Enacts the "faithless servant reform act", creating a rebuttable presumption of retaliation or discrimination for certain actions of an employer; provides that the employer maintains the burden of proof in certain actions against an employee; limits an employer's remedy of forfeiture against an employee's compensation.
STATE OF NEW YORK
________________________________________________________________________
7776--A
2025-2026 Regular Sessions
IN SENATE
May 6, 2025
___________
Introduced by Sen. RAMOS -- read twice and ordered printed, and when
printed to be committed to the Committee on Labor -- reported favora-
bly from said committee and committed to the Committee on Finance --
committee discharged, bill amended, ordered reprinted as amended and
recommitted to said committee
AN ACT to amend the labor law and the executive law, in relation to
enacting the "faithless servant reform act"
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Short title. This act shall be known and may be cited as
2 the "faithless servant reform act".
3 § 2. Legislative intent. The purpose of this act is to safeguard all
4 employees from retaliatory legal actions by employers in the context of
5 employment disputes and to ensure that all claims of employee disloyalty
6 are substantiated, narrowly limited, and consistently and appropriately
7 applied. The second purpose of this act is to ensure that even in the
8 very limited class of cases where some forfeiture of employee compen-
9 sation may otherwise be permissible under this act, such forfeiture
10 shall be limited to compensation for pay periods during which the
11 disloyal acts occurred and shall not encompass any part of an employee's
12 minimum wage or overtime compensation.
13 § 3. The labor law is amended by adding a new section 215-d to read as
14 follows:
15 § 215-d. Prohibited retaliation; additional provisions. Rebuttable
16 presumption of retaliation. In any action where an employee asserts a
17 claim under this chapter, for unpaid wages, benefits, or wage supple-
18 ments, and the employer responds by filing or threatening to file a
19 claim, counterclaim, or affirmative defense seeking the forfeiture of
20 any employment compensation, there shall be a rebuttable presumption
21 that such employer's action is retaliatory under section two hundred
22 fifteen of this article.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD05454-04-5
S. 7776--A 2
1 § 4. The labor law is amended by adding a new section 198-f to read as
2 follows:
3 § 198-f. Limitations on forfeiture of wages, benefits, or wage supple-
4 ments. 1. Burden of proof for employers. (a) The forfeiture of any
5 unpaid wages, benefits, or wage supplements shall not be an available
6 remedy to an employer against an employee arising from within the scope
7 of the employment relationship, unless such employer proves by clear and
8 convincing evidence that:
9 (i) such employee's conduct was so pervasive and egregious as to
10 negate the central purpose of the employment relationship;
11 (ii) such forfeiture is based on more than a single act of such
12 employee; and
13 (iii) such employer did not know of and tolerate such employee's
14 conduct.
15 (b) Forfeiture of unpaid wages, benefits, or wage supplements under
16 paragraph (a) of this subdivision shall be limited to instances where
17 the employee unfairly competes with the employer, diverts business
18 opportunities away from such employer to such employee to the financial
19 detriment of such employer, or accepts improper kickbacks.
20 2. Limitation on the remedy of forfeiture. In the limited instances
21 where it may be available, an employer's remedy of forfeiture against an
22 employee shall be strictly limited to compensation due for the pay peri-
23 ods during which such employee's affirmative acts under subdivision one
24 of this section occurred. Notwithstanding such potential availability of
25 a partial forfeiture of an employee's compensation, such partial forfei-
26 ture shall not include minimum wage and overtime payments as required by
27 article nineteen of this chapter or any wage orders promulgated there-
28 under.
29 3. Existing rights. Nothing in this section shall be deemed to dimin-
30 ish the rights, privileges, or remedies of any employee under any other
31 law, rule or regulation or under any collective bargaining agreement or
32 employment contract.
33 § 5. The executive law is amended by adding a new section 296-e to
34 read as follows:
35 § 296-e. Unlawful discriminatory practices; rebuttable presumption of
36 discrimination. In any action where an employee asserts a claim under
37 this article and the employer responds by filing or threatening to file
38 a claim, counterclaim, or affirmative defense seeking the forfeiture of
39 any employment compensation, there shall be a rebuttable presumption
40 that such employer's action is discriminatory under section two hundred
41 ninety-six of this article.
42 § 6. This act shall take effect immediately.
