Assembly Labor Committee
Wage Theft Prevention Act Compliance and Reform Issues
Vice President, Government Affairs
Thursday, November 21, 2013
My name is Ken Pokalsky, and I am Vice President of Government Affairs for The Business Council of New York State, Inc. I appreciate this opportunity to address the Assembly Labor Committee on Wage Theft Prevention Act compliance issues.
The Council, which represents about 2,500 private sector employers across New York (with about 1 million in-state employees), raised a number of concerns regarding this legislation when it was being considered by the State Legislature in 2010. Basically, the Act imposes additional compliance costs on the vast majority of New York state employers that were paying, and continue to pay, full and fair wages.
The Act caused incremental increase in business compliance costs in a state with already substantial regulatory burdens, high state and local taxes, historically high energy costs, and other economic headwinds which contribute to job growth lagging national trends for the past several decades.
Since the initial compliance costs (for developing new documents and procedures, and reconfiguring wage statements) were absorbed by business, substantial concerns have been raised about the ongoing administrative burdens due to the annual pay notice and acknowledgment requirement set forth in Labor Law § 195.1(a).
This clause requires that, each January, every private sector employer must a) provide a written pay notice to each and every one of their employees in New York State, b) obtain a written acknowledgement of the receipt of such notice from each employee and c) keep such notices on file for six years.
You can image the total effort required in preparing notices for, and obtaining a signed and dated written acknowledgement from, each and every one of 7.5 million private sector employees. This is especially for an employer with multiple locations and/or significant field staff.
This mandate imposes administrative costs on every private sector employer in the state, from hundreds of dollars for small employers, to thousands of dollars for medium size employers, to tens of thousands of dollars for large employers, and does nothing to improve overall compliance with the state’s wage laws.
As a result of these concerns, The Business Council has been a vocal advocate of reforming the Act to repeal this annual notice and acknowledgement requirement.
There is a simple and compelling justification for this repeal.
As illustrated in the table below, the components of the annual pay notice are virtually identical to the information that is mandated to be included on each and every pay stub given to an employee. This means that employees would have received this information at least 26 times, and as many as 52 times, the previous year.
The inclusion of this information on every paycheck stub received by an employee, on every payday throughout the year, provides ample opportunity for questions by an employee on any pay information that appears wrong or unclear. The law also includes a separate requirement that employers furnish written explanations of how individual employee wages are computed, if requested by an employee.
Employers must take this notice mandate seriously. Contrary to some commentators, Labor Law Section 195 does impose civil penalties for non-compliance with the annual notice requirement; moreover, Labor Law compliance can be a factor in other business activities ranging from issuance of environmental permits to bidding on state contracts.
Frankly, it is hard to believe that an employer knowingly engaged in “wage theft” or wage underpayment is going to suddenly change ways and comply with this annual notice requirement; meaning that most likely 100 percent of the compliance cost is borne by compliant employers.
The Department of Labor has conceded that wage compliance is an issue for a small percentage of New York State employers, despite the universal application of this annual pay notice requirement.
In our view, this extra notice and acknowledgement provides little if any additional benefit to employees. Repeal of this one provision is the sole focus of our WTPA reform advocacy efforts.
During the 2013 session, we were encouraged when this issue received the attention of the Assembly and Senate Labor chairs, respectively, as well as by the Cuomo Administration.
The Business Council supported S.5885/A.8106, sponsored by Senator Savino and Assemblyman Heastie. In addition to repealing the annual notice requirement, this legislation increases civil penalties and recoveries for violations of the Act’s “time of hire” and pay stub notice requirements, and establishes an anti-shirt-changer provision designed to prevent a non-complying employer from avoiding repeat-violator penalties.
Importantly, this legislation leaves intact all other provisions of the 2010 Act, including the time of hire pay notice provisions and the provision of additional paycheck stub information.
In our view, this legislation presents a balanced approach, reducing compliance costs for in-compliance employers, and increasing penalties for employers that actually violate fair pay laws.
Again, we appreciate this opportunity to discuss our concerns, and we look forward to working with your Committee, the Senate, the Governor and other stakeholders to adopt limited, common sense WTPA reforms.
|Annual Notice Section 195.1(a)||
Paystub Notice Section 195.3
|dates of work covered by that payment of wages|
|name of employee|
|rate or rates of pay and basis thereof, whether paid by the hour, shift, day, week, salary, piece, commission, or other||rate or rates of pay and basis thereof, whether paid by the hour, shift, day, week, salary, piece, commission, or other|
|the number of overtime hours worked (for all employees who are not exempt from overtime compensation)|
|allowances, if any, claimed as part of the minimum wage, including tip, meal, or lodging allowances||allowances, if any, claimed as part of the minimum wage; and net wages|
|regular pay day designated by the employer in accordance with section one hundred ninety-one of this article|
|wages; deductions||wages; deductions|
|name of the employer||name of employer|
|the applicable piece rate or rates of pay and number of pieces completed at each piece rate (for all employees paid a piece rate, the statement shall include|
|any "doing business as" names used by the employer|
|physical address of the employer's main office or principal place of business, and a mailing address if different||
address and phone number of employer
|the telephone number of the employer;|
|such other information as the commissioner deems material and necessary.