Santabarbara, De Los Santos, Reyes, Ardila, McDonough, McMahon
MLTSPNSR
Amd §§190, 195, 198-b & 198-c, Lab L
Amends provisions relating to payment of wages to include compensation that is not payable solely at the employer's discretion; requires certain notices; expands enforcement provisions.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5348A
SPONSOR: Simon TITLE OF BILL:
An act to amend the labor law, in relation to payment of wages
PURPOSE OR GENERAL IDEA OF BILL:
To bolster protections against wage theft for employees by clarifying
that all bonuses and other forms of employment remuneration that are not
purely discretionary count as wages.
SUMMARY OF PROVISIONS:
Section one of this bill names it the "Wage Payment Integrity Act"
Section two of this bill amends subdivision 1 of section 190 of the
Labor Law to clarify that the definition of wages also includes any form
of compensation such as a bonus not payable at the employer's sole and
absolute discretion. If an employer wishes to make a bonus discretion-
ary, it must notify the employee in a clear, prominent, timely, and
uncontradicted fashion that it is discretionary.
Section three of the bill amends subdivision 2 of section 195 of the
Labor Law to provide that a failure of the employer to produce written
terms of employment upon request, as required by law, shall give rise to
a presumption that the terms of employment presented by the employee are
the agreed upon terms.
Sections four and five of the bill amend sections 198-b and 198-c of the
Labor Law to clarify that the criminal penalties prescribed in those
sections were never intended to limit the civil remedies for wage theft
available to employees under section 198 of Labor Law.
Section six of the bill sets the effective date.
JUSTIFICATION:
New York's protections against wage theft, contained largely in Article
6 of the Labor Law, are some of the strongest in the nation. Among
other things, the statute prohibits the withholding of wages, benefits,
and wage supplements, bars the untimely payment of wages, mandates writ-
ten notice of the terms and conditions of an employee's pay, and
provides additional administrative remedies to certain workers earning
less than $900 per week through the Department of Labor.
Despite the strong language of Article 6, however, judges in New York
often narrowly interpret its prohibitions against wage theft - which has
necessitated several amendments to the statute, including the passage of
Ch. 397 in 2021 to close a judicially-created loophole by-declaring that
there is "no exception to liability under
SECTIONS 193 AND 198 for the
unauthorized failure to poy wages, benefits and wage supplements." A
closely related problem is that section 190's broad definition of
"wages" continues to be narrowly interpreted by most courts, which hold
that mandatory bonuses, even if clearly promised ahead of time by the
employer, do not count as wages under Article 6 so long as the bonus can
be tied to any factor other than the individual employee's performance.
The way that our modern economy works, however, bonuses are rarely due
to just one employee's individual performance. A bonus may be tied to
the performance of a group (as in Doolittle v. Nixon Peabody LLP, where
multiple lawyers at Nixon Peabody LLP had billed hours for a client that
the plaintiff had secured for the firm through a personal relationship),
the performance of the company as a whole, or an external factor. A soft
beverage portfolio manager at an investment firm, for example, may earn
a bonus based partially on how they managed their portfolio, but also
how the market fared overall for soft beverage sales that year. This
legislation would say that unless the employer clearly told the portfo-
lio manager from the outset that their bonus was purely discretionary,
it must be paid timely and in full, subject to all of the provisions of
Article 6, despite the fact that the bonus can be tied to a factor other
than the portfolio manager's individual performance.
If the bonus is truly discretionary, the employer must notify the
employee in a clear, prominent, uncontradicted manner that such compen-
sation is only payable, if at all, in the employer's sole and absolute
discretion. Effectively, this is a "truth in compensation" requirement
which will improve the functioning of the labor markets by creating
increased transparency. It will also avoid placing honest and responsi-
ble employers who either pay what they promise, or label purely discre-
tionary bonuses as purely discretionary-at a competitive disadvantage
relative to employers who make representations designed to entice
employees to work for them without necessarily intending to pay those
employees accordingly.
Section three of the bill provides that the failure of an employer to
provide employees with written terms of employment, as required in
Section 195 of the Labor Law, upon request shall give rise to a rebutta-
ble presumption that the terms presented by the employee are the
agreed-upon terms - a provision that already exists for commissioned
salespeople in § 191(c).
Finally, sections four and five of the bill address further judge-creat-
ed loopholes by clarifying that the criminal penalties for wage theft
created in Sections 198-b and 198-c of Labor Law were never intended to
limit the civil penalties available under Section 198.
This bill represents common sense fixes to a judicial narrowing of our
state's landmark wage theft protection laws. Excluding promised (i.e.,
nondiscretionary) employment compensation from the definition of "wages"
unless it is "expressly linked" to an employee's performance is an
archaic notion that is out-of-step with the realities of a modern econo-
my, where production and service results depend on the combined efforts
of many people rather than a solitary individual.
