Unpaid wage claims are very common amongst employees in New York. All business owners who have employees are expected to keep up with the constant changes in both federal and state wage and hour laws such as minimum wage, the exempt and nonexempt salary threshold, overtime rules, paid sick leave, time tracking, vacation time, etc.
Below are just some of the most common Wage and Hour violations that could turn into some pretty hefty legal ramifications if not properly handled by employers.
Such “red flags” below show why it is so important for even a small startup company to have an attorney to consult with on all business and employee related matters.
Unpaid Wages and Wage Supplements
Both state and federal law mandate that employers keep complete and accurate records of all non-exempt employees’ hours worked in no particular manner or form. An employee is required to be paid for all hours worked, regardless of whether the employer overlooked or encouraged the employee to work off-the-clock.
Additionally, every employer in New York State is required to notify employees in writing or publicly post the employer’s policy on sick leave, vacation, personal leave, paid holidays, and hours of work. Employees may file claims against their employers for such unpaid wage supplements only if the employer promises (either verbally or in writing) but did not provide the employee with any wage supplements. I previously addressed the issue of whether an employer must pay an employee for unused, accrued vacation time or PTO at the time of termination or resignation here.
Employees can file a complaint with the Department of Labor here or file a lawsuit for unpaid wages under the Fair Labor Standards Act (“FLSA”) if the employee was not paid for all hours worked, if the paycheck bounced, if the employee did not receive all of their tips, or if the rate of pay was lowered without notifying the employee in advance.
Manual Workers Must be Paid Weekly
The New York Labor Law (“NYLL”) essentially defines manual workers as employees who spend at least 25% of their work time performing physical duties. Manual workers must be paid weekly, and failure to pay such employees on a weekly basis tends to be a common error amongst many smaller or startup companies.
Spread of Hours Pay and Service Industry Workers
Under the spread of hours rule, a non-exempt worker in the “hospitality industry,” which includes restaurants, fast food establishments, and hotels, whose workday is longer than ten hours in one day, must receive an extra hour of pay at the basic minimum hourly wage rate.
Tips can be received through cash, check, credit card, and any other form of payment. Tipped hourly employees can be paid a bit differently than other hourly employees in New York State because of the tip credit. Not many states offer a tip credit, so this type of error tends to be a common mistake as well.
What is the Tip Credit in New York State?
If an employee works a job for tips (excluding fast food workers), then the employer may be able to pay the employee less than minimum wage per hour as long as that amount plus tips is at least equal to minimum wage and:
- The employee regularly receives tips as part of the job;
- The employee’s hourly tips and wage add up to at least the normal minimum wage;
- The employer informed the employee that it is paying the employee less than the minimum wage because the employee regularly receives tips; and
- The employer keeps a weekly record of the amount of tips the employee earned each week.
Wage Notice Penalties
Each of the below documents must contain all of the information required under the law. Failure to provide employees with the proper wage documentation as required by law can result in a penalty of up to $5,000 for a notice of pay rate violation and $5,000 for the paystub violation per employee.
This means that employers who follow these simple laws can save up to $10,000 in potential penalties per employee.
Notice of Pay Rate
Employers in New Yok State are required under the Labor Law to provide a written notice of pay rate to each new employee (regardless of pay structure) when hired. According to the Department of Labor, the notice of pay rate must be in writing and include:
- Rate or rates of pay, including overtime rate of pay (if applicable)
- How the employee is paid: by the hour, shift, day, week, commission, etc.
- Regular payday
- Official name of the employer and any other names used for business (DBA)
- Address and phone number of the employer’s main office or principal location
- Allowances taken as part of the minimum wage (tips, meal and lodging deductions)
- The notice must be given both in English and in the employee’s primary language (if the Labor Department offers a translation).
Sample notices are found here for various categories of employees, such as:
- Hourly rate employees
- Multiple Hourly Rate Employees
- Employees paid a weekly rate or a salary for a fixed number of hours (40 or fewer in a week)
- Employees paid salary for varying hours, day rate, piece rate, flat rate or other non-hourly pay
- Exempt employees
- Agricultural employees
Employers are also required to provide employees with a wage statement (“paystub”) with each paycheck. If an employee is paid by direct deposit, then the employer must make a paystub available to the employee. For more information on this issue, see my prior article on payroll compliance issues here.
Overall, it is important to know and understand the industry specific wage and hour laws as well as the different employment and employee benefits laws that apply based on the number of employees in order to successfully run a business and avoid the plethora of potential lawsuits described above. Regina Sarkis can help both employers and employees navigate through these issues so that the focus stays on running the business and paying employees a “fair day’s wage for a fair day’s work.”
This article is intended for general information and educational purposes only and should not be considered legal advice or counsel. No attorney-client relationship is created by the distribution of this article. The substance of this article is not intended to cover all legal issues or developments regarding the matter. Please consult with an attorney to ascertain how these new developments may relate to you or your business. © 2022 Law Office of Regina Sarkis, PLLC.