No private lawsuits for NY kickback retaliation law

State law prohibits employers from retaliating against employees who resist demands for financial kickbacks. That's Labor Law section 198-b(5). The plaintiff was a teacher at a private school who claims he was fired because he would not turn over part of his salary to finance a Turkish religious leader who was closely affiliated with the school. Does the statute allow plaintiff to sue for damages?

The case is Konkur v. Utica Academy of Science Charter School, a decision by the New York Court of Appeals on February 10. The vote is 4-2. This may come as a shock to clients, but some laws provide you with certain rights but otherwise cannot form the basis for a lawsuit. Instead, only the government can enforce these protections. If there is a violation, the government may in fact enforce it and even win you some damages along with civil penalties against the offender. While that is not as fun as bringing your own lawsuit, it is up the Legislature whether you can file a private suit.

This statute does not expressly provide for a right of action, the Court of Appeals notes, but plaintiffs can get around that if legislative intent nonetheless authorizes a lawsuit. The three-part test that the Courts have created in determining whether such a statute permits a private lawsuit is as follows: "(1) whether the plaintiff is one of the class for whose particular benefit the statute was enacted; (2) whether recognition of a private right of action would promote the legislative purpose; and (3) whether creation of such a right would be consistent with the legislative scheme." For a private lawsuit to happen, all three conditions must be met. 

These conditions are not met here. The first factor factors plaintiff, as the law was intended to help people like him. He also satisfies the second factor, as a private lawsuit would promote the legislative purpose. So plaintiff is now 2 for 2. But he does not make it 3 for 3 because the legislative scheme is not consistent with a lawsuit. The statute provides for the government to win restitution, back pay, liquidated damages, and reinstatement for the victim. The Court of Appeals infers from this statutory scheme that the Legislature considered how best to effectuate the statute, through the Department of Labor, not a private lawsuit. While plaintiff argues that the Legislature did intend for private lawsuits because it made attorneys' fees available to the victims, that relates to wage claims under a different provision of the Labor Law, Article 6, which expressly allows for private lawsuits. Two justices, Rivera and Wilson, dissent. After reviewing the statute's legislative history, Justice Rivera writes:

employees have a private right of action to recover unlawfully withheld wages, as provided in article 6, and employees like plaintiff have a private right of action against an employer or third party for money earned but taken as a kickback in violation of section 198-b(2). The purpose and language of the Labor Law and article 6 establish the legislature's unwavering commitment to the broadest enforcement of an employee's rights to fairly earned wages under the law by providing for a private right of action, the remedies allowed under section 198, and continued criminalization of kickbacks.