New York Employment Lawyer Blog

The New York Wage Theft Prevention Act (the "Act"), effective April 2011, amended the New York Labor Law ("NYLL") and increased the liquidated damages penalty for failure to pay wages from 25% of the wages found to be due, to 100% of the wages found to be due.

In Ji v. Belle World Beauty, Inc. (Aug. 24, 2011), nail technicians at a beauty salon sued their employer, alleging that the salon paid them a fixed amount per day regardless of the amount of time worked, refused to permit them to take breaks, and failed to properly compensate them for working overtime. After complaining to management, the salon terminated the Plaintiffs' employment. Although the Plaintiffs were terminated in 2007, they argued that the Act should be applied retroactively, and they should be entitled to recover a 100% liquidated damages award.

The New York Supreme Court (New York's trial court) agreed, holding that: a) the Act was a remedial statute; b) the Act did not impair any vested rights of the employer; and c) the Act did not create any new rights of recovery for the Plaintiffs. Therefore, the Court permitted the Plaintiffs to seek a 100% liquidated damages award for wages that their employer failed to pay before the Act took effect.

However, a few months earlier, in Wicaksono v. XYZ 48 Corp. (May 2, 2011), the Southern District of New York (New York federal court) held that the Act was not retroactive and, therefore, the liquidated damage provision applied only as it existed at the time of the employer's wage violations. In this case, four waiters sued their former employer for wage and hour violations under both the federal Fair Labor Standards Act ("FLSA") and the NYLL. Regarding the Plaintiffs' state law claim, the court held that the enhanced liquidated damages provision of the Act should not be applied retroactively, reasoning that "retroactive operation is not favored by [New York] courts and statutes will not be given such construction unless the language expressly or by necessary implication requires it."

Due to this split between New York state and federal courts in the interpretation of the retroactive effect of the Act, employees alleging violations going back more than three years should consider filing their claims in state court where they can recover 100% liquidated damages going back six years, even where those claims accrued before April 2011.

If you believe that your employer is in violation of the FLSA and/or the NYLL by not properly compensating you, it's important to speak with a New York Wage and Hour attorney to accurately assess and determine all of your legal rights.

On April 12, 2011, the New York Wage Theft Prevention Act ("the Act") became effective, amending the New York Labor Law and increasing penalties for wage and hour violations. See this firm's December 13, 2010 blog entry for further information on the Act.

In addition to the written notice that must be given to all new employees, beginning in 2012, all private sector employers in New York State will also be required to provide each of their New York employees with an annual notice between January 1st and February 1st of each year.

Similar to the notice to new hires, the annual notice must contain the following information:
· The employee's rate(s) of pay;
· The basis of the employee's rate(s) of pay (e.g. by the hour, shift, day, week, salary, piece, commission, or other);
· Whether the employer intends to claim allowances as part of the minimum wage, including tip, meal, or lodging allowances, and the amount of those allowances;
· The employee's regular pay day designated by the employer in accordance with the frequency of pay requirements in the Labor Law;
· The name of the employer and any "doing business as" names used by the employer;
· The physical address of the employer's main office or principal place of business, and a mailing address if different;
· The telephone number of the employer; and
· Any "such other information as the commissioner deems material and necessary."

Employers are required to provide such notice in English and in the "primary language" of the employee, but only if that primary language is one of the languages in which the New York State Department of Labor ("NYSDOL") has prepared such dual-language forms. Currently, the NYSDOL has prepared dual-language forms in Spanish, Chinese, Korean, Russian, Polish, and Haitian-Creole.

Also significant, the Act creates a private right of action for employees to bring a lawsuit for the failure to comply with the amended notice provisions of the Labor Law, which can result in damages of up to $2,500.00, plus costs and attorneys' fees. If you believe that your employer has neglected to provide you with any of the required notices, it's important to consult with a New York Wage and Hour attorney as soon as possible to preserve all your legal rights.

In Shahriar v. Smith & Wollensky Restaurant Group (September 26, 2011), current and former waiters claimed that Defendant violated both the Fair Labor Standards Act ("FLSA") and the New York Labor Law ("NYLL") when it unlawfully required Plaintiffs to share tips with managers and/or employees who did not regularly interact with customers.

Plaintiffs brought their FLSA claims as a collective action and their NYLL claims as a class action under Rule 23 of the Federal Rules of Civil Procedure ("Rule 23"). The district court granted Plaintiffs' motion for class certification of their NYLL claims, and Defendant appealed, claiming there was an inherent conflict between collective actions under the FLSA and class actions under the NYLL because potential plaintiffs must affirmatively opt-in to FLSA collective actions, while FRCP 23 requires plaintiffs to opt-out of class actions.

