Court Rules Wage Theft Prevention Act Liquidated Damages Provision Applies Retroactively
September 27, 2011
Late last year, we posted on the passage of New York’s Wage Theft Prevention Act (WTPA), noting that the Act changed the penalties for violating the New York Labor Law’s prohibition on failure to pay wages. Specifically, the Act 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 addition, the WTPA requires an award of those liquidated damages, unless the employer proves it had a good faith basis to believe the underpayment of wages complied with the law, making an award of liquidated damages more likely.
Now, a New York trial court has determined that this liquidated damages provision applies retroactively to claims arising before the Act’s April 9, 2011 effective date. The case involves, among other claims, an alleged failure to pay overtime. The plaintiffs moved to amend their complaint to add the remedies created by the WTPA. In its decision granting the motion, the Court noted that under New York law a remedial statute is applied retroactively unless it impairs vested rights or creates new rights. The parties agreed the WTPA is a remedial statute, and the court concluded that it does not impair vested rights or create new rights. It just changes the penalty imposed with respect to a violation of rights already existing in the Labor Law. As a result of the decision, claims for failure to pay wages which go back several years (the statute of limitations on unpaid wage claims is six years) will be subject to the heightened WTPA penalties.
