

            2012 is the first year that private-sector New York employers must provide the annual written pay notice required by the Wage Theft Prevention Act.  Although the initial passage of the Wage Theft Prevention Act over a year ago garnered significant attention, it is worth reiterating now that the February 1 deadline for provision of the annual notice is rapidly approaching and employers should use the remaining time to ensure compliance with the new notice obligations.

            On December 14, 2010, then-Governor David Paterson signed the Wage Theft Prevention Act, S. 8380/ A. 11726 (the "Act"), into law in New York State, which amended Section 195 of the New York Labor Law.  Joining a growing number of states with similar wage theft legislation, the Act sought to address classification of employees and payment of statutorily-mandated minimum wages and overtime, and included enhanced civil and criminal penalties for non-compliance.  In effect since April 9, 2011, the requirements applies to all private-sector employers in New York.

            Under the Act, every employee, whether full or part-time, whether covered by a union contract or not, and regardless of exempt status, must receive a written pay notice between January 1 and February 1 of each year, including the following information:

• the employee's rate of pay, including overtime rate of pay, if non-exempt;
• the basis of the wage payment (e.g., by  the  hour, shift, day, week, salary, piece, commission, or other); 
• the regular payday;
• the allowances taken as part of the minimum wage (e.g., tip, meal and lodging deductions); 
• the employer's official name and any other "doing business as" names; and 
• the address and phone number of the employer's main office or principal location, and mailing address if different. 

2012 is the first year that employers must provide the annual written pay notice, which applies even if none of the information has changed from the prior year.          

            Under the Act, the notice must be provided in English and in the employee's primary language if the New York Department of Labor ("NY DOL") offers a translation.  Currently, the NY DOL offers dual language translations in Chinese, Haitian Creole, Korean, Polish, Russian, and Spanish, all of which are available here.  Employers with seasonal employees on layoff between January 1 and February 1 must furnish the notice as soon as the employees return from layoff.  The notice may be distributed electronically, but only if employees' receipt of the notice and acknowledgment is verifiable and if the employee is able to print a copy for their records. 

            In addition, the Act requires employers to obtain a signed and dated acknowledgment of the notice from each employee.  Employers must retain copies of the notice and accompanying acknowledgment for six years, and provide them to the NY DOL upon request.  If an employee refuses to acknowledge the notice, an employer should still give the notice and note the refusal on its retained copy.  Moreover, an employee cannot waive the written notice requirement.  The NY DOL can assess penalties of $50 per week per employee if a proper written notice is not provided, and employees can sue for not receiving a proper written notice with damages capped at $2,500 per employee. 

            With the February 1, 2012 deadline rapidly approaching, employers should take any remaining steps necessary for to meet the annual notice requirements.  The NY DOL provides web-based, printable model templates for employers seeking guidance, which are available here.  The Act does not require the use of these particular forms, and employers may develop their own forms so long as all the information legally required is included.  The NY DOL has also published a Fact Sheet on the Act, available here, and a set of FAQs, available here.

            This post was authored by Matt Lampe, Joseph Bernasky, and Jenny Ma of Jones Day.  The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of Jones Day or the New York State Bar Association.

On February 29, 2012, the New York State Senate passed Bill S60631-2011, which would eliminate the annual notice requirement under the New York State Wage Theft Prevention Act, which we discussed in a prior post.  The Bill does not add text to the Wage Theft Prevention Act, and keeps intact the notice requirements for new hires, but deletes the language regarding the requirement that such notices be provided "on or before February first of each subsequent year of the employee's employment with the employer...." 

The Bill was introduced by Senator DeFrancisco on January 4, 2012.  The Senate Memo summarizing the Bill explains, as its justification, that the annual notice requirement "imposes a new administrative cost on every private sector employer in the state, with aggregate costs in the millions of dollars, and will do little to improve overall compliance with the state's wage laws. The Department of Labor has conceded that wage compliance is an issue for only a small percentage of New York State employers, despite the universal application of this annual notice requirement. This type of annual notification requirement should be reserved for instances where non-compliance has been an issue, however, as an across the board measure, it will add costs and provide little if any additional benefit.  Moreover, this modification to the WPTA leaves in place its most significant reforms intended to assure payment of all wages earned by employees."

Now that the Bill has passed the Senate, it has been delivered to the Assembly, where an identical bill (A08856) is pending, and if passed by the Assembly, will be presented to the Governor for signature.  New York employers should stay tuned for further developments on this Bill. 

This post was authored by Matt Lampe and Joseph Bernasky of Jones Day.  The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of Jones Day or the New York State Bar Association. 

Effective November 6, 2012, amendments to the New York Labor Law Section 193 ("Section 193") authorize a host of new permissible wage deductions from employee paychecks.  Bill A10875-2011 passed the New York State Legislature on June 21, 2012, and was signed into law by Governor Cuomo on September 7, 2012.  Governor Cuomo's "Statement in Support" of the bill noted that employers' inability to make deductions for valuable services provided to employees is "disadvantageous to both employers and employees."  Since 1966, New York employers have been prohibited from making any deductions from employee paychecks, subject to a limited number of exceptions. 