While Rule 23 does not govern FLSA collective actions, it does govern NYLL class action claims brought in federal court. The primary difference between a Rule 23 class action and an FLSA collective action is the manner in which a class is formed. In order to participate in an FLSA collective action, an employee who is not a named plaintiff must "opt-in" or affirmatively consent to litigation of his or her claims in the named lawsuit. A Rule 23 class action does not require consent of class members. Instead, all members of the class are included as parties to the action unless they "opt- out." To opt-out, a class member must expressly request exclusion and formally withdraw from the lawsuit.

The Second Circuit Court of Appeals upheld the district court's order granting class certification, holding that Plaintiffs could simultaneously maintain a collective action under the FLSA, as well as a class action based on NYLL claims under Rule 23, where the facts underlying both claims "form part of the same case or controversy."

The Court concluded that the "conflict" between an FLSA opt-in case and a NYLL opt-out case was not so compelling as to warrant that they be asserted in separate lawsuits, especially because "an employee fearful of retaliation ... may choose not to assert his or her FLSA rights," but that a "class action under the NYLL allows employees to recover lost wages without the risks attendant to asserting affirmatively an FLSA claim."

If you believe that your employer is violating the FLSA or the NYLL by not properly compensating you, it's important to speak with a New York City wage and hour attorney to assess and determine all of your legal rights.

On April 29, 2011, in Cortes v. Foot Locker, Inc.pdf, the Southern District of New York denied, for the second time, Plaintiffs' motion for class certification of their New York State Labor Law ("NYSLL") claims pursuant to Rule 23 of the Federal Rule of Civil Procedure ("Rule 23").

In this case, Plaintiffs sued their employer alleging that the store managers continually altered their time sheets to decrease hours and thus meet corporate quotas. In January 2010, the Court conditionally certified the case as an opt-in collective action under the Fair Labor Standards Act ("FLSA"), but denied Plaintiffs' motion to certify their NYSLL claims as an opt-out class, pursuant to Rule 23.

While Rule 23 does not govern FLSA collective actions, it does govern NYSLL class action claims brought in federal court. The primary difference between a Rule 23 class action and an FLSA collective action is the manner in which a class is formed. In order to participate in an FLSA collective action, an employee who is not a named plaintiff must "opt-in" or affirmatively consent to litigation of his or her claims in the named lawsuit. A Rule 23 class action does not require consent of class members. Instead, all members of the class are included as parties to the action unless they "opt- out." To opt-out, a class member must expressly request exclusion and formally withdraw from the lawsuit. In addition, while the FLSA's statute of limitations is only two years (three years for "willful" violations), the NYSLL has a six-year statute of limitations.

When the Court conditionally certified the FLSA opt-in collective action, it permitted Plaintiffs to take discovery beyond the FLSA's statute of limitations and gave them permission to renew their motion for Rule 23 class certification only if they uncovered evidence showing that the Defendant had committed violations outside of the FLSA's statute of limitations.

However, after discovery, when Plaintiffs did in fact renew their motion, the Court renewed its denial of the Rule 23 certification, stating that, "certifying a Rule 23 class as to plaintiffs' state-law claims would lead to a significant expansion of the scope of fact discovery, which, in turn, would likely substantially delay trial on plaintiffs' claims arising under the [FLSA] . . . If an opt-out class were certified on the New York state labor law claims, the proofs on those claims would potentially overshadow and overwhelm the claims that arise under federal law, as to which I have already certified an opt-in collective action."

Unfortunately, this is not the first time that a court stressed the incompatibility of certifying a collective action under the FLSA and certifying a class action under Rule 23 in the same case. As such, it's so important for all New York employees to first consult with a New York wage and hour attorney before initiating a lawsuit for unpaid wages.

On May 12, 2011, in Zivali v. AT&T Mobility, the Southern District of New York decertified an FLSA class because the plaintiffs were unable to demonstrate a class-wide illegal policy or practice. The court found that the plaintiffs were not "similarly situated" for purposes of a FLSA collective action, and dismissed all of the claims except those of the original plaintiff.

To give some background on procedure, New York federal courts generally use a two-step procedure when dealing with FLSA collective actions. "In the first step, the court authorizes plaintiffs to send out notices to potential opt-in plaintiffs who may be similarly situated to the named plaintiffs with respect to the FLSA violation alleged." Capsolas v. Pasta Resources, Inc., 2011 WL 1770827, 2 (S.D.N.Y. 2011). The burden for demonstrating that potential plaintiffs are "similarly situated" is very low at the notice stage. A plaintiff need make only a "modest factual showing" that he and potential collective action members were victims of "a common policy or plan that violated the law."

