Senate Bill S5463

                                 
BILL NUMBER: S5463

SPONSOR: COMRIE
 
TITLE OF BILL:

An act to amend the labor law, in relation to remedies for payment of
wage violations

 
PURPOSE GENERAL IDEA OF BILL:

To reduce the harmful effects that the Vega ruling will have on small
businesses by aligning damages for violations of section 191 of the
labor law with penalties already existing in Section 218 of the labor
law.

 
SUMMARY OF PROVISIONS:

Section one amends labor law section 198 to provide for a private right
of action for violations of the frequency of payment requirements in
Section 191 of the labor law. Employees who bring actions for violations
of Section 191 can recover damages in the amount of $1,000, $2,000, or
$3,000 for first, second, third, and subsequent violations.
              

Section two states the effective date.

 
JUSTIFICATION:

In September of 2019, the First Department ruled in Vega v. CM & Associ-
ates Construction Management, LLC that manual workers who were paid in
full but at a frequency other than weekly could bring a lawsuit seeking
liquidated damages. The court's rationale in Vega suggests that the
holding extends beyond manual laborers to all employees covered under
the frequency of pay requirements in Section 191.

Section 191 of the Labor Law regulates how frequently certain non-exempt
employees must be paid. For manual workers and railroad workers, wages
must be paid weekly. Clerical and other workers must be paid at least
semi-monthly and commission sales persons must be paid at least once a
week.

Prior to the Vega decision, it was generally understood that there was
no private cause of action for a violation of Section 191. That section
does not expressly include a private right of action and Section 198,
the labor law's remedy section, allows relief for unpaid wages but not
for late-paid wages.

Additionally, the NYS Department of Labor (NYS DOL) who enforces
violations of the labor law never advised or suggested that a private
cause of action existed for wages paid late in violation of Section
191's frequency of payment requirements. As a result, consensus was that
the only consequence for violating the frequency of pay requirements was
the possibility that the NYS DOL could assess a penalty pursuant to
labor law section 218. The fine for a frequency of payment violation
under Section 218 is $1,000, $2,000, or $3,000 for first, second, third,
and subsequent violations.

The Vega holding allowing for liquidated damages for violations of
Section 191 is concerning for small businesses. Liquidated damages are
typically measured as the full amount of the underpayment. In a frequen-
cy of payment case, the liquidated damages would be the total amount of
wages the employee received late for the entire duration of the statute
of limitations (6 years). This could result in small businesses closing
because they owe hundreds of thousands of dollars and individual owners
remaining on the hook because there is personal liability for violations
of the labor law.

This bill seeks to protect workers and employers by amending Section 198
of the labor law to acknowledge that there is a private right of action
for violations of Section 191, frequency of payment, but that damages
are limited. The bill caps damages at $1,000 for the first violation,
$2,000 for the second violation, $3,000 for third and subsequent
violations. This penalty scale is consistent with the fines that NYS DOL
can assess pursuant to labor law section 218.

 
PRIOR LEGISLATIVE HISTORY:

2024: S361 (Thomas) - Referred to Labor.

2022: S.9511 (Thomas) - Referred to Rules.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None to the state.

 
EFFECTIVE DATE:
This act shall take effect immediately.