The question in this case is whether state law creates a private right of action to enforce Labor Law § 198-b, which prohibits wage kickbacks. In a 4-2 decision, the Court (Garcia, J.) held that there was no such private right of action. Judge Rivera, with Judge Wilson, dissented.
By way of background, Labor Law § 198-b makes it unlawful to unlawful for any person to “request, demand, or receive” part of an employee’s wages as a condition of retaining the employee’s job. Violation of Labor Law § 198-b is a misdemeanor criminal offense, and the statute can also be enforced administratively by DOL. Plaintiff alleged that his employer demanded a prohibited kickback and asserted a claim under Labor Law § 198-b, but the Appellate Division dismissed the claim on the ground that the statute created no private right of action. The Court of Appeals affirmed.
Finding no express right of action in the statute, the majority began by reiterating its three-factor test to determine whether to imply a private right of action: (1) was the plaintiff part of the class for whom the statute was enacted; (2) would recognition of a private right promote the legislative purpose; and (3) was creation of a private right consistent with the legislative scheme. In the majority’s view, the first two factors favored plaintiff, but the third “most important” factor did not.
In reaching that conclusion, the majority pointed to the other enforcement avenues, i.e., a criminal prosecution and an administrative enforcement proceeding. It also cited legislative history, which it viewed as suggesting that the available enforcement mechanisms were the product of a deliberate choice by the Legislature. And it cited the broader context of the Labor Law, where the Legislature had expressly created a private right of action in other provisions. The majority concluded that “a plenary private right of action for violations of section 198-b would be inconsistent with the comprehensive statutory enforcement scheme.”
In dissent, Judge Rivera argued that the Labor Law expressly created an employee right of action to recover kickbacks in Labor Law § 198. Nevertheless, she continued, the majority’s application of the third factor was wrong. The existence of an express private right of action in some sections could not possibly be determinative evidence that other sections did not create a private right of action. Were it otherwise, Judge Rivera pointed out, there would be no reason to have a doctrine of implied rights of action at all. What is more, the existence of parallel public enforcement mechanisms did not signal an intent to exclude private enforcement. Instead, it signaled simply that private enforcement was “intended to work with law enforcement by state actors to impose a heavy deterrent on extortive conduct in the workplace.” Lastly, Judge Rivera noted that the majority’s approach would work absurd results. It would mean, for instance, that an employee’s only recourse for an illegal kickback was to await action by DOL or the Attorney General—a “paternalistic application of the Labor Law” that, in Judge Rivera’s view, the Legislature could not possibly have intended.