The second stage, called the "decertification stage," typically takes place after discovery has been completed and after the defendant has filed a motion for decertification. This second and more stringent review of the "similarly situated" standard is undertaken to ensure that having the case proceed to trial as a collective action, as opposed to individual actions, is appropriate. See Indergit v. Rite Aid Corp., 2010 WL 2465488 (S.D.N.Y. 2010).

In Zivali, the plaintiff, a nonexempt retail employee, alleged that AT&T failed to pay wages and overtime compensation, in violation of the FLSA and the New York Labor Law. He specifically claimed that needing supervisor approval for overtime, having to work through meal periods, and having to work "off-the-clock" made it difficult to capture all of his hours in the company's electronic time-keeping system.

In 2009, applying the lower standard, the court "conditionally" certified the class of all similar employees nationwide. After notices were sent out, over 4,100 plaintiffs ultimately opted into the lawsuit. Following discovery, AT&T made a motion for decertification.

In it's May 12, 2011 decision, applying the higher, second-stage standard, the court decertified the class, holding that the company's policies and electronic time-keeping system were "lawful under the FLSA, and plaintiffs have failed to show that these lawful policies are consistently violated in practice such that it would be possible to generalize across the 4,100 opt-in plaintiffs in this case." The court found that each employee's situation was different, depending upon the specific manager and location. Because there was no overarching policy that violated the FLSA, the court held that "resolution of the many fact-specific issues in this case would essentially require 4,100 mini-trials . . . Such a result is the antithesis of collective action treatment and would overwhelm the judicial system and eliminate any judicial efficiency that might be gained."

If you believe that you're not being properly compensated for all your time, it's important to speak with a New York wage and hour attorney to determine whether your employer's wage and/or overtime policy violates the law.

On January 1, 2011, the New York State Hospitality Industry Wage Order ("Wage Order") went into effect. It makes substantial changes to the rules governing payment of wages to employees in the hospitality industry. Here are some of the more important changes:

Hourly Wage Rates Required

The Wage Order expressly requires hourly rates of pay for all non-exempt employees, except for commissioned salespersons, and disallows a daily, weekly, salary, piece rate or other non-hourly rate.

Minimum Pay Rates

The current minimum wage in New York is $7.25 per hour. The Wage Order alters the calculation of this minimum wage for workers in the hospitality industry by increasing the minimum cash wage and decreasing the amount of the permissible tip credit. For example, it increases the minimum hourly wage rate for tipped food-service employees from $4.65 to $5.00, and thereby reducing the tip credit wage to $2.25/hour.

Tip Pooling and Sharing

The Wage Order also drastically changes the treatment of "tip sharing" and "tip pooling," allowing mandatory tip pooling for the first time. Pursuant to the Wage Order, employees eligible to receive shared tips or distributions from a tip pool must perform, or assist in performing, personal service to patrons as a principal and regular part of their duties.

Employees eligible to receive shared tips or distribution from a tip pool include, but are not limited to, wait staff, counter personnel who serve food to customers, bus persons, bartenders, service bartenders, barbacks, food runners, captains who provide direct food service to customers, and hosts who greet and seat guests. Eligibility is always based on the employee's duties, not the employee's title.

Hospitality employers may not require directly tipped employees to contribute a greater share of their tips to indirectly tipped employees (through tip sharing or tip pooling) than is customary and reasonable.

Gratuities

The Wage Order explicitly requires hospitality employers to distribute to employees the full amount of any house-imposed charges on guest bills that are "purported to be a gratuity." There will now be a rebuttable presumption that any charge made by a customer, in addition to charges for food, beverage, lodging, and other specified materials or services, including but not limited to any charge for "service" or "food service," is a charge purporting to be a gratuity.

Service Charges

The Wage Order provides that in order for an employer to retain a charge for the administration of a banquet, special function, or package deal, the employer must clearly identify the charge as an "administrative" charge and notify the customer in writing that the charge is not a gratuity or tip and that it will not be distributed as a gratuity to the employees who provided services. When imposing service charges, employers have the burden of demonstrating by "clear and convincing evidence" that a reasonable person would not have understood the charge to be a gratuity.

Uniform Maintenance Pay

The Wage Order also contains a new "wash and wear" exemption, making employers in the hospitality industry exempt from having to pay to clean it's employees' uniforms if the employer provides uniforms constructed of "wash and wear" fabrics that can be laundered routinely along with personal garments, does not require ironing, dry cleaning, daily washing, commercial laundering, or other special treatment, and if the number of uniforms provided are consistent with the average number of days per week worked by the employee.

