The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
Boon Hooi Teoh,
Plaintiff,
-v-
2:22-cv-4110
Manhasset Restaurant, LLC; Roslyn Hospitality, LLC; (NJC) (LGD)
Gold Coast Restaurant Corp.; Miracle Mile Restaurant,
LLC; Wheatley Restaurant, LLC; East Meadow Avenue
Restaurant Corp.; 100 Hospitality, LLC; Poll Restaurant
Group, Inc.; George Poll; and Gillis Poll,
Defendants.
OPINION AND ORDER
NUSRAT J. CHOUDHURY, United States District Judge:
In October 2024, this action was tried before a jury, which returned a verdict for Plaintiff
Boon Hooi Teoh (“Teoh”) on claims against all Defendants1 for unpaid overtime and spread of
hours wages under the New York Labor Law (“NYLL”) and its implementing regulations, 12
N.Y.C.R.R. §§ 146-1.4 and 146-1.6. (Court Ex. 5 (“Jury Verdict Form”), ECF No. 92.)
Specifically, the jury found that, although Defendants paid Teoh an annual salary, Teoh was not
an “executive employee” exempt from the NYLL’s requirements that employees receive (1) one-
and-a-half times their “regular rate of pay” for all hours over 40 worked in a given workweek,
and (2) one extra hour of pay for each workday in which the employee’s spread-of-hours worked
exceeds ten. (Jury Verdict Form at 2.) Prior to trial, the parties stipulated to Teoh’s week-by-
1 The Defendants in this action are: Manhasset Restaurant, LLC; Roslyn Hospitality, LLC; Gold
Coast Restaurant Corp.; Miracle Mile Restaurant, LLC; Wheatley Restaurant, LLC; East
Meadow Avenue Restaurant Corp.; 100 Hospitality, LLC; Poll Restaurant Group, Inc.; George
Poll; and Gillis Poll.
week work schedule and his annual salary, including raises, during the relevant period. (Joint
Pre-Trial Order § X ¶¶ 46–50, ECF No. 75; Corrected Stip. ¶¶ 6–10, ECF No. 82-1.) Following
trial, the parties agreed that N.Y.C.R.R. § 146-3.5 (“Section 146-3.5”)—which sets forth the
method of calculation for a hospitality worker’s “regular rate of pay”—governs the calculation of
compensatory damages to Teoh for Defendants’ failure to pay him overtime wages, although
Defendants noted that they “still intend[ed] to challenge the method of calculation” set forth in
the regulation. (Nov. 12, 2024 Damages Calculation Ltr., ECF No. 93.)
Following the jury’s verdict, the parties applied Section 146-3.5’s method of calculation
to the parties’ stipulated facts and stipulated that this calculation yielded an amount of
$184,067.52 in compensatory damages and pre-judgment interest for Teoh on his successful
NYLL claim for failure to pay overtime wages. (Damages Calculation, ECF No. 93-1 at 2.) On
November 19, 2024, this Court entered Judgment awarding Teoh that amount. (Judgment, ECF
No. 94.)
Shortly thereafter, Defendants filed a Motion to Amend the Judgment under Rule 59(e) of
the Federal Rules of Civil Procedure (“Fed. R. Civ. P.”) and supporting submissions, arguing
that Section 164-3.5 sets forth a method to calculate compensatory damages for NYLL overtime
claims brought by hospitality workers that is contrary to New York public policy against punitive
remedies for conduct that lacks enhanced culpability, violates due process guarantees under the
Fifth and Fourteenth Amendments to the United States Constitution and Article I, Section 6 of
the New York State Constitution, and conflicts with the NYLL statutory scheme. (Mot., ECF No.
100; ECF Nos. 98, 99, 103.) Teoh opposed. (ECF No. 101.)
Upon referral from this Court, Judge Dunst issued a Second Report and
Recommendation, which recommended the denial of Defendants’ substantive arguments for
setting aside this Court’s Judgment.2 For the reasons explained below, I adopt the Second Report
and Recommendation and reject Defendants’ objections as unpersuasive. Accordingly,
Defendants’ Rule 59(e) Motion is denied, and Defendants must pay Teoh $184,067.52 in
compensatory damages and pre-judgment interest on Teoh’s successful NYLL claim for unpaid
overtime wages.
PROCEDURAL HISTORY
On December 17, 2024, Defendants filed their Rule 59(e) Motion. (ECF No. 100; see
also ECF Nos. 98, 99.) Plaintiffs opposed on December 26, 2024. (ECF No. 101.) Defendants
did not file a reply brief.
I referred the fully-briefed Motion to Magistrate Judge Lee G. Dunst. (Elec. Order, May
8, 2025.) On July 1, 2025, Judge Dunst issued a Report and Recommendation (the “First R&R”)
in which he recommended that I deny the Motion on several procedural grounds raised by Teoh.
(First R&R, ECF No. 117.) Following the Court’s grant of extensions requested by both parties,
Defendants timely filed objections on July 22, 2025 (Defs.’ First Obj., ECF No. 119), and Teoh
timely filed a response on August 10, 2025 (Pl.’s First Resp., ECF No. 121).
