In a series of significant recent decisions, Judge Pamela K. Chen of the U.S. District Court, Eastern District of New York, held that federal courts lack jurisdiction to hear claims alleging violations of New York’s wage statement and wage notice claims under the Wage Theft Prevention Act (WTPA).
The WTPA requires employers to provide at the time of hiring, a wage notice containing enumerated and specified information—for example, the employee’s rate or rates of pay and basis thereof, any allowances claimed as part of the minimum wage, the designated payday, and the employer’s address and telephone number. The WTPA also requires employers to provide, with each payment of wages, a wage statement listing certain information—for example, the dates of work covered by that payment of wages, the rates of pay and basis thereof, allowances claimed as part of the minimum wage.
Section 198 of the New York Labor Law provides that any employee not provided with a wage notice within 10 business days of their start date may bring a civil claim to recover damages of $50 dollars for each workday that the violation occurred or continued to occur, capped at $5,000 per employee, together with costs and reasonable attorneys’ fees. Section 198 also provides that any employee not provided with a wage statement may bring a civil claim to recover damages of $250 for each workday that the violation occurred or continued to occur, capped at $5,000 per employee, together with costs and reasonable attorneys’ fees. Thus, an aggrieved employee potentially could recover in a civil action up to $10,000 (plus costs and reasonable attorneys’ fees) for technical violations of the WTPA’s notice requirements.
Judge Chen, in Sevilla v. House of Salads One LLC, No. 20-cv-6072, 2022 WL 954740 (E.D.N.Y. Mar. 30, 2022) and two other cases decided on consecutive days,1 held that federal courts lack jurisdiction to hear WTPA wage statement and notice claims. According to Judge Chen, violations of the WTPA’s wage notice and wage statement requirements do not satisfy Article III Standing requirements. Citing recent Supreme Court precedent,2 Judge Chen dismissed plaintiff’s WTPA notice claims and held, “[t]echnical statutory violations that do not lead to either a tangible injury or something akin to a traditional cause of action cannot sustain Article III standing in federal court.”
The Sevilla decision is significant, as New York Civil Practice Law and Rules Section 901(b) prevents plaintiffs from bringing claims seeking to recover penalties on a class-wide basis unless expressly authorized by statute. Thus, many plaintiffs’ lawyers have traditionally asserted WTPA notice claims in federal court on a putative class action basis, seeking to recover up to $10,000 per employee for technical violations of the WTPA’s notice requirements. But if such claims cannot be sustained in federal court, as held in Sevilla, would-be plaintiffs would be limited to bringing such claims in New York state court on an individual basis.
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