Published Articles

Does it Matter Whether There Is a Distinction Between Deducting and Failing to Pay Wages Under Labor Law § 193?

No.  A different section of Article 6, § 198, was amended in 1997 as part of the Unpaid Wages Prohibition Act to include the following rights-affirming or rights-creating language:

All employees shall have the right to recover full wages, benefits and wage supplements accrued during the six years previous to the commencing of such action[.][12]

Why was that amendment necessary?  Four years earlier, in Gottlieb v. Kenneth D. Laub & Co.,[13] the Court of Appeals concluded that the then-existing version of Labor Law § 198 was not “substantive.”  Gottlieb held that an employee who asserted a common-law contract claim, but did not allege a violation of any substantive provision of Article 6, could not collect attorney’s fees under Labor Law § 198(1–a).[14]

The narrow holding in Gottlieb was understandable because § 198’s rights-affirming language did not yet exist, and because the plaintiff apparently never invoked Labor Law § 193. But Gottlieb caused much confusion by implying in dicta that Article 6 does not protect the right of employees to receive the fruits of their labor (i.e., the wages owed under their employment agreement) unless the plaintiff is covered by § 191, which regulates the frequency of wage payments for certain classes of employees.[15]

That dicta was incorrect.  With limited exceptions,[16] the earnings (wages) protected by Article 6 are determined by the parties’ employment agreement.[17]  Thus, a contractual right to the wages at issue is not a bar to a Labor Law § 193 claim, but a prerequisite.

In its first post-Gottlieb amendment to Article 6, the Legislature enacted the “Unpaid Wages Prohibition Act.”  Among other things, it amended § 198 to make clear that “All employees shall have the right to recover full wages, benefits and wage supplements accrued during the six years previous to the commencing of such action[.]”  McKinney’s Labor Law § 198(3) (emphasis added).[18]  The Legislature later enacted the Wage Theft Protection Act[19] which, inter alia, added “liquidated damages” to the list of things “[a]ll employees shall have the right to recover” in § 198(3).

Since Labor Law § 198(3) is part of Article 6 and mandates full payment of wages, § 198(1-a)’s reference to the “failure to pay the wage required by this article” encompasses § 198(3)’s mandate that “[a]ll employees shall have the right to recover full wages, benefits and wage supplements and liquidated damages[.]”

While the much narrower version of Labor Law § 198 in effect in 1993 was purely remedial, i.e., non-substantive, that does not mean the current version is as well.  The Court of Appeals has explained that labels such as remedial, substantive, etc. are not very important in construing statutory amendments.[20]  Thus, “even so-called ‘remedial’ statutes may in effect impose a liability where none existed before[.]”[21]

Bearing this in mind, it is hard to imagine a clearer expression of rights-affirming or rights-creating language than “All employees shall have the right to recover full wages, benefits and wage supplements and liquidated damages[.]”[22]  It does not really matter what label one attaches to Labor Law § 198, however. Courts must give effect to a statute’s “plain meaning,”[23] and § 198(3)’s meaning could hardly be plainer.

Further, statutes are to be harmonized and not interpreted in a way that would leave one section without meaning or force.[24] Labor Law § 198(3)’s rights-affirming language would be left without force unless one or more of Article 6’s “substantive” provisions could be harmonized with § 198(3)’s command that “[a]ll employees shall have the right to recover full wages, benefits and wage supplements and liquidated damages[.]”  If the “[a]ll employees shall have the right to recover” language of § 198(3) did not create substantive rights, then § 193 would then be left as the only “substantive” Article 6 provision through which employees not covered by § 191 could recover unpaid wages.  Therefore, excluding the failure to pay earned wages from the universe of “any [unauthorized] deduction” from wages under § 193 would nullify § 198(3)’s guarantee that “[a]ll employees shall have the right to recover full wages benefits and wage supplements and liquidated damages” – an unacceptable result.

[12] See Labor Law—Unpaid Wages Prohibition Act, 1997 Sess. Law News of N.Y. Ch. 605 (S. 5071–C) (McKinney’s) (emphasis added); See also Labor Law—Wage Theft Prevention Act, 2010 Sess. Law News of N.Y. Ch. 564 (S. 8380) (McKinney’s) (adding the words “and liquidated damages” to Labor Law § 198(3)).
[13] 82 N.Y.2d 457, 462, 605 N.Y.S.2d 213 (1993).
[14]  See Pachter v. Bernard Hodes Group, Inc., 861 N.Y.S.2d 246, 250, 10 N.Y.3d 609, 616 (2008) (discussing limitation of holding in Gottlieb).
[15] Gottlieb, 82 N.Y.2d at 462 (implying that agreed upon wages are not “statutory wages” protected by Article 6, and incorrectly stating that some employees are “in all … respects … excluded from wage enforcement protection under … article 6.”).
[16] See, e.g., McKinney’s Labor Law § 194 (2016) (prohibiting unequal compensation between the sexes for substantially equal work).
[17] See, e.g., Hammond v. Lifestyle Forms and Display Co., Inc., 2009 WL 10313837, at *3 (E.D.N.Y. 2009).
[18]  Labor Law—Unpaid Wages Prohibition Act, 1997 Sess. Law News of N.Y. Ch. 605 (S. 5071–C) (McKinney’s).
[19]  Labor Law—Wage Theft Prevention Act, 2010 Sess. Law News of N.Y. Ch. 564 (S. 8380) (McKinney’s).
[20]  Becker v. Huss Co., Inc., 43 N.Y.2d 527, 540-41, 402 N.Y.S.2d 980, 984, 373 N.E.2d 1205, 1209 (1978), citing Judge Cardozo’s “penetrating discussion” of the issue in Berkovitz v. Arbib & Houlberg, 230 N.Y. 261, 268 130 N.E. 288, 289 (1921).
[21]  Anonymous v. Anonymous, 40 Misc.2d 492, 498, 243 N.Y.S.2d 630, 636-37 (N.Y.Fam.Ct. 1963), citing Jacobus v. Colgate, 217 N.Y. 235, 111 N.E. 837 (1916).
[22]  N.Y. Lab. L. § 198(3) (2010) (emphasis added).
[23]  Majewski v. Broadalbin-Perth Cent. School Dist., 91 N.Y.2d 577, 583, 673 N.Y.S.2d 966, 968 (1998).
[24]  McKinney’s Cons.Laws of New York, Book 1, Statutes, § 98; Matter of Albano v. Kirby, 36 N.Y.2d 526, 530, 369 N.Y.S.2d 655 (1975).