The courts' current narrow definition of "wages" leads to costly,
protracted, and unnecessary litigation. It also makes it hard for many
unpaid employees to find counsel willing to take their case on a contin-
gency fee basis.
It is the sponsor's hope that in clarifying that all bonuses and other
forms of supplemental compensation that are not purely discretionary
count as wages, despite the fact that such bonus or compensation may be
due to more than one person's job performance, will better align the
protections of Article 6 with how modern workplaces function in reality.
Additionally, further incentivizing employers to provide written terms
of employment, as they are already required to do under law, will lead
to healthier and better-functioning workplaces across the state while
bolstering the remedies available to victims of wage theft under Labor
Law.
PRIOR LEGISLATIVE HISTORY:
2023: A5348 - referred to Labor S4973 - Passed Senate, died in Assembly
FISCAL IMPLICATIONS:
None
EFFECTIVE DATE:
This act shall take effect immediately and apply to all actions filed on
or after such effective date, provided, however, that section six of
this act shall take effect on the same date as chapter 433 of the laws
of 2023.
STATE OF NEW YORK
________________________________________________________________________
5348--A
2023-2024 Regular Sessions
IN ASSEMBLY
March 7, 2023
___________
Introduced by M. of A. SIMON, SANTABARBARA, DE LOS SANTOS, REYES -- read
once and referred to the Committee on Labor -- recommitted to the
Committee on Labor in accordance with Assembly Rule 3, sec. 2 --
committee discharged, bill amended, ordered reprinted as amended and
recommitted to said committee
AN ACT to amend the labor law, in relation to payment of wages
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. This act shall be known and may be cited as the "wage
2 payment integrity act".
3 § 2. Subdivision 1 of section 190 of the labor law, as amended by
4 chapter 328 of the laws of 1972, is amended to read as follows:
5 1. "Wages" means the earnings of an employee for labor or services
6 rendered, regardless of whether the amount of earnings is determined on
7 a time, piece, commission or other basis. The term "wages" also includes
8 any employment compensation that is not payable at the employer's sole
9 and absolute discretion and benefits or wage supplements as defined in
10 section one hundred ninety-eight-c of this article, except for the
11 purposes of sections one hundred ninety-one and one hundred ninety-two
12 of this article. For a bonus or other form of employment compensation
13 to be excluded from "wages", the employer must notify the employee in a
14 clear, prominent, timely and uncontradicted fashion that the employer
15 has sole and absolute discretion to decide whether or not to pay it.
16 § 3. Subdivision 2 of section 195 of the labor law, as amended by
17 chapter 564 of the laws of 2010, is amended to read as follows:
18 2. notify his or her employees in writing of any changes to the infor-
19 mation set forth in subdivision one of this section, at least seven
20 calendar days prior to the time of such changes, unless such changes are
21 reflected on the wage statement furnished in accordance with subdivision
22 three of this section. The failure of an employer to produce the written
23 terms of employment as required under this subdivision and subdivision
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD09387-03-3
A. 5348--A 2
1 one of this section, upon request of the commissioner or an employee,
2 shall give rise to a presumption that the terms of employment that the
3 employee has presented are the agreed terms of employment;
4 § 4. Subdivision 5 of section 198-b of the labor law, as added by
5 chapter 1031 of the laws of 1965 and as renumbered by chapter 390 of the
6 laws of 1967, is amended to read as follows:
7 5. A violation of the provisions of this section shall constitute a
8 misdemeanor. Persons violating the provisions of this section are not
9 exempt from civil liability under subdivisions one-a and three of
10 section one hundred ninety-eight of this article.
11 § 5. Subdivision 3 of section 198-c of the labor law, as amended by
12 chapter 304 of the laws of 2007, is amended to read as follows:
13 3. [This] The criminal penalties prescribed by this section shall not
14 apply to any person in a bona fide executive, administrative, or profes-
15 sional capacity whose earnings are in excess of nine hundred dollars a
16 week.
17 § 6. Subdivision 3 of section 198-c of the labor law, as amended by
18 chapter 433 of the laws of 2023, is amended to read as follows:
19 3. [This] The criminal penalties prescribed by this section shall not
20 apply to any person in a bona fide executive, administrative, or profes-
21 sional capacity whose earnings are in excess of one thousand three
22 hundred dollars a week.
23 § 7. This act shall take effect immediately and apply to all actions
24 filed on or after such effective date; provided, however, that section
25 six of this act shall take effect on the same date and in the same
26 manner as chapter 433 of the laws of 2023, takes effect.
