Last month, New York State Governor Kathy Hochul signed into law a bill that updated New York Penal Law section 155. This new law makes wage theft a criminal larceny, and it went into effect immediately.
The updated Penal Law states that a person commits the crime of larceny when “with intent to deprive another of property or to appropriate the same to himself or to a third person, he wrongfully takes, obtains, or withholds such property from an owner thereof.” The change to the law adds “compensation for labor services” to the definition of property.
The five original ways in which a person could commit larceny are embezzlement, acquiring lost property, issuing a bad check, through a false promise, and through extortion.
Remarkably, as of September 6th, when the Governor signed the bill into law, there’s now a sixth way to commit larceny – and that’s if you steal someone else’s wages. In New York, this is commonly called “wage theft.”
This criminal law affects all business owners, HR professionals, and workplace managers across New York State.
What’s wage theft?
Wage theft happens when an employer doesn’t pay the proper, lawful wages to an employee or employees. This can occur in a number of different ways, and many are inadvertent. For example, wage theft can happen when an employee doesn’t receive at least minimum wage for her work. It can also happen when an employer fails to pay an overtime rate (typically one and a half times an employee’s regular rate) for a non-exempt employee. Also failing to follow company policy on compensation can be wage theft. There are many traps for the unwary employer here – and now they’re criminal traps.
What does this mean for New York employers?
As a result of the new law, if an employer doesn’t pay a worker minimum wage or overtime that is required, the employer is now criminally liable in addition to pre-existing civil liabilities. Prosecutors can aggregate these non-payments or underpayments.
Aggregation? What’s the impact of that? It means that prosecutors can aggregate – or combine – the unpaid or underpaid wages of a workforce into a single count of larceny. The statute defines a workforce to be “a group of one or more persons who work in exchange for wages.” This can happen even if the employees work in different counties across New York State.
If the dollar amount of these aggregated unpaid or underpaid wages exceeds $1,000, the employer is now facing potential grand larceny in the fourth degree, a class E felony under the law. A conviction for grand larceny can draw up to a four-year prison sentence. Higher unpaid wage amounts can result in longer prison sentences, with the maximum sentence being up to 25 years for failure to pay wages totaling over $1 million.
What should employers do to avoid potential liability for wage theft?
Pay attention to this development. It’s critical, and criminal liability isn’t a joke!
It’s now more important than ever for employers to ensure that they’re properly paying all employees. Equally important is for companies to make and save proper and appropriate records to prove their employees are being paid properly.
- First, review your wage theft notices and make sure they’re in order. You must create one for every new employee, get their signature, provide them a copy, and keep the original in your files for at least six years. Don’t skimp out on this simple – and critically important – step.
- Second, ensure your wage theft notices comply with the Wage Theft Prevention Act. Not certain? Call us and we’ll help guide you through this simple process.
- Third, also ensure your employees and – if you have them – independent contractors are properly classified under the Fair Labor Standards Act.
- Fourth, talk to your employees about their compensation, and keep an open line of communication between the company and its workforce. Many investigations and audits by the New York Department of Labor happen because a disgruntled employee or recently-terminated ex-employee calls or writes in a complaint. It’s easy for them to do – so employers should be aware and, to the best of their ability, avoid this risk.
By reviewing your timekeeping and pay policies and practices now, you can avoid a huge headache later.
You can find a link to the Labor Standards Complaint form here for more information.
Know that your labor and employment team at The Coppola Firm always is here to answer questions and help navigate through these thorny areas of New York law. Call or email us today at 716.839.9700 or email@example.com