Meal Allowances/Credits

Pursuant to the Wage Order, the meal allowance/credit is increased to $2.50 per meal for all workers.

Tip Credit Card Fees

The Wage Order permits an employer to deduct, from the tip left an employee on a charge card, the amount of credit card processing fees actually incurred on that charge for employee tips on a pro-rata basis.

Notice Policies

Similar to the recent changes to the New York Labor Law, employers in the hospitality industry are required to give each new employee written notice of the employee's regular payday, regular hourly rate, overtime hourly rate, and the tip credit, if any, to be taken from the basic minimum hourly rate. The required notice must also state that extra pay is required if tips are insufficient to bring the employee up to the basic minimum hourly rate.

If you have any questions with respect to any of these new requirements, we recommend speaking with a New York employment attorney as soon as possible.

New York State Labor Law ("NYSLL") § 162 covers the requirements concerning employee meal periods.

NYSLL § 162(1) requires that all employees working in, or in connection with, a factory must be given at least a sixty-minute noon day meal. NYSLL § 162(2) requires that all other employees who work in excess of six hours must be given at least a thirty-minute noon day meal break.

The "noon day meal" is recognized as one that is taken during the period extending from 11:00 a.m. to 2:00 p.m., meaning that the hours of employment must extend through the noon day meal period.

NYSLL § 162(3) requires that every person employed for a period starting before 11:00 a.m. and continuing later than 7:00 p.m. must be allowed an additional meal period of at least twenty minutes between 5:00 p.m. and 7:00 p.m.

NYSLL § 162(4) requires that all factory workers who work for more than six hours between the hours of 1:00 p.m. and 6:00 a.m. must be given a sixty-minute meal break and all other workers who work for more than six hours between the hours of 1:00 p.m. and 6:00 a.m. must be given a forty-five minute meal break.

Although it's clear that most employees are in fact entitled to meal breaks, in Russo v. 210 Riverside Tenants, Inc. (July 2010), the Southern District of New York recently held that there is no private cause of action for alleged violations of Labor Law § 162, as the NYSLL vests the New York Commissioner of Labor with the sole authority to enforce § 162. This means employees who are denied meal breaks to which they are entitled cannot bring a lawsuit in court, but instead, must present their claims to the New York Commissioner of Labor who is charged with regulating and enforcing the law.

When making the determination as to whether or not an employee is entitled to any meal break, it's always smart to first consult with a New York employment attorney.

As a matter of law, neither Federal nor New York State law requires that an employer provide its employees with paid vacation, personal or sick time off. These are benefits generally provided at the discretion of the employer, or based upon an employee contract or collective bargaining agreement. Therefore, there is no "correct" or "proper" method by which an employer may provide its employees with sick, personal, and vacation time.

However, while there is no requirement for an employer to provide such benefits to its employees, once it agrees to do so, the employer must abide by the terms of that agreement. "[A]n employee's entitlement to receive payment for accrued, unused paid time off . . . is governed by the terms of the employer's publicized policy." Kolesnikow v. Hudson Valley Hosp. Ctr. (S.D.N.Y. 2009). In other words, "all that is required by [New York Labor Law] section 198-c is that an employer abide by the terms of his agreement to provide benefits." Glenville Gage Co. v. Industrial Bd. of Appeals (1979).

Such agreements need not even be in writing. They can be established through credible evidence of an employer's longstanding policy and practice or unwritten agreement with employees.

In addition, as I stated in a previous blog entry, pursuant to New York Labor Law § 195, employers are required to notify employees in writing or by publicly posting the employer's policy on sick leave, vacation, personal leave, holidays and hours. Nevertheless, a failure by an employer to provide such written notification will not relieve the employer from its obligations under that policy, notwithstanding the fact that it was not put in writing.

The New York Wage Theft Prevention Act (the "Act") was signed into law today by Governor Paterson. The Act, effective April 12, 2011, amends the New York Labor Law to provide new protections for employees in New York, as well as stiffer penalties for employers who fail to pay their employees overtime or the minimum wage.

Tougher Civil Penalties

The Act increases the amount of liquidated damages an employee can recover in cases where a violation is shown and the employer fails to prove that it had a good-faith basis for believing it was acting in compliance with the law. Specifically, the Act now permits liquidated damages of up to 100% of the total amount of wages due, an increase from 25% under the existing law. This means that employees may be entitled to recover twice what they are owed in wages or overtime.

The Act also provides for the recovery of prejudgment interest and attorneys' fees in any civil action to recover unpaid wages brought by an employee.