The recent amendments are a welcome change for New York employers, as state courts and the New York Department of Labor ("NYDOL") Opinion Letters have consistently taken a narrow approach to the deductions enumerated in Section 193.  Prior to the new amendments, New York law permitted deductions under only two circumstances: (1) as otherwise authorized by law (e.g., tax withholdings or Medicare contributions); and (2) the narrow, statutorily enumerated deductions in Section 193 (e.g., charitable organizations, labor organization dues, insurance premiums, and retirement contributions).

The newly permissible deductions are numerous and include, but are not limited to, the following: parking passes or mass transit vouchers; gym membership dues; certain purchases made by the employee, such as cafeteria or vending machine purchases at the employer's place of business; tuition, room and board fees; and day care expenses. 

Additionally, the new amendments allow employers to make deductions to recover an overpayment of wages that is due to mathematical or other clerical errors, and to recoup salary or wage advances.  Wage deductions related to overpayments and repayments of wages must comply with additional regulations promulgated by the NYDOL (addressing, e.g., the timing, frequency, duration, method of recovery, heightened notice requirements, and implementation of an employee-dispute system). 

New York employers should carefully review the new law as there are several notice requirements that must be fulfilled prior to making any deductions from employee wages.  For example, employers must provide employees with written notice of the terms and conditions of the payments and benefits, and other relevant details pertaining to how deductions will be taken.  Also, employees must provide their employer with a voluntary, written authorization, which may be freely revoked.  These written authorizations must be kept on the employer's premises throughout the employment relationship, and for an additional six years following conclusion of the relationship.  Employees can also authorize wage deductions through a collective bargaining agreement. 

Notably, if no further legislative action is taken, these amendments to the law will expire on November 6, 2015.  As additional requirements may be promulgated from time to time by the NYDOL, employers should continue to closely monitor the legislation's post-enactment activity.

This post was authored by Matt Lampe, Emilie Hendee, and Michele Bradley of Jones Day.  The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of Jones Day or the New York State Bar Association.

The Eighth Circuit, in Owen vs. Bristol Care, Inc., No. 12-1719 (8th Cir. 1/7/13), held that the plaintiff must arbitrate her Fair Labor Standards Act ("FLSA") overtime claim even though the governing mandatory arbitration agreement ("MAA") contained a waiver of class claims barring her proposed collective action.

Owen, a former administrator with Bristol Care, a nursing home operator, brought her FLSA action in federal district court on behalf of herself and other similarly situated current and former employees alleging that she and other administrators had been deliberately misclassified as "exempt" employees for purposes of FLSA and corresponding state laws. The district court denied Bristol Care's motion to compel arbitration in accordance with the MAA and the Federal Arbitration Act ("FAA"). The court reasoned that although the MAA encompassed Owen's claim, arbitration could not be ordered here because the inclusion of the class waiver in the MAA rendered it invalid. In so concluding, the court noted that the Supreme Court's decision in AT&T Mobility LLC vs. Concepcion, 563 U.S. __, 131 S.Ct. 1740 (2011), upholding a class waiver in a consumer arbitration agreement, was not controlling in the employment context. Citing Chen-Oster vs. Goldman Sachs & Co., 758 F.Supp. 2d 394 (S.D.N.Y. 2011) and D.R. Horton, Inc., 357 NLRB No. 184 (2012), it explained that class waivers are invalid in FLSA cases because the FLSA authorizes the bringing of a class action.

In reversing the district court, the Eighth Circuit instructed that Section 2 of the FAA "requires courts to enforce arbitration agreements according to their terms," absent a "contrary congressional command" in another statute overriding the FAA's mandate. It noted that the burden to make this showing rests with the party challenging the arbitration agreement.

Owen, the Eighth Circuit decided, failed to meet this burden. "Owen identifies nothing in either the text or legislative history of the FLSA that indicates a congressional intent to bar employees from agreeing to arbitrate FLSA claims individually, nor is there an 'inherent conflict' between the FLSA and the FAA. In short, the FLSA contains no 'contrary congressional command' as required to override the FAA."

The Eighth Circuit also highlighted that its conclusion is consistent with the five other courts of appeals that have addressed the issue. See Vilches vs. The Travelers Companies, Inc., 413 F. App'x 487 (3rd Cir. 2011); Caley vs. Gulfstream Aerospace Corp., 428 F.3d 1359 (11th Cir. 2005); Carter vs. Countrywide Credit Industry, Inc., 362 F.3d 294 (5th Cir. 2004); Adkins vs. Labor Ready, Inc., 303 F.3d 496 (4th Cir. 2002); Horentstein vs. Mortgage Market, Inc., 9 F. App'x 618 (9th Cir. 2001).

http://www.ca8.uscourts.gov/opndir/13/01/121719P.pdf