On September 20, 2025, upon de novo review, I rejected the First R&R’s
recommendation to deny the Motion in its entirety solely on procedural grounds. (First R&R
Order, ECF No. 124.) Specifically, I found the following: (1) Defendants had reserved their right
2 On June 23, 2025, I issued an order adopting in full Judge Dunst’s Report and
Recommendation (Attorney’s Fees R&R, ECF No. 95), to which no party objected,
recommending that the Court award Teoh’s counsel $45,170.77 in attorney’s fees and $8,382.25
in costs. (Order Adopting Attorney’s Fees R&R, ECF No. 115; Judgment on Attorney’s Fees,
ECF No. 116.) The Court separately granted Plaintiff’s motion to correct the Judgment on
Attorney’s Fees due to a clerical error on March 27, 2026. (Elec. Order, Mar. 27, 2026; see also
Amended Judgment on Attorney’s Fees, ECF No. 131.) Defendants’ Motion to Amend the
Judgment does not seek to amend the Judgment on Attorney’s Fees. (See Mot., ECF No. 100.)
to file the instant Motion, despite their failure to adequately address in their briefing the pertinent
facts concerning when and how they did so (id. at 7–9); (2) although Defendants’ challenge to
Section 146-3.5’s method of calculating the regular rate of pay would have been more
appropriately brought as a motion for summary judgment under Rule 56, Fed. R. Civ. P., or a
motion for judgment as a matter of law under Rule 50, Fed. R. Civ. P., Defendants were not
procedurally barred from raising this issue on a Rule 59(e) motion to amend the judgment in
light of the procedural history of this action; and (3) the New York State Board of Industrial
Appeals does not have exclusive jurisdiction to decide constitutional challenges to Section 146-
3.5 (id. at 9–13). Accordingly, I respectfully returned the Motion to Judge Dunst for a written
report and recommendation regarding the merits of Defendants’ arguments under (1) the Due
Process Clause of the Fifth and Fourteenth Amendments to the United States Constitution, (2)
Article I, Section 6 of the New York State Constitution, and (3) the NYLL statutory scheme and
New York public policy generally. (Id. at 13–14.)
On November 18, 2025, Judge Dunst issued a Second Report and Recommendation (the
“Second R&R”), which recommended that I deny the facial and as-applied challenges to Section
146-3.5 set forth in the Motion. (Second R&R, ECF No. 125.) Defendants timely filed objections
on December 2, 2025 (Second Obj., ECF No. 127), and Teoh timely filed a response on
December 17, 2025 (Second Resp., ECF No. 129).
LEGAL STANDARD
In reviewing a report and recommendation, a district court “must determine de novo any
part of the magistrate judge’s disposition that has been properly objected to.” Fed. R. Civ. P.
72(b)(3); see also United States v. Male Juvenile, 121 F.3d 34, 38 (2d Cir. 1997); Miller v.
Brightstar Asia, Ltd., 43 F.4th 112, 120 (2d Cir. 2022). A district court “may accept, reject, or
modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28
U.S.C. § 636(b)(1)(C); Fed. R. Civ. P. 72(3).
DISCUSSION
Defendants bring several facial and as-applied challenges to the method of calculating
damages for violations of the New York Labor Law’s overtime wage requirements set forth in
Section 146-3.5, which applies only to workers in the hospitality industry. Section 146-3.5
requires that if an employer pays an employee by salary (as opposed to hourly wages), “the
employee’s regular hourly rate of pay shall be calculated by dividing the employee’s total
weekly earnings, not including exclusions from the regular rate, by the lesser of 40 hours or the
actual number of hours worked by that employee during the work week.” N.Y.C.R.R. § 146-
3.5(b) (emphasis added). Defendants argue that this method of calculating the regular rate of pay
should mirror the method set forth in N.Y.C.R.R. §§ 141-3.3, 142-2.16, which apply respectively
to workers in miscellaneous industries and building service industries and require that “[w]hen
an employee is paid on a . . . salary . . . the regular hourly [wage] rate shall be determined by
dividing the total hours worked during the week into the employee’s total earnings.” N.Y.C.R.R.
§§ 141-3.3, 142-2.16 (emphasis added). Defendants contend that the distinction results in the
imposition of overly harsh and punitive compensatory damages under Section 146-3.5.
To illustrate the distinction between the two methods of calculation of compensatory
damages for NYLL overtime claims, take the example of a worker who is paid a weekly salary
of $1,000 per week for working 50 hours per week. Under Section 146-3.5, the regular rate of
pay for this hospitality industry worker would be $25 per hour, which is calculated by dividing
$1,000 by 40 hours per week—“the lesser of 40 hours or the actual number of hours worked by
that employee during the work week,” N.Y.C.R.R. § 146-3.5(b). By contrast, if the worker is
employed outside the hospitality industry, under Section 141.3-3, the regular rate of pay would
be $20 per hour, which is calculated by dividing $1,000 by 50 hours per week—“the total hours
worked during the week,” N.Y.C.R.R. § 141-3.3. Defendants take issue with the fact that the
hospitality worker has a regular rate of pay that is $5 per hour greater than that of a similarly
situated non-hospitality worker by virtue of Section 146-3.5’s method for calculating the regular
rate of pay. In this scenario, the hospitality worker’s time-and-a-half rate for overtime wages
would be $37.50 per hour whereas the time-and-a-half rate for the non-hospitality worker would
be $30 per hour. As a result, under Section 146-3.5, the hospitality worker would receive a
greater amount of compensatory damages for unpaid overtime than the non-hospitality worker
for the same number of unpaid overtime hours.
In the Motion, Defendants raise four challenges to Section 146-3.5. First, Defendants
argue that the regulation’s method of calculating the regular rate of pay violates “fundamental
public policy” under New York law because it amounts to the imposition of punitive remedies on
hospitality industry employers found liable under the NYLL for unpaid overtime even if a jury
found that the employer acted in “good faith,” as the jury did in this action. (Mot. at 6–8.)
