New York Enacts the Wage Theft Accountability Act
According to a report from the National Employment Law Project, wage theft in New York accounts for almost $1 billion in lost wages owed to New Yorkers every year. In an effort to curb this, New York enacted the Wage Theft Accountability Act (“WTAA”) on September 6, 2023, which took effect immediately after being signed into law by Governor Hochul. The new law amends New York’s Penal Law to include “wage theft” in the definition of “larceny.” Under the Penal Law, larceny is committed when “property” is taken with the intent to deprive another person of that property, or with the intent to appropriate the property to oneself or another. Under the WTAA, “wage theft” occurs when a person is hired to perform services, and the person who performed such services is not paid wages in accordance with the higher of either the minimum wage and overtime rates, or the promised wage and overtime rates for the work performed. The Act makes clear that all withheld wages that constitute wage theft, including underpayments, can be aggregated into one larceny count under the Penal Law.
It remains to be determined whether the WTAA applies to withheld payments owed to independent contractors in addition to employees, although the use of the term “wages” in the statute does suggest that it may be so limited to employees.
As a result of the new law, prosecutors may now seek greater penalties against employers who intentionally withhold wages from workers, and employees can pursue criminal charges for misdemeanors or felonies against their employers, depending on the amount of wages withheld. As the WTAA allows for aggregating multiple claims into one larceny count, if employers are withholding wages from multiple employees, they can all potentially be grouped together to push a misdemeanor claim into the realm of felony. Under the Penal Code, misdemeanors, which can result in corporations and individuals being fined and individuals being imprisoned for less than a year, are limited to stolen wages of up to $1,000. Amounts exceeding this limit constitute felonies, which can result in up to $10,000 in fines against corporations and individuals, and prison sentences for individuals of up to 25 years, depending on the amount stolen.
While the New York Labor Law previously allowed for criminal penalties to be applied to wage theft, the new law strengthens the potential for such penalties against employers and provides for additional avenues to be pursued by prosecutors that result from reports and complaints of wage theft made by employees. Under the WTAA, employers who employ individuals in New York should be cognizant of the potential criminal liability, and should institute protections to comply with New York’s wage payment obligations.
This article is intended as a general discussion of these issues only and is not to be considered legal advice or relied upon. For more information, please contact RPJ Partner Ethan Krasnoo who counsels clients in areas of complex commercial litigation, arbitration, mediation and dispute resolution, and employment, intellectual property, and entertainment and media. Mr. Krasnoo is admitted to practice law in New York, the United States District Courts for the Southern and Eastern Districts of New York, the United States Court of Appeals for the Second Circuit and United States Tax Court.