Enacts the wage payment integrity act

• Democratic9
• Republican2

◆ The sponsor's argument

Why Andrew Gounardes says this is needed

New York's protections against wage theft, found 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 written 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 pay 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 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 upon request, as required in section 195 of the Labor Law, 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, section four of the bill addresses further judge-created loop- holes by clarifying that the criminal penalties for wage theft created in sections 198-c of Labor Law was never intended to limit the civil penalties available under section 198. This bill represents a commonsense response to a judicial narrowing of our state's landmark wage theft laws. Excluding promised (i.e., nondis- cretionary) 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 often depend on the combined efforts of many

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.