New York business owners cannot afford to ignore these figures, which do not include lawsuits brought by private attorneys. Following are five issues that employers should be aware of:
• Federal law assesses violations for up to three years past, but New York State law allows for recovery of unpaid wages going back six years. Even for a small business, this can turn into a five or six figure assessment once it is applied to all current and past employees.
• Wage and hour laws are not limited to the minimum wage rate and the requirement to provide overtime pay for any hours over 40 per week. Many employers face other wage and hour issues, such as split shift pay, spread-of-hours pay, and tip credit requirements, among others.
• The laws provide for stiff penalties and interest against an offending employer. Under New York State law, an employee can recover an extra 25 percent of such wages as “liquidated damages,” as well as interest at the rate of 16 percent per year. Additionally, the state can assess civil money penalties of up to 200 percent of any unpaid wages that are found to be due to employees, as well as further fines for various types of record keeping violations. Thus, even a relatively small wage and hour violation can turn into an expensive problem.
• Employers must have records showing hours worked and pay received by each employee in order to successfully defend against a claim or investigation. Without these records, the law shifts the legal burden of proof to the employer to prove that the hours and pay that an employee is claiming are incorrect. Thus, without adequate records, whatever hours and pay an employee claims he/she worked and received will usually be accepted as true, and it will be difficult for an employer to rebut the employee’s claims and prove that his/her employees received adequate compensation for the hours they worked.
• Business owners do not avoid personal liability from wage and hour violations by incorporating. The law provides for individual liability of business owners and managers who control or oversee employee work and payroll. Even an absent shareholder-investor may be held personally liable for wages owed.
Many business owners take wage and hour compliance for granted, believing that they are reasonably compliant, and do not appreciate the risks they face. All businesses – no matter how small – should arrange for a comprehensive review of their payroll and record keeping procedures by an experienced employment attorney in order to minimize liability in the event of an investigation or litigation.
Stephen D. Hans & Associates, P.C. is an employment and labor law firm with over 30 years of experience representing New York City area businesses in all areas of employment law. Further information about the firm can be found on its website.