Strengthens wage and hour protections for working people

Summary of provisions

Section 1 of the bill would amend Labor Law § 198(1-a) to allow the Commissioner of Labor to bring a court action or administrative proceeding to collect wage underpayments and liquidated damages on behalf of workers, unless the employer proves a good faith basis for believing its underpayment complied with the law.

Section 2 of the bill would amend Labor Law § 215(1) to expand the categories of conduct protected against employer retaliation for complaints concerning wage and other labor law violations, extend liability for such violations to limited liability companies and partnerships, increase the minimum civil penalty from $200 to $1,000 and the maximum penalty from $2,000 to $10,000 for retaliation and allow the Commissioner to award lost compensation to employees who have been victims of employer retaliation.

Section 3 of the bill would amend Labor Law § 663(1) and (2) to clarify that the Commissioner may use an administrative proceeding against employers to collect minimum wage underpayments and liquidated damages, and to provide that such liquidated damages may be assessed unless the employer proves a good faith basis for believing its wage underpayment complied with the law.

Section 4 of the bill establishes an effective date 90 days after enactment.

Existing law

Labor Law § 198(1-a) places the burden of proof on employees to show entitlement to liquidated damages by showing that the employer acted willfully.

Labor Law § 215(1) establishes the grounds to claim retaliation against workers who assert certain labor rights and allows Commissioner to impose civil penalties against employers.

Labor Law §663 allows an employee to bring a civil action to recover minimum wages, and allows liquidated damages upon proving the underpayment was willful. The same section allows the Commissioner to bring any legal action necessary, including administrative action, against employers to do the same.

Prior legislative history

In 2008, a similar bill was introduced (A.10852/S.8208) and referred to the Senate Rules Committee.

Statement in support

It is not uncommon for employees to lose their jobs or have their work hours reduced after their employer learns they have requested the Department of Labor's help to recover unpaid wages, or have asserted other rights under the Labor Law. This retaliation can also take the form of less favorable shifts, loss of benefits, reassignment of duties, and other changes to the terms and conditions of employment. Retaliation against employees who attempt to recover unpaid wages often victimizes individuals who are among the lowest paid in our state. The current minimum penalty of $200 for employer retaliation is more than a half century old and is woefully inadequate to provide any disincentive for such action. Without a sufficient deterrent, employers can decide that it is easier to wait until the Department brings an enforcement action if their penalty will only be a small fine. In the past 50 years, the consumer price index has increased sixfold. If the $200 penalty had kept pace, it would have increased to $1,200 by now. This proposal would raise the minimum penalty to a more modest amount of $1,000.

The bill would also extend liability for retaliation to officers and agents of limited liability companies and partnerships. The number of LLC's in the state has quadrupled in the past ten years. This increasingly popular form of business entity allows employers to operate for profit and should be subject to the same liability as other employers who retaliate against workers. Further, this proposal will protect employers throughout the State who comply with the wage law by ensuring that violators do not have an unfair competitive advantage by underpaying workers.

This proposal would also conform New York law to the Fair Labor Standards Act and the laws of other states that allow workers liquidated damages once they establish that their employer violated the wage law. These jurisdictions recognize the inherent unfairness of requiring employees who have already proven they were underpaid to further prove the underpayment was willful. The burden of explaining the basis of violations rightly rests with the employer, rather than imposing the onerous burden on employees of establishing their employer's state of mind. Many of the employees that would benefit from this proposal are low-wage workers struggling to support their families on the minimum wage. In many cases, employers have failed for years to pay even the well-publicized minimum wage rate of $7.15 an hour. The bill would not impact the 25% cap on liquidated damages allowed to New York employers, unlike many other jurisdictions that allow recovery of 100% liquidated damages.

Current law also limits the Commissioner's remedies against employer retaliation. Such retaliation harms not only the employee involved, it also interferes with the Commissioner's overall enforcement of wage and hour laws by chilling the willingness of other workers to file complaints, testify, or cooperate with investigations. This bill would provide the Commissioner with broader powers to punish retaliatory

action through the recovery of lost compensation for a discharged employee.

Strengthening the recovery of unpaid wages will also help the state and local economies. Wage complaints prompt investigations and lead to orders against employers to recover unpaid wages which are taxable income. Each dollar earned and recovered reduces the amount of assistance the state may have to provide to workers to help heat their homes and feed their families. During 2006-2007, the Commissioner collected $15.3 million in minimum wage underpayments on behalf of more than 19,000 workers, nearly half of whom live upstate. Each dollar recovered also returns between $1.50 - $2.00 to the economy through household purchases, bill payments, and other contributions that strengthen the state and local tax bases.

Unfortunately, this increased wage recovery effort has also resulted in more cases of wage retaliation. For example, the Department recently helped 22 workers at a company recover approximately $10,000 in unpaid wages. Three of these workers were terminated after the employer learned of their wage complaints. If this proposal had been in effect, the Department could have recovered as much as $30,000 in civil penalties, rather than the maximum amount of $6,000 available under current law.

Budget implications

The penalty increases are estimated to generate $75,000 in state revenues.

Effective date

The bill would take effect ninety days after enactment and apply to offenses committed on or after the effective date.