Provided by: Judge Ruth B. Kraft
Can things get worse for employers in New York?  Actually, yes!  A member of the state assembly has introduced a bill (A02499) to amend the labor law and double the liquidated damages available to employees whose employers deprived them of properly due wages if either (1) the underpayment took place over a minimum 30 day period, or (2) 10 or more employees were underpaid.  Under the current statute, Labor Law section 198, liquidated damages are calculated at an amount equal to the unpaid wages owed to the complaining employee so the amendment, if adopted, would double the penalty.
 
The bill also proposes to authorize class actions covering the entire gamut of wage payment issues in the New York State courts. Currently, the civil practice act prohibits class actions in the state trial courts if the action is brought under a law which authorizes the prevailing party to collect a penalty.  Since liquidated damages are awarded under Article 6 of the Labor Law, unless liquidated damages are waived, class actions alleging violations of the wage payment laws cannot be brought in state courts.  If passed, this class action authorization could have significant effects on New York employers who are already under pressure by federal class actions.  This type of legislation is consistent with Albany’s focus on “wage theft” and could impose yet another burden on employers seeking to do business in New York. 

Any good news here?  Yes.  There would continue to be an affirmative defense to liquidated damages. If an employer affirmatively demonstrates that it acted in good faith and that the underpayment was the result of an error, it can escape liability for penalties, including the double penalties envisioned under the bill. 
 
How can an employer demonstrate good faith?  A basic way is by scheduling a compliance audit of your labor and employment law policies, procedures and wage calculations.  Keep in mind that an audit conducted by an employment attorney will maximize protection of the audits by the attorney client privilege. 
 
Kirschenbaum & Kirschenbaum can assist your organization in identifying risks and taking pro-active measures to avoid sanctions, penalties and litigation.  
Have a question or comment?
Contact Jennifer at Jennifer@Kirschenbaumesq.com or at (516) 747-6700 x. 302.