Second, they argue that Section 146-3.5’s calculation method has resulted in the imposition of an
“excessive punitive damages award[]” against Defendants in this action in violation of the Due
Process Clauses of the Fifth and Fourteenth Amendments. (Mot. at 9–11.) In support, they
contend that the damages for the NYLL overtime claim would be only $33,469.95 if damages
were calculated under any applicable regulation other than Section 146-3.5. (Id. at 9.) Third,
Defendants argue that in promulgating Section 146-3.5, the New York Department of Labor
(“NYDOL”) “enhance[d] penalties or establish[ed] punitive remedies” and thereby acted outside
its authority under NYLL § 656. (Mot. at 11–12.) Fourth, Defendants argue that Section 146-3.5
establishes an “irrebuttable presumption” as to the amount of hours a hospitality worker’s salary
is intended to compensate and thereby “precludes the [employer’s] right to be heard” in violation
of the due process guarantees of the Fifth and Fourteenth Amendments and Article I, Section 6
of the New York State Constitution. (Id. at 13–14.)
The Second R&R recommends that I deny the Motion on the following grounds. First, it
concludes that Section 146-3.5 satisfies Defendants’ Fifth and Fourteenth Amendment right to
substantive due process because the regulatory history shows that the regulation is a “rational
means to address the ‘multitude’ of overtime violations in the hospitality industry.” (Second
R&R at 13.) Second, it finds that Section 146-3.5 comports with rights to procedural due process
under the Fifth and Fourteenth Amendments because it does not impose an “irrebuttable
presumption” as to the amount of hours a hospitality worker’s salary is intended to compensate,
and Defendants had ample opportunity to be heard at trial to provide “documentary evidence
refuting an employee’s Section 146-3.5 overtime calculations,” but failed to do so. (Id. at 7–9.)
Third, the R&R concludes that the NYDOL validly enacted Section 146-3.5 pursuant to its
NYLL authority because the regulation does not impose punitive remedies. (Id. at 18–22.)
Fourth, according to the R&R, because Section 146-3.5 does not impose punitive remedies, it
does not violate fundamental “public policy” of the NYLL. (Id. at 22–24.)
Defendants object to all four of the Second R&R’s conclusions. First, with respect to
their substantive due process argument, Defendants contend that the regulation fails rational
basis review because: (1) it “ignores the actual hours worked, the parties’ compensation
agreement, the employer’s good faith understanding . . . or any evidence indicating that the
weekly salary was intended to compensate for all hours worked”; (2) it does not comport with
the “good faith” defense available to employers under the NYLL; and (3) it fails to properly
consider the factors set forth in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996),
which applies to substantive due process analyses of economic regulations. (Second Obj. at 2–6.)
Second, with respect to their procedural due process argument, Defendants contend that the
parties stipulated at trial that Plaintiff’s salary “was intended to cover all hours of work” and that,
contrary to Judge Dunst’s findings, Defendants had indeed submitted evidence to “rebut the
presumption of the 40-hour workweek under Section 146-3.5.” (Id. at 8–9.) Third, with respect
to the conclusion that Section 146-3.5 falls within the NYDOL’s regulatory authority,
Defendants respond that the NYLL does not empower the NYDOL to regulate salaries or set
“arbitrary 40-hour denominators.” (Id. 6–8.) Fourth, Defendants additionally reiterate the
arguments set forth in their briefing that Section 146-3.5 imposes “punitive-effect damages,”
without advancing any new arguments to address Judge Dunst’s reasoning that the damages are
not punitive. (Id.) Finally, with respect to the conclusion that Section 146-3.5 does not violate
fundamental “public policy,” Defendants reiterate their assertion that the challenged damages are
punitive in nature and therefore contrary to the NYLL’s statutory scheme, including its
recognition of an employer’s defense of good faith effort to comply with the NYLL. (Id at 7–8.)
I adopt the Second Report & Recommendation for the reasons explained below. First and
foremost, all of Defendants’ arguments rely on the unsubstantiated notion that Section 146-3.5’s
method for calculating damages and the resulting imposition of damages against Defendants for
failure to pay Teoh overtime are punitive in nature. However, for the reasons discussed below,
Defendants are incorrect. Simply because the compensatory damages for a NYLL overtime
claim calculated under Section 146-3.5 is larger than the compensatory damages calculated
under wage orders governing non-hospitality industries does not render the calculated damages
punitive in nature or effect. Second, Defendants fail to show that Section 146-3.5 violates the
right to substantive due process on the basis that it sets forth a method for calculating damages
that bears no reasonable relationship to the legitimate government interest in curbing hospitality
industry employers’ failure to pay workers overtime wages. Third, Defendants also fail to show
that their procedural due process rights were violated through the Court’s application of Section
146-3.5 to calculate a compensatory damages award of $125,908.52 for Teoh on the NYLL
overtime claim where Defendants were provided ample notice and an opportunity to be heard
during pre-trial proceedings and a four-day jury trial. Finally, because the calculation of
compensatory damages under Section 146-3.5 for successful unpaid overtime claims does not
result in the imposition of punitive damages, I concur with Judge Dunst’s conclusion that the
regulation was enacted pursuant to the NYDOL’s authority to regulate overtime compensation
and does not run afoul of fundamental public policy under the NYLL.
I. Compensatory Damages Calculated Under Section 146-3.5 Are Not Punitive
A common contention underlying Defendants’ facial and as-applied challenges to Section
146-3.5’s method of calculating compensatory damages for a NYLL failure-to-pay overtime
claim is that the regulation’s definition of the “regular rate of pay” results in the imposition of
damages that are punitive in nature and effect. Because Defendants repeat this contention in
almost all of their arguments, I address it before turning to Defendants’ specific objections to the
findings and conclusions of the Second R&R.