The new law also gives employees expanded protections against employers who have been found to have violated the law, but still fail to pay. If an employer loses in court and still fails to pay within ninety (90) days, the employee can now collect an extra 15% of the judgment owed, as well as attorneys' fees and costs for enforcing the judgment.

Employee Notice of Wages

The New York Labor Law already requires employers to notify all newly hired employees at the time of hiring, in writing, of their regular rate of pay, regular pay day, and overtime rate of pay if they will be eligible for overtime. The Act now also requires employers to include the basis of the wage payment (e.g., whether paid by the hour, shift, day, week, salary, piece, or commission, or on another basis) as well as the employer's intent to claim allowances (e.g., tip or meal allowances) as part of the minimum wage.

Under the Act, the notice must be updated and provided again to the employee at least seven (7) calendar days prior to any changes to the employee's pay or other terms contained in the notice (unless such changes are reflected in the employee's wage statement).

Lastly, the Act requires that all employers obtain from each employee a signed and dated written acknowledgment, in English and in the primary language of the employee, of receipt of the notice.

If an employer fails to provide the required notice of wages within ten (10) business days of the employee's first day of employment, the employee may bring an action in court to recover damages of $50 for each workweek that the violation occurred or continues to occur (not to exceed a total of $2,500), plus costs and reasonable attorneys' fees.

Employers are now required to preserve and maintain the employee's acknowledgment(s) of the notice for a period of six (6) years.

Pay Statements

The Act requires that employers provide pay statements that specify the applicable dates the wages cover and the rate and basis of pay. For non-exempt employees, pay statements must also include the regular and overtime pay rates and the number of regular and overtime hours worked.

If an employer fails to provide the required pay statement, the employee may bring an action in court to recover damages of $100 for each workweek that the violation occurred or continues to occur (not to exceed a total of $2,500), plus costs and reasonable attorneys' fees.

The Act also increases the length of time an employer must preserve and maintain payroll records and/or pay statements from three (3) to six (6) years.

Anti-Retaliation Provisions

The Act also increases protections for employees who complain about employer violations, as well as for workers the employer merely believes has complained about violations. The Act permits the Commissioner to order additional remedies in the event of retaliation, specifically enjoining conduct, liquidated damages not to exceed $10,000, reinstatement with back pay, and/or front pay instead of reinstatement.

Criminal Penalties

The Act imposes new criminal penalties against employers that fail to pay minimum wage or overtime compensation. Any employer that pays less than the amount owed may be guilty of a misdemeanor, and if convicted will be fined a minimum of $500 and a maximum of $20,000 or imprisoned for up to a year. If a second violation occurs within six (6) years of the first conviction, the employer will be guilty of a felony.

The new law also includes new criminal penalties against employers that fail to maintain records. Such a violation is deemed a misdemeanor, with fines between $500 and $5,000 or imprisonment for up to one year. A subsequent violation and conviction within six (6) years will result in either a fine of $500 to $20,000 or imprisonment for a period not to exceed one year and a day, or both.

In sum, although the new law does not radically change the duties of New York employers, the Act does impose significant civil and criminal penalties for employers that fail to comply with the law. If you have any questions with respect to these new requirements, we recommend speaking with a New York overtime attorney as soon as possible.

In Mullins v. City of New York (2nd Cir. 2010), the U.S. Court of Appeals for the Second Circuit recently upheld a ruling by the U.S. District Court for the Southern District of New York barring the City of New York (the "City") and the New York City Police Department ("NYPD") from conducting internal investigations related to the Plaintiffs' claims under the Fair Labor Standards Act ("FLSA") until the FLSA litigation ended.

In 2004, about 4300 current and former New York City police sergeants sued the City and NYPD, claiming systematic violations of their overtime rights under the FLSA. Because of the sheer volume of plaintiffs, the parties agreed to limit depositions to "test plaintiffs" - individuals from seventeen job categories.

After the test plaintiffs were chosen, the City's attorneys and outside counsel met with the Chief of the NYPD's Internal Affairs Bureau ("IAB") regarding the "topic of deposition testimony." The very next day, IAB officials began collecting documents, gathering command logs, memo books, activity reports, overtime slips, and requests for leave from all test plaintiffs. It was clear to the plaintiffs that this was nothing more than retaliation, as IAB did not normally conduct such collections.

In addition to establishing minimum wage and overtime requirements, the FLSA also provides that it is "unlawful for any person... to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under [FLSA]." 29 U.S.C. § 215(a)(3).

In another example, when one plaintiff was ready to retire, he was told his retirement was being deferred while the NYPD "investigated" him. It subsequently came to light that he was being investigated regarding his deposition testimony that he had given months earlier.

