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Bill to Further Punish Wage & Hour Violators Introduced in New York Assembly

On January 28, 2013 by Schnader in Labor and Employment

By Scott J. Wenner

New York Assembly member Annette Robinson last week introduced A02499 to amend section 198 of the New York Labor Law. The bill proposes two circumstances that would double the liquidated damages available to employees in cases where employers deprive them of properly due wages. It also would add a new subdivision [5] to section 198  that expressly authorizes class actions to recover on any liability imposed by Article 6.

Liquidated Damages

A02499 is not a model of clarity. However, it appears that it will permit assessment of a penalty equal to twice the amount of wages unlawfully withheld where either (a) the employer’s underpayment of wages continued for at least 30 days, or (b) 10 or more employees were underpaid by the employer. Presently, liquidated damages in an amount equal to  the unpaid sum owed to a complaining employee can be awarded under Labor Law section 198. Thus, available penalties would double under the aggravated circumstances targeted by the bill.

As under current law, where the employer affirmatively shows that it has acted in good faith, even erroneously, for the underpayment(s) found, A02499 would continue to allow it to escape liability for penalties, including the double penalties envisioned by the bill.

Class Action Authorization

By inserting proposed subdivision [5] authorizing class actions into section 198, A02499 goes well beyond the subject of liquidated damages. In authorizing class actions, the bill specifically refers to actions “to recover upon a liability imposed by this article.” The article of the Labor Law in which section 198 is located is Article 6, which broadly covers wages, wage payment and wage deductions, as well as commissions, bonuses, gratuities, sales representative agreements and related subjects. Thus, the brief addendum to section 198 that A02499 proposes covers the entire spectrum of wage payment issues addressed by Article 6 in authorizing class actions to collect amounts allegedly owed but withheld by employers.

The proposed addition of subdivision [5] undoubtedly is aimed at an anomaly created by the New York State court rules of practice (NY CPLR), which apply to actions brought in state trial courts. CPLR §901(b) forbids a party from bringing a class action in state court if the action is brought under a statute that authorizes the prevailing party to collect a penalty. Liquidated damages awardable under Article 6 of the New York Labor Law – New York’s wage payment law – are considered a penalty, and thus unless liquidated damages are waived, class actions alleging violation of New York’s wage payment laws may not be brought in state courts.

If passed by the state senate and signed by the governor, the class action authorization in A02499 could have significant effects on employers in New York State already weary of class action litigation in federal court.

Impact and Future Action

While still far from the harsh and unforgiving wage legislation in force in California, if enacted, A02499 would perpetuate the heightened attention focused in Albany on so-called “wage theft” in recent years. A02499 has been referred to the Assembly’s Committee on Labor. We will monitor its progress.