At trial, the parties stipulated that Defendants paid Teoh by salary starting in 2017, the
amount of the salaries that he was paid during different time periods during the years at issue,
and the average number of hours per week that Teoh worked for each week of the relevant
period. (Court Ex. 3 at 19–22 (“Jury Charge”), ECF No. 90 (Table A setting forth regular weekly
schedules during the relevant period; Table B setting forth annual and weekly salaries during the
relevant period).) Accordingly, the parties agreed that Teoh worked a specific number of hours
more than 40 hours a week during specified weeks of the relevant period and that Defendants did
not pay Teoh any additional wages beyond his salary for any hours worked above 40 hours. (See
id.) Based on these stipulated facts and evidence adduced at trial, the jury found, among other
things, that Teoh was not an “executive employee” who was exempt from the New York Labor
Law’s requirement that employers pay certain employees at least one-and-a-half times either the
employee’s regular rate of pay or the statutory minimum wage, whichever is greater, for hours
worked over 40 hours in a given workweek. (Jury Verdict Form; Jury Charge at 19.) The jury
also found that Defendants nevertheless acted in good faith in failing to pay Teoh overtime
wages. (Jury Verdict Form at 2.) The parties agreed that Section 146-3.5 applies to the
calculation of compensatory damages for Defendants’ violation of the NYLL’s overtime wage
requirements and that, based on Teoh’s stipulated hours of work and salaries, the Section 146-3.5
calculation yielded a total amount of $125,908.52 in compensatory damages for the overtime
claim. (See ECF Nos. 93, 93-1.)
Defendants contend that the $125,908.52 compensatory damages figure is punitive in
effect for four overarching reasons. First, the $125,908.52 amount is larger than it would be if
Teoh were employed in an industry outside of hospitality, where damages would be calculated
under a wage order that defines the regular rate of pay as the weekly salary divided by the actual
number of hours worked that week rather than a maximum of 40 hours per week. Second, the
$125,908.52 amount is larger than it would be if Defendants had been paying Teoh on an hourly
basis, rather than by salary, and the jury had still found that Defendants failed to pay him
overtime wages. (See Mot. at 8 (arguing that an “extreme disparity between salaried and hourly
employees for the same pay and hours demonstrates an entirely punitive, and not compensatory,
intent and effect” (emphasis added)); see id. at 9 (“Here, the Judgment awards overtime damages
. . . merely for paying Plaintiff on a salary basis and not on an hourly basis.”).) Third, the
$125,908.52 amount fails to account for the jury’s determination that Defendants acted in good
faith in failing to pay Teoh overtime by misclassifying him as an executive employee exempt
from the NYLL’s overtime requirements. (See Second Obj. at 5 (“[T]he regulation penalizes the
use of weekly salaries that are mandatory for exemptions and even when adopted in good
faith.”).) Fourth, Defendants and Teoh purportedly had an agreement that his salary would
compensate him for all hours worked, so the calculation of compensatory damages for unpaid
overtime wages under Section 146-3.5 incorrectly assumes that Defendants paid Teoh nothing
for his overtime hours when Defendants actually paid Teoh something for those hours. (See Mot.
at 12 (“[The regulation] fails to credit at least the minimum wages paid for hours worked over 40
in a week – therefore, creating a “double dip” by automatically declaring wages unpaid for those
hours,” and “requires liquidated damages to be awarded for more than ‘underpayment of wage’
in NYLL § 198 – it punishes technical violations”); see also Second Obj. at 1 (stating that the
regulation “in application essentially imposes punitive consequences”).)
None of these contentions demonstrates that the calculation of compensatory damages
under Section 146-3.5 results in the imposition of punitive damages for the reasons explained in
the Second R&R and below.
First, Defendants’ objections amount to little more than displeasure at the fact that the
compensatory damages calculated under Section 146-3.5 are higher than they would be under
entirely different factual scenarios, such as if Defendants were operating in a different industry or
if Defendants had not elected to change Teoh from an hourly employee to a salaried employee in
2017. But neither of these alternative scenarios are true. Here, Defendants stipulated that they
decided to change Teoh from an hourly to a salaried worker on or around August 28, 2017. (See
Joint Pre-Trial Order ¶ 48 (“Thereafter, Boon Hooi Teoh’s job title changed from sushi chef to
sous sushi chef, and his pay structure changed from $13.50 per hours to $55,000 annually.”);
Jury Charge at 20, 22 (noting parties’ agreement that on August 28, 2017, Defendants began
paying Teoh a $55,000 annual salary).) Moreover, Defendants stipulate that Teoh was working a
specific number of compensable overtime hours on average during specified weeks of the
relevant period. (Jury Charge at 19–20.) The New York Department of Labor promulgated
Section 146-3.5 pursuant to the recommendation of the Wage Board that compensatory damages
for a hospitality industry employer’s failure to pay overtime to a worker who is entitled to time-
and-a-half overtime under the NYLL should be calculated based on a regular rate of pay defined
as the weekly salary divided by the lesser of the number of actual hours worked or 40 hours.
Simply because the NYDOL identified a different method for calculating compensatory damages
for unpaid overtime for employees outside of the hospitality industry does not render the
resulting compensatory damages punitive.
Defendants’ repeated characterization of the $125,908.52 compensatory damages figure
as punitive thus boils down to an unhappiness about their obligation to pay what they perceive to
be a larger figure than warranted. But the mere size of the damages award does not render it
punitive. The $125,908.52 damages amount is meant to compensate Teoh so that he is made
whole for the time-and-a-half that he was not paid for overtime hours worked from August 28,
2017 through October 31, 2024. See State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408,
416 (2003) (“Compensatory damages ‘are intended to redress the concrete loss that the plaintiff
has suffered by reason of the defendant’s wrongful conduct.’ . . . By contrast, punitive damages
serve a broader function; they are aimed at deterrence and retribution.”).
