Nov 14, 2023

New York Wage Theft Claims: New Developments

Labor Law written on a blank page of a book.

New York Governor Kathy Hochul recently signed legislation (S.B. 5572) that, effective March 13, 2024, will change the salary threshold governing various exemptions under Article 6 of the New York Labor Law (“NYLL”). For reference, Article 6 generally regulates how frequently and the method by which employees must be paid.  Employers who violate provisions of Article 6 regulations have committed “wage theft” and claims for wage theft include unpaid wages, illegal deductions, unpaid wage supplements, minimum wage and overtime pay.

Effective March 13, 2024, any employee making less than $1,300 a week (including any employee working in an executive, administrative or professional capacity previously exempt from Article 6) may bring wage theft claims in court or before the New York Department of Labor. Before this legislation, only non-exempt employees who made $900 a week or less could bring wage theft claims. In addition to expanding the protections of Article 6 to even more employees, the new legislation also requires that employers obtain employee consent before paying certain workers making below $1,300/week through direct deposit.

The expansion of the protections under Article 6 will increase potential liability for employers. The penalties for being found liable for wage theft range from $500 to $20,000 per offense, plus plaintiffs’ attorneys’ fees.

Notably, Governor Hochul also recently signed (S.B. S2832A), the Wage Theft Accountability Act, which amends the penal law to include “wage theft” in the definition of larceny. This turns wage theft into a felony offense that creates criminal liability for nonpayment or underpayment of wages.

These bills are indicative of a trend in New York to create even more protection for employees and their wages.

Before March 13, 2024, employers should (i) work their human resources department to obtain written consent for direct deposit payments for the employees who are impacted by the new consent requirements and (ii) evaluate the company’s workforce and assess whether it has increased exposure for potential wage theft claims given the expansion of employees who will now be covered by Article 6.

If you have any questions regarding the issues raised in this client alert, please contact your Labor and Employment counsel at Smith, Gambrell & Russell, LLP.

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