Jonathan Ash writes:

Waiter carrying tray of glasses
Copyright: bedya / 123RF Stock Photo

In what amounts to a victory for all employers throughout the State of New York, the Supreme Court of New York recently granted summary judgment in one of the first cases to effectively make use of the newly amended affirmative defense set forth in the Wage Theft Prevention Act (“WTPA”).  The case is entitled Ahmed v. Morgans Hotel Group Management, LLC.

Employers in the hospitality industry in New York often fall victim to unsubstantiated claims by former employees of unpaid wages.  Attorneys will send letters threatening a potential class action wage and hour lawsuit and demanding that the employer provide documentation on a class-wide basis to disprove the existence of the claim in order to resolve the case with a substantial settlement.  The mere threat of such a lawsuit is enough to get employers to comply with this fishing expedition.

In this instance, the Company limited its production to only those documents necessary to show that the named plaintiff(s) did not have a claim that they were not paid gratuities for banquet events where the Company charged an administrative fee.  The Court rejected the plaintiff’s claim and concluded that no reasonable customer could have been confused and that because the plaintiff could not identify a single instance in which the gratuity was not paid, the WTPA claim must fail.

Perhaps more significantly, however, was the claim for unpaid minimum wage, which was based upon the alleged failure to provide the required notice under the Hospitality Wage Order.  Plaintiffs’ attorneys attempt to capitalize on this nuanced area of the law in hopes that one of these requirements is not met due to human error or inadvertence.

One year ago, the WTPA was amended to provide that “it shall be an affirmative defense” to such a violation if the employer can show complete and timely payment of all wages due and that the employee never earned below the minimum wage.  In such a case, the employee suffered no actual injury, so this affirmative defense prevents a windfall and discourages the predatory practices of plaintiffs’ attorneys.

The Takeaway

This significant decision paves the way for other employers to defend against such actions.  Rather than succumbing to the demands of an aggressive plaintiffs’ attorney fishing for information, employers now have a means to defend these claims through this affirmative defense if they can show that the employee was always timely paid wages equal to or above the minimum wage.

Jonathan Ash is an associate in the firm’s Labor & Employment Department, resident in its Princeton office.