Defendants’ invocation of the “good faith” defense in support of their contention that
Teoh’s $125,908.52 compensatory damages award has a punitive effect is unavailing for the
reasons discussed in more detail below at Discussion Section II.A. In summary, the New York
State Legislature determined that an employer’s showing of good faith should be rewarded with
the elimination of the requirement to pay liquidated damages on top of compensatory overtime
damages. See N.Y. Lab. Law § 198 (providing that “[l]iquidated damages shall be calculated . . .
as no more than one hundred percent of the total amount of wages found to be due,” unless
certain exceptions not applicable here apply); Second R&R at 17 (noting that if this Court had
imposed liquidated damages, Defendants “would have been responsible for an additional
$139.008.23”). Defendants’ contention that their good faith should also result in a reduction of
compensatory damages calculated under Section 146-3.5 amounts to a mere disagreement with
the policy choice of the New York State Legislature and the NYDOL, neither of which
determined that the good faith of any employer, much less an employer in the hospitality
industry, should reduce the amount of damages imposed to make whole a worker when the
employer fails to pay them time-and-a-half overtime wages required under the NYLL. Moreover,
as Judge Dunst reasoned, the $125,908.52 in compensatory damages awarded to Teoh is not
itself a liquidated damages award just because Defendants acted in good faith. (Id. at 16–17.)
Courts traditionally award liquidated damages in addition to compensatory damages at the
amount of 100% of the unpaid wages, and I made no such calculations here. (Id.; see also
Prudencio Trejo v. Blanca’s Bakery & Deli Inc., No. 2:23-cv-6063, 2025 WL 850625, at *3
(E.D.N.Y. Mar. 19, 2025) (imposing damages under Section 146-3.5 and separately awarding
liquidated damages at 100% of unpaid wages); Paulino v. S & P Mini Mkt. Corp., 791 F. Supp.
3d 457 (S.D.N.Y. 2025) (same); Kargar v. Kamolov, No. 22-cv-00664, 2025 WL 4063721
(S.D.N.Y. Dec. 16, 2025), report and recommendation adopted, No. 22-cv-664, 2026 WL
149786 (S.D.N.Y. Jan. 20, 2026) (same and additionally awarding punitive damages).
Finally, Defendants’ contention that the $125,908.52 compensatory damages award to
Teoh under Section 146-3.5 is punitive in nature and effect is based in part on the unsupported
factual contention that the parties had an express agreement that Teoh’s salary compensated him
for all of the hours that he worked in a given work week, including all hours above 40 hours per
week. Defendants repeat this contention throughout their briefing. (See, e.g., Mot. at 8 (referring
to “the express stipulation that Defendants paid Plaintiff on a salary basis as compensation for all
hours worked in a workweek”); Second Obj. at 2 (referring to “the trial-stipulated fact that
Plaintiff’s salary compensated him for all hours of work, including for hours over 40” (emphasis
added)); id. at 3 (“This regulation ignores . . . the parties’ compensation agreement . . . or any
evidence indicating that the weekly salary was intended to compensate for all hours worked.”);
id. (“Other Wage Orders and the FLSA, on the other hand, acknowledge the possibility of
submitting evidence to demonstrate mutual understanding between parties that a salary is
intended to cover all hours of work.”).) Based on this proposition, Defendants argue that the
damages calculation required by Section 146-3.5 punishes Defendants by assuming that Teoh
was paid nothing for the hours above 40 that he worked in any given week, when in fact
Defendants paid Teoh some amount of money for those overtime hours, even if they did not pay
him time-and-a-half.
Defendants’ contention is simply unsupported by the record. After the close of Teoh’s
case, Defendants requested a directed verdict on the issue of whether Defendants and Teoh had
an agreement that the various salaries Defendants paid Teoh during the relevant time period
covered all of the hours he worked above 40 hours per week. (Tr. 588:12–589:5.) Teoh opposed
that motion, arguing that there was no testimony showing that both Defendants and Teoh
understood that the salaries covered any particular number of hours of work per week. (Id.
589:8–20 (citing Saldarriaga Saldarriaga v. IND Glatt, Inc., No. 17-cv-2904, 2019 WL 1332887
(E.D.N.Y. Mar. 25, 2019)).) I denied the motion for the following reasons:
Viewing the evidence in the light most favorable to the plaintiff, the nonmoving party
with respect to the motion, I conclude that defendants are not entitled to judgment as a
matter of law on the issue of whether there was an express[] agreement between the
plaintiff and his employer that his annual salary covered all hours worked.
There are credibility determinations that a jury must make. And even if there are any
contradictions, it’s within the province of jury to resolve those contradictions, and make
those credibility determinations. So making all reasonable inferences in favor of the
nonmoving party, I find that a jury could find for the plaintiff with respect to this issue of
whether or not there was an express[] agreement between him and his employer that his
annual salary covered a specific amount of overtime every week. Or as the defendant
phrased it, all hours worked.
(Id. 590:22–591:15.) Defendants did not renew their Rule 50 motion after the jury reached a
verdict, and any such motion was due “[n]o later than 28 days after the entry of judgment—or if
the motion addresses a jury issue not decided by a verdict, no later than 28 days after the jury
was discharged.” Fed. R. Civ. P. 50(b).
Moreover, based on the trial testimony, a reasonable jury could have concluded that
although Defendants paid Teoh by salary in different amounts throughout the relevant period,
there was no specific agreement that the hours he worked above 40 hours per week were paid at
all. Defendants failed to elicit any testimony by Teoh that he understood his salary to cover
payments for a specific number of overtime hours in any given pay period.
Q (Defendants’ counsel). Would those notes tell you how much you believe you should
earn for five days?
A (Teoh). Working for five days?
Q. Yes.
A. It should be 1384.61.
Q. And in around that time period, was that your usual weekly pay?
A. Are you talking about 1384.61?
Q. Yes, correct.
A. Yes.
Q. So for all five days no matter how many hours you worked on each of those days, your
salary is expected to be that number?
A. Yes. Yes. My time schedule was arranged by Mr. Chen. So it varies, but it was
decided by Mr. Chen.
Q. So no matter how much it varied, time schedule, you would still be paid the same
amount?