In addition, IAB sent an Integrity Control Officer to attend the deposition of another plaintiff, who explained that Integrity Control Officers do not normally attend depositions, and he was, therefore, "surprised and concerned" by the officer's presence. He also testified that he found the officer's presence to be "intimidating."

Next, NYPD ordered another plaintiff to undergo a type of interview reserved for allegations of serious misconduct or corruption. This plaintiff was questioned for four (4) hours - entirely about the testimony he had given regarding the FLSA lawsuit.

The Court found that IAB investigated the veracity of testimony given by plaintiffs as part of the lawsuit, and collected documents from all of the test plaintiffs, not just those plaintiffs they suspected of perjury. Further, the Court found that the NYPD sent an IAB officer to one plaintiff's deposition before there was any basis on which to conclude he had given false testimony.

As a result, the Southern District of New York issued a preliminary injunction, restraining the City and NYPD from continuing its retaliatory activities. The Southern District concluded that the evidence clearly showed that absent injunctive relief, numerous plaintiffs would likely (and reasonably) withdraw from the litigation rather than testify and face a line-by-line IAB interrogation.

The defendants appealed the decision to the U.S. Court of Appeals for the Second Circuit, which upheld the order barring the City and NYPD from conducting internal investigations related to the FLSA case, finding that the City's actions were designed to encourage the plaintiffs to drop out of the lawsuit. The Court held that the district court did not abuse its discretion in finding that the plaintiffs are likely to succeed on the merits of their FLSA retaliation claim, and that plaintiffs have established that irreparable harm is likely to flow from the putative FLSA violation absent injunctive relief.

This decision should remind all employers to always consult with a New York City employment attorney before terminating, disciplining, or even investigating an employee who has recently complained or initiated a lawsuit.

Under the New York State Labor Law, it is illegal for an employer to require an employee to pay back wages paid for days the employee didn't work.

Section 193(1) of the New York State Labor Law prohibits employers from making any deductions from an employee's wages except those made (a) in accordance with any other law, or (b) for the benefit of the employee and authorized in writing by the employee. Such authorized deductions are limited to payments for insurance premiums, pension or health and welfare benefits, contributions to charities, payments for U.S. savings bonds, payments for union dues and assessments, and "similar payments for the benefit of the employee."

In other words, while an employee may authorize an employer to take away or subtract wages, the clear language of section 193(1)(b) limits the types of deductions to those enumerated and to "similar payments."

In Angello v. Labor Ready (2006), the New York Court of Appeals held that "subtracting from wages a [payment] that goes directly to the employer or its subsidiary violates both the letter of the statute and the protective policy underlying it." The Court then noted that all the deductions authorized by Labor Law §193(1)(b) are either "monetary or supportive," and as such, the term "similar payment" must also be either "monetary or supportive" to be allowed. The "monetary" deductions are all investments of money for the later benefit of the employee, such as deductions for insurance premiums, pension or health and welfare benefits and payments for United States bonds. The "supportive" deductions are all investments used by someone other than the employee or employer to support some purpose of the employee, such as contributions for charitable organizations or payments for dues or assessments to a labor organization.

Consequently, requiring an employee to pay back wages already paid for days off from work does not benefit the employee in any way, and is thus illegal under New York Labor Law. The same reasoning holds for any attempt by the employer to deduct payments from wages to cover the cost of anticipated future use of unpaid leave.

Additionally, although section 193(2) provides that the employer cannot require the employee to make any payment by a separate transaction that would be prohibited as a deduction, in Huntington Hospital v. Huntington Nurses Association (E.D.N.Y. 2004), the Eastern District of New York held that "such overpayments could be sought in a separate proceeding." Therefore, while an employer may not make any deductions from an employee's wages to recover overpayments, employers may seek relief in a separate proceeding against the employee, i.e. an action in civil court.

To limit potential liability, we recommend that all New York employers consult with a New York wage and hour attorney before making any wage deductions that are not explicitly authorized by New York Labor Law §193.

Lawsuits brought under the FLSA seeking unpaid minimum or overtime wages are typically brought as "collective actions," pursuant to 29 U.S.C. § 216(b), not Federal Rule of Civil Procedure 23 ("Rule 23"). However, in the same federal lawsuit, plaintiffs will often include state law claims, bringing them as class actions under Rule 23.

The plaintiffs, in Myers v. Hertz Corp. (October 27, 2010), were Station Managers classified as exempt from receiving overtime under the executive exemption. Although their job titles were "managers," the plaintiffs claimed that their management duties formed only a small part of their overall duties. Rather than analyzing each individual station manager's duties, the defendant determined that the position was exempt because it entailed primarily managerial responsibilities involving supervision of workers, enforcement of company policies, management of inventory and other tasks.

