New York Labor Law Amendments Expand Scope Of "Deductions" Claims

• Published date: 21 September 2021
• Law Firm: Proskauer Rose LLP
• Author: Mr Allan Bloom

New York Governors seem to have a history of favoring employees with Labor Law giveaways as they check out of the Executive Mansion. (Remember the Wage Theft Prevention Act, signed by David Paterson days before he left office in December 2010?) On August 20, 2021, four days before his resignation took effect, former Governor Andrew Cuomo signed the "No Wage Theft Loophole Act" (the "Act"), which amended sections 193 and 198 of the Labor Law to state that "[t]here is no exception to liability [under those sections] for the unauthorized failure to pay wages, benefits, or wage supplements." The Act was intended to clarify that employees can bring ' 193 claims not only for unauthorized "line-item" deductions from wages but also for the wholesale withholding of wages alleged to be owed.

How We Got Here

Labor Law ' 193 prohibits a wide range of "deductions" from "wages," and ' 198 provides a civil right of action for a violation of ' 193. For years, litigants have debated whether the failure to pay wages at all'e.g., a bonus that was allegedly owed'constitutes a "deduction" for purposes of ' 193. Plaintiffs challenging the non-payment of compensation often invoked ' 193, arguing that the wholesale withholding of wages is tantamount to a "100% deduction" from wages. The alleged violation of ' 193 triggers a right to sue under ' 198(1-a), under which a prevailing plaintiff can recover not only the amounts...