A. Yes. They paid me that amount for each week of my work.
(Tr. 525:7–25.) Thus, Teoh admitted that he did not expect to be paid more than his weekly
salary no matter how many hours he worked each week. But that does not constitute an
admission that he agreed that his salary compensated him for all of the hours that he worked over
40 in a given week. Defendants also asked Teoh other questions related to his compensation but
never elicited a response showing that Teoh understood his annual salary to compensate him
specifically for the hours he worked above 40 hours per week, or that there was any ‘meeting of
the minds’ regarding whether Teoh’s salary constituted payment for overtime hours. (See, e.g.,
id. 376:22–377:14 (discussing deductions from Teoh’s pay); 397:6–398:12, 413:2–415:15
(discussing Teoh’s pay raises); 431:13–434:11 (discussing Teoh’s schedule).
All that is clear from the record is that Defendants paid Teoh by salary in specific
amounts throughout the relevant period and that Teoh did in fact work specific and varying
weekly schedules, as shown in the following tables, which were included in the Jury Charge by
agreement of the parties:
Table A, Jury Charge at 20–21
Time Period Regular Weekly Schedule Average Hours Weekly
Worked Per Compensable
Week Overtime
Hours
Mon: 11:00am-10:00pm (one 1-
hour break)
Tue: OFF
August 28, 2017 –
Wed: OFF
September 22, 2019 53 13
Thu: 11:00am-10:30pm (one 1-
hour break)
Fri: 11:00am-10:30pm (one 1-hour
break)
Sat: 11:00am-11:30pm (one 1-hour
break)
Sun: 11:00am-10:30pm (one 1-
hour break)
Mon: 11:00am-10:30pm (one 1-
hour break)
Tue: OFF
Wed: OFF
Thu: 12:00pm-10:30pm (one 1-
September 23, 2019 – hour break)
February 29, 2020 Fri: 12:00pm-10:30pm (one 1-hour 50 10
break)
Sat: 12:00pm-11:00pm (one 1-hour
break)
Sun: 11:00am-10:30pm (one 1-
hour break)
Mon: 12:00pm-8:00pm (no break)
Tue: OFF
Wed: OFF
March 1, 2020 –
Thu: 12:00pm-8:00pm (no break)
May 31, 2020 40 0
Fri: 12:00pm-8:00pm (no break)
Sat: 12:00pm-8:00pm (no break)
Sun: 12:00pm-8:00pm (no break)
Mon: 11:00am-10:30pm (one 1-
hour break)
Tue: OFF
Wed: OFF
Thu: 12:30pm-10:30pm (one 1-
hour break)
June 1, 2020 – Fri: 12:30pm-10:30pm (one 1-hour
March 31, 2022 break) 49 9
Sat: 12:30pm-11:30pm (one 1-hour
break)
Sun: 11:00am-10:30pm (one 1-
hour break)
Mon: 2:00pm-10:30pm (one 1-hour
break)
April 1, 2022 –
Tue: OFF
Present 43 3
Wed: OFF
Thu: 12:30pm-10:30pm (one 1-
hour break)
Fri: 12:30pm-10:30pm (one 1-hour
break)
Sat: 12:30pm-11:30pm (one 1-hour
break)
Sun: 2:00pm-10:30pm (one 1-hour
break)
Table B, Jury Charge at 22
From To Flat Annual Salary Weekly Pay New York Labor
Rate Law Regular Rate
of Pay
(Flat Annual
Salary Divided (Weekly Pay Rate
by 52) D ivided by 40)
August 28, 2017 June 30, 2019 $55,000 $1,057.69 $26.44 per hour
July 1, 2019 September 20, 2019 $60,000 $1,153.85 $28.85 per hour
September 21, 2019 September 5, 2021 $65,000 $1,250.00 $31.25 per hour
September 6, 2021 Currently $72,000 $1,384.62 $34.62 per hour
Defendants’ claim that the parties had an agreement that Teoh’s salaries provided him at least
some compensation for hours worked above 40 hours a week reads too much into the parties’
stipulated facts and Teoh’s testimony. As shown, it is unclear whether Teoh simply did not know
that he was entitled to payment for the hours he worked beyond 40 per week, whether he thought
his salary was covering those additional hours, or something else. Nor did Defendants propose
that the jury be asked to determine whether there was any express agreement between the parties
as to whether Teoh’s salaries compensated him for all hours worked or move for a judgment as a
matter of law on this issue following the jury’s verdict.
Accordingly, Defendants’ contention that the calculation of NYLL overtime damages
under Section 146-3.5 effectively punishes them by ignoring evidence of an express agreement
of the parties that Teoh’s salaries would pay him for all of the hours he worked above 40 per
week is simply belied by the factual record and unsupported by law. See Shanfa Li v. Chinatown
Take-Out Inc., 812 F. App’x 49, 52 (2d Cir. 2020) (rejecting defendant’s challenge to 40-hour
denominator under Section 146-3.5 in light of district court findings that “Defendants failed to
‘offer any credible evidence’ of an agreement or understanding that Plaintiffs’ wages were
intended to compensate more than forty hours a week”).
With these overarching deficiencies in Defendants’ argument that Section 146-3.5 results
in the imposition of overtime damages that are punitive in nature and effect, I turn to
Defendants’ facial and as-applied challenges to Section 146-3.5 on substantive due process and
procedural due process grounds.
II. Substantive Due Process
Defendants make several objections to the Second R&R’s conclusion that Section 146-
3.5 does not violate their Fifth and Fourteenth Amendment rights. None are persuasive.
A. Facial Challenge
Defendants challenge Section 146-3.5 as facially invalid because (1) it purportedly
“ignores the actual hours worked, the parties’ compensation agreement, the employer’s good
faith understanding, . . . or any evidence indicating that the weekly salary was intended to
compensate for all hours worked”; (2) does not comport with the “good faith” defense available
to employers under NYLL; and (3) fails to properly consider the factors set forth in BMW of
North America, Inc. v. Gore, 517 U.S. 559 (1996), which applies to substantive due process
analyses of economic regulations. (Second Obj. at 2–6.)
