CLASS ACTION LAWSUITS TO RECOVER OVERTIME PAY ARE COGNIZABLE UNDER NEW YORK’S LABOR LAW

A recent decision issued by the Chief Judge of the United States District Court for the Southern District of New York, Hon. Loretta A. Preska, serves as a timely reminder of two important principles applicable to claims arising under New York’s wage and hour statutes: first, that the New York Labor Law does in fact authorize a private cause of action for overtime pay; and, second, that so long as the plaintiffs waive any claim for liquidated damages, class actions to recover unpaid overtime compensation are cognizable under New York law.

The case, Archibald v. Marshalls of MA, Inc., Docket No. 09-cv-2323 (S.D.N.Y. Nov. 12, 2009), was initiated by two former assistant store managers of Marshalls retail stores located in the Bronx and Hartsdale, New York.  Styled as a state law class action, suit was brought by the named plaintiffs on behalf of themselves and others similarly situated alleging that Marshalls willfully failed to pay its assistant managers an overtime premium for hours worked in excess of forty per week in violation of New York’s Labor Law.  The defendants moved to dismiss the complaint in its entirety asserting, among other things, that (1) the New York Labor Law does not recognize a cause of action for overtime pay, and (2) New York law bars class actions where the plaintiffs seek liquidated damages, a remedy expressly available for a willful failure to pay wages.  The Court rejected both of these arguments.

As to the first issue, the Court noted that although the New York Labor Law makes no specific reference to overtime compensation, regulations promulgated pursuant to the State’s wage and hour laws require that non-exempt employees be paid 1.5 times the regular rate for each hour worked beyond forty in a workweek.  Defendants claimed the regulations were enacted without statutory authorization so as to be invalid, but the Court, citing a host of decisions issued by the First, Second and Third Departments of the Appellate Division, as well as Second Circuit precedent, concluded otherwise.  These appellate courts have uniformly upheld the Department of Labor’s overtime pay regulations as a valid exercise of the agency’s power.  Consistent with the great weight of authority, Judge Preska concluded that a cause of action to recover unpaid overtime pay exists under the New York Labor Law.

Turning to defendants’ motion to dismiss the class action claims, the Court was not persuaded by Marshalls’ argument that because the plaintiffs alleged a willful violation of New York’s Labor Law, and liquidated damages are an available remedy for such a violation, a class action could not lie.  Although Judge Preska agreed with the defendants that as a general rule class actions are not permitted under New York law in cases where a plaintiff seeks liquidated damages, she denied this aspect of the motion to dismiss as well.  To begin with, the Court observed, plaintiffs had the right, pursuant to New York law, to waive any claims for liquidated damages and pursue only actual damages and class relief.  Having said that, Judge Preska found it unnecessary to decide the waiver issue at the outset of the litigation since plaintiffs could effectuate such a waiver at the time of filing a motion for class certification.  Archibald, therefore, stands for the proposition that the class action device is not foreclosed under New York law by a mere allegation in the plaintiffs’ complaint that the employer’s Labor Law transgressions were of the willful variety.

 Lawrence Peikes, Wiggin and Dana LLP

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