In this case, a collective action under the FLSA was initially sought and denied by the district court. In denying the motion, the district court ruled that the FLSA's similarity analysis required a highly individualized assessment of the duties of each potential plaintiff station manager, making a collective action improper.

This led the plaintiff to pursue class certification under Rule 23 based on alleged violations of unpaid overtime under New York Labor Law § 191. The court denied this motion too, holding that the plaintiff failed to satisfy Rule 23's commonality, typicality and predominance requirements because the main issue to be decided in the case, whether each potential plaintiff was properly classified as an exempt employee, required a fact-intensive inquiry.

The plaintiff appealed the decision to the Second Circuit, which affirmed the district court's denial of class certification under Rule 23. The Court noted the applicability of the exemption requires an analysis of the actual duties performed by each manager. According to the Court, more individualized proof than generalized proof would be necessary in this matter to resolve the factual and legal questions for each plaintiff station manager. As the Court held, "[t]he existence of a blanket exemption policy standing alone, is not itself determinative of the 'the main concern in the predominance inquiry: the balance between individual and common issues.'" The Court further explained that such a policy does not establish whether all plaintiffs were actually entitled to overtime pay, and that the question of entitlement to overtime pay is still answered by examining the employee's actual duties.

Although the Court held it did not have jurisdiction to review the district court's refusal to conditionally certify the plaintiffs' FLSA claims, it nonetheless provided guidance with respect to the two-step standard district courts should apply to motions seeking certification of a collective action under § 216(b) of the FLSA.

To obtain conditional certification under the FLSA (allowing notice to be sent to potential opt-ins), the Court stated that plaintiffs must "make a modest factual showing that they and potential opt-in plaintiffs together were victims of a common policy or plan that violated the law." This typically occurs before substantial discovery has been completed and was described by the Court as a "low standard" of proof. However, the court cautioned that while it's a low standard, it cannot be satisfied simply by "unsupported assertions."

At the second stage, normally after discovery has taken place, the Court must determine whether the collective action should continue to go forward as a collective action or whether it should be decertified. The Court does this by determining whether the plaintiffs who have opted in are in fact similarly situated to the named plaintiffs.

The determination as to whether an employee is exempt under the FLSA and New York Labor Law can be especially difficult and confusing, and as such, all New York employers should always first consult with a New York overtime attorney.

A New York federal court recently held, in Guinup v. Petr-All Petroleum Corp. (August 23, 2010), that because Plaintiff's primary duties as Store Manager were managerial in nature, Defendant properly classified Plaintiff as exempt under the Fair Labor Standards Act ("FLSA").

The FLSA states that an employee who works more than 40 hours in a given week must receive overtime pay of at least one and one-half times his regular rate of pay for each hour worked over 40 in that week. However, if the employee is employed in an executive capacity, he is exempt from overtime pay.

The U.S. Department of Labor set forth the following requirements for application of the executive exemption: (1) the employee is compensated on a salary basis at a rate of not less than $455 per week; (2) the employee's primary duty is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof; (3) the employee customarily and regularly directs the work of two or more other employees; and (4) the employee has the authority to hire or fire other employees or the employee's suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight.

In this case, Plaintiff worked as the Store Manager of Store 360, a combination convenience store and gas station. Throughout her employment with Defendant, Plaintiff's supervisor only visited her store, on average, once per week for between one hour and half the day. Although there were other employees who also worked at Store 360 at various times, as Store Manager, Plaintiff was the only exempt, salaried employee at her store. All of the other employees were non-exempt employees who were paid on an hourly basis.

Plaintiff argued that she was not exempt under the FLSA because her primary duty as Store Manager was not the management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof.

With regard to this requirement, the Court laid out four factors to be weighed in determining an employee's primary duty: (1) the relative importance of the exempt duties as compared with other types of duties; (2) the amount of time spent performing exempt work; (3) the employee's relative freedom from direct supervision; and (4) the relationship between the employee's salary and the wages paid to other employees for the kind of nonexempt work performed by the employee.

In this case, Plaintiff performed a number of managerial tasks, including interviewing and hiring new employees, scheduling, training, writing performance evaluations, reporting employee and customer injuries to corporate, discussing sales performance and promotions with corporate, conducting surveys of competitors' gas prices and convenience store business, and controlling "shrink." Plaintiff was also responsible for making recommendations to corporate regarding product ordering and pricing, new hire pay rates, employee discipline and termination, and certain Store 360 security measures. Furthermore, Plaintiff accepted phone calls at home from her subordinates at Store 360 regarding incidents that arose at Store 360 when she was not working.