First, for all of the reasons already discussed, Section 146-3.5 does not ignore the actual
hours worked by an employee whose right to overtime wages under the NYLL was violated by
an employer. The regulation expressly provides that “the employee’s regular hourly rate of pay
shall be calculated by dividing the employee’s total weekly earnings . . . by the lesser of 40 hours
or the actual number of hours worked by that employee during the work week.” N.Y.C.R.R.
§ 146-3.5(b) (emphasis added). Therefore, Section 146-3.5 does not disregard the “actual hours
worked,” but rather, reflects a policy decision that the actual number of hours worked factors
into the calculation of the regular rate of pay used to calculate compensatory damages for unpaid
overtime only where the employee worked less than 40 hours a week. Defendants’ disagreement
with the NYDOL’s decision to draw such a distinction does not establish that the regulation
lacks a relationship to the actual harm in question. As Judge Dunst explained, Section 146-3.5
and its enabling statute were enacted to rectify conditions of insufficient pay “as rapidly as
practicable without substantially curtailing opportunities for employment.” (Second R&R at 14)
(quoting N.Y. Lab. Law § 650) (emphasis added). Specifically, Judge Dunst found that the
NYDOL intended to “clarif[y] that all hospitality employees . . . must receive an overtime
premium for hours worked beyond the 40-hour workweek” and that Section 146-3.5(b)
functioned to “put hospitality employers on notice of their overtime obligations under the
NYLL.” (Id. at 13.) Moreover, I agree with Judge Dunst that the maximum 40-hour denominator
bears a reasonable relationship to the goal of addressing overtime violations in the hospitality
industry and providing “notice” to employers “as rapidly as practicable” of their obligations.
Second, Defendants’ objection that the R&R’s substantive due process analysis
improperly ignores the import of the New York State Legislature’s provision of a ‘good faith’
defense” to employers who “make efforts to comply with wage & hour laws” is similarly
unpersuasive. (Second Obj. at 4.) As explained in the Second R&R, Section 146-3.5 was enacted
in response to specific findings and goals by the NYDOL and the New York State Legislature
regarding overtime compensation for workers in the hospitality industry. (Second R&R at 10–
15.) The New York State Legislature determined that an employer who makes a reasonable
effort to comply with the NYLL’s overtime wage requirement but nevertheless fails to pay a
worker time-and-a-half wages for overtime should be rewarded only with the reduction or
elimination of liquidated damages and not an additional reduction of compensatory damages. See
N.Y. Lab. Law § 198. Similarly, the NYDOL decided—after receiving recommendations and
public comment—to adopt in Section 146-3.5 a method of calculating damages for NYLL
overtime violation claims relating to hospitality industry workers that does not reduce
compensatory damages where an employer shows good faith. Defendants’ disagreement with
these policy decisions does not render Section 146-3.5’s method for calculating compensatory
damages arbitrary and irrational. The regulation bears a reasonable relationship to mitigating the
actual harm of rampant failure to pay hospitality workers overtime compensation and is justified
by a legitimate government interest in compensating such workers when hospitality employers
fail to pay them overtime wages. Specifically, Judge Dunst noted that the NYDOL had already
addressed arguments that the regulation “would increase costs to businesses and hurt jobs” when
adopting Section 146-3.5(b), by pointing out that “[o]nly if a business does not comply with the
new law and fails to pay an hourly rate plus overtime does the new regulation make it more
costly for the employer . . . .” (Id. at 13–14.)3
Third, Defendants are simply incorrect in their objection that the Second R&R’s
3 The NYDOL’s reasoning was further validated by the New York State Legislature when it
enacted Section 146-3.5(b)’s enabling statute, the Minimum Wage Act, which explicitly provides
that insufficient pay “impairs the health, efficiency, and well-being” of employees, “threatens the
stability of industry, reduces the purchasing power of employees,” and “threatens the health and
well-being of the people of [New York] and injures the overall economy.” (N.Y. Lab. Law
§ 650; see also Second R&R at 14.)
substantive due process analysis erred in failing to apply the multi-factor analysis set forth in
BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996). In Gore, the Supreme Court set forth factors
for a court to consider when assessing whether the imposition of punitive damages is “grossly
excessive” and therefore “arbitrary” with respect to the “State’s legitimate interests in
punishment and deterrence” in violation of the Fourteenth Amendment right to substantive due
process. 517 U.S. at 568; see id. at 575–84 (discussing indicia of “an unreasonable or excessive
punitive damages award”). Gore does not apply here, where Defendants challenge the method of
calculating a compensatory damages award under Section 146-3.5. Again, as discussed
previously, Defendants fail to provide any support in caselaw, statute, or regulation for their
contention that the resulting figure for compensatory damages is punitive simply because it is
larger than it would be if the underlying facts are different.
Accordingly, I adopt the Second R&R’s recommendation to reject Defendants’ facial
challenge to Section 146-3.5 on substantive due process grounds.
B. As-Applied Challenge
As previously noted, the application of Section 146-3.5 to Teoh’s successful claim
against Defendants for unpaid overtime wages does not ignore any purported compensation
agreement between the parties. The parties did not stipulate to any such agreement. (See
Discussion Section I supra; Joint Pre-Trial Order § X ¶¶ 46–50; Corrected Stip. ¶¶ 6–14.) The
jury was not asked to find whether the parties had any such agreement and did not indicate that it
made any such finding. (See Jury Charge; Jury Verdict Form.) Although Defendants moved for
judgment as a matter of law on this issue, Defendants failed to point to any specific trial evidence
establishing that the parties reached such an agreement. (See Tr. 588:12–591:15, Docket, 2:22-
cv-4110.) Moreover, Plaintiff opposed the motion, this Court denied it due to the existence of
questions of fact, and Defendants never filed a post-verdict motion on this issue. (See id.)
