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.

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.

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.

As a New York City employment attorney, this is one case that I feel is especially important. On July 1, 2010, the New York Court of Appeals, in Hoffman v. Parade Publications, held that nonresident plaintiffs who do not work in New York City or New York State and who cannot establish that the alleged discriminatory conduct had an "impact" within either location may not invoke the protections of those laws.

Plaintiff Howard Hoffman, a Georgia resident, worked in Parade Publications' Atlanta office. He did not service any accounts in New York. In October 2007, the president of Parade called Hoffman from Parade's New York City headquarters to inform Hoffman that his employment would be terminated. Thereafter, Hoffman filed age discrimination claims under the New York City and New York State Human Rights Laws.

Regarding the New York City Human Rights Law, the court found that requiring the discriminatory decision to have an "impact" within the City would ensure predictable results and limit the law's protections to those who were meant to be protected--people who live or work within New York City. As Hoffman did not fall under either category, the court dismissed his City Human Rights Law.

Using a similar rationale, the court also dismissed Hoffman's State Human Rights Law claim, holding that a "non-resident must plead and prove that the alleged discriminatory conduct had an impact in New York" state. According to the court, the State Human Rights Law was enacted to protect the "inhabitants" of New York, as well as those persons "within" the state.

Lastly, the court also noted that the State Human Rights Law not only protects those New York residents, domestic corporations, and corporations doing business in New York from discriminatory acts committed outside the state, but also prohibits New York residents and domestic corporations from discriminating against New York residents outside of New York. Therefore, "while New York residents may bring a claim against New York residents and corporations who commit 'unlawful discriminatory practices' outside the state," the court held that the Human Rights Law was not intended to protect an individual who neither resided nor worked in New York, and who could not demonstrate that the alleged discriminatory act had any impact within the state.