Therefore, while Plaintiff also performed a number of non-managerial tasks and may not have been the only employee at Store 360 who trained new employees and corrected employee performance problems, the Court found that Plaintiff's managerial functions were more important to the success of Store 360 than her non-managerial functions. Simply put, Store 360 could not have operated successfully unless Plaintiff performed her managerial functions, such as hiring, training, and scheduling employees, completing the daily paperwork, and regularly reporting various day-to-day issues to corporate.

Moreover, the Court made clear that a local store manager's job is no less managerial for FLSA purposes simply because she has an active district manager. A district manager's periodic visits do not negate a finding that the store manager operates free from supervision when the district manager is absent.

Although this time the Court found in favor of the employer, the determination as to whether an employee should be classified as an exempt executive can be especially difficult and confusing, and as such, employers should always first consult with a New York City wage and hour attorney.

Pursuant to New York Labor Law § 195:

· New York employers must provide any new employee with the employee's regular hourly rate of pay, overtime rate of pay (if applicable), and regular payday at the time the employee is hired. Such notice must be given at the time of hiring and before the employee performs any work. The employer must keep the original notice for at least six (6) years and must provide the employee with a copy.

· Employers must obtain written acknowledgment of the rates of pay and the regular payday from each employee at the time the employee is hired.

· Employers must notify an employee of any change in that employee's payday before the change takes place.

· Employers must provide each employee with every payment of wages, listing gross wages, deductions and net wages, and must, at the employee's request, explain how the wages were computed.

· Employers must establish, maintain and preserve records showing the hours worked, gross wages, deductions, and net wages for each employee, for not less than three (3) years.

· Employers must notify employees in writing or by publicly posting the employer's policy on sick leave, vacation, personal leave, holidays and hours.

· Employers must notify, in writing, any employee terminated from employment of the exact date of termination, as well as the exact date of cancellation of employee benefits connected with the termination. Employers must provide this notice within five (5) working days of the actual date of termination. Failure to notify an employee of the cancellation of his or her benefits subjects an employer to potential liability in a civil action brought by the employee in which damages may include reimbursement for medical expenses that were not covered by the insurer because of the termination of the employee without notice.

Pursuant to the New York Unemployment Insurance regulations (12 N.Y.C.R.R. § 472.8):

· New York employers must inform all terminated employees, in writing, at the time of separation of their right to file an application for unemployment benefits. The notice must include the employer's name, address, and registration number. Employers must also advise an employee to present the notice to the New York State Unemployment Insurance Division when he or she files a claim for benefits.

It is well settled in New York that a party may not bring a class action lawsuit in State Court for a violation of a New York statute if the statute authorizes the prevailing party to collect a penalty. This is because New York CPLR § 901(b) prohibits class actions in suits seeking penalties or statutory minimum damages. The express language of NY CPLR §901(b) states that, "Unless a statute creating or imposing a penalty or a minimum measure of recovery specifically authorizes the recovery thereof in a class action, an action to recover a penalty, or minimum measure of recovery created or imposed by statute may not be maintained as a class action."

New York Labor Law Articles 6 (payment of wages) and Article 19 (New York Minimum Wage Act) both allow successful plaintiffs to recover liquidated damages. Liquidated damages under New York Labor Law are considered a penalty for purposes of CPLR 901(b) and, accordingly, absent anything more, an action to recover wages and liquidated damages is not maintainable as a class action in state court. Carter v. Frito-Lay, Inc. (1981).

However, it is undisputed that an employee may elect to waive his or her right to seek liquidated damages. "Consequently, the law is now well established in New York that, in the context of an action presenting allegations of Labor Law wage violations, 'the correct rule' is that, if the named plaintiff waives the statutory penalty, the action may be maintained as a class action as long as class members are afforded the obtain of opting out so that they may pursue all statutory remedies." Krebs v. Canyon Club, Inc. (N.Y. Sup. 2009).

It's important to note that this limitation only applies in State court and not in Federal court. On March 31, 2010, the United States Supreme Court issued a significant decision, in which it rejected these limitations on class actions heard in federal court.

In Shady Grove Orthopedic Assocs., PA v. Allstate Ins. Co. (Mar. 31, 2010), the US Supreme Court held that New York CPLR § 901(b) conflicts with Federal Rule of Civil Procedure 23 and thus cannot be applied by a federal court sitting in diversity.

If you have any questions regarding whether or not to file your class action wage and hour lawsuit in Federal or State court, it's always smart to consult with a New York City wage and hour attorney.