Accordingly, the record simply does not show that the parties had any agreement that the salaries
Defendants paid Teoh compensated him for all hours worked above 40 hours per week. See
Discussion Section I supra. Defendants complain that in contrast to Section 146-3.5, “[o]ther
Wage Orders and the FLSA . . . acknowledge the possibility of submitting evidence to
demonstrate mutual understanding between parties that a salary is intended to cover all hours of
work.” (Second Obj. at 3.) But contrary to their contention, nothing barred Defendants from
proposing a special verdict form for the jury on the question of whether the parties had an
agreement that Teoh’s salaries would specifically compensate him for all of the hours worked
over 40 hours per week during the relevant time period.
Finally, Defendants’ argument that Teoh “was always paid above the salary threshold
under the NYLL” is also inapposite to the substantive due process analysis. (Second Obj. at 6.)
Defendants appear to argue that if Teoh’s salaries are understood to cover all hours worked, he
was paid more than the minimum wage for all hours worked, including all overtime hours during
the relevant period. (See Dft’s Alternate Damages Calculations, ECF No. 99-4 (reflecting hours
worked and weekly salary, resulting in hourly wage calculations of at least $19 to $32 per hour).)
This argument is beside the point. The NYLL does not contain any compensatory damages
carveouts exempting employers who misclassify their employees as salaried employees but
nevertheless pay them above the minimum wage. As provided above, it provides employers with
a “good faith” defense to liquidated damages, which Defendants successfully made here. Further,
as discussed in Discussion Section I, supra, there was no agreement between the parties that
Teoh’s salaries were understood to cover all hours worked, so Defendants’ hypothetical is
irrelevant.
Accordingly, I agree with Judge Dunst’s recommendation to reject Defendants’ as-
applied challenge to Section 146-3.5 on substantive due process grounds. In concluding that both
Section 146-3.5’s method for calculating compensatory damages and the specific award of
$125,908.52 in compensatory damages to Teoh bear a reasonable relationship to the legitimate
government interest in compensating hospitality workers when their employers fail to pay them
required overtime wages, I fully account for the fact that the New York State Legislature and
NYDOL contemplate larger compensatory damages awards for salaried hospitality workers
whose employers fail to pay them overtime required under NYLL as compared to salaried
workers in other industries who experience the same violation.
III. Procedural Due Process
A. Facial Challenge
Defendants’ procedural due process challenge to Section 146-3.5 as facially invalid is
premised on the contention that Section 146-3.5 creates an “irrebuttable presumption” that a
salary provides compensation for only the first 40 hours of work. (Second Obj. at 8–9; Mot. at
13–14.) Defendants’ framing is incorrect. “There is a ‘rebuttable presumption’ [under the NYLL]
that a ‘weekly salary covers only the first 40 hours’ Plaintiff worked each week.” Beltran v.
Imamura, Inc., No. 22-cv-3636, 2025 WL 2793754, at *4 (S.D.N.Y. Aug. 21, 2025), report and
recommendation adopted, No. 22-cv-3636, 2025 WL 2793736 (S.D.N.Y. Oct. 1, 2025)
(awarding damages calculated pursuant to Section 146-3.5); Shanfa Li, 812 F. App’x at 52
(affirming district court award of damages calculated pursuant to Section 146-3.5 in light of
defendants’ failure to rebut the 40-hour presumption); see also Soto v. Crismeli Deli Grocery
Inc., No. 19-cv-10053, 2024 WL 3730115, at *6 (S.D.N.Y. June 28, 2024), report and
recommendation adopted, No. 19-cv-10053, 2024 WL 3730300 (S.D.N.Y. Aug. 8, 2024) (noting
that the NYLL provides this “rebuttable presumption,” “unless the parties have an alternate
agreement” (emphasis added)); Second R&R at 8 (“If a portion of an employee’s wages were
‘credited to overtime,’ employers can provide courts with documentary evidence refuting an
employee’s Section 146-3.5 overtime calculations. Employers can offer that evidence at any
point before a judgment is enforced, giving them ample opportunity to be heard before they are
‘deprived’ of money.”).
As discussed, at trial, Defendants had the opportunity to introduce evidence
demonstrating that the parties had an understanding or agreement that Teoh’s salary paid him for
more than 40 hours per week. Defendants failed to do so. See Discussion Section I supra.
Further, this Court repeatedly asked the parties whether they stipulated to such an agreement.
(See, e.g., Tr. 478:6–9, 482:17–20.) Defendants also had the opportunity to challenge Teoh’s
contention that he was a non-exempt employee entitled to overtime as well as the specific
overtime hours that he worked during the relevant period. Although Defendants failed on their
challenge to Teoh’s exempt status, they did not even seek to challenge the total number of hours
he worked, including overtime hours.
Accordingly, Defendants fail on their facial procedural due process challenge to Section
146-3.5 for the reasons set forth in the Second R&R and above.
B. As-Applied Challenge
Defendants argue that the Second R&R’s conclusion that the imposition of compensatory
damages pursuant to the Section 146-3.5 calculation did not violate Defendants’ right to
procedural due process ignores undisputed facts, specifically the purported “stipulated trial fact
that Plaintiff’s salary was intended to cover all hours of work” and the jury’s verdict that
“Defendants acted in good faith in applying the managerial exemption to overtime
requirements.” (Second Obj. at 8–9; see also Second R&R at 9.) This argument fails for the
following reasons.
First, Defendants once again fail in their briefing to point to any specific evidence in the
trial record to support the claim that it is undisputed that Teoh was paid a salary intended to
compensate him for all hours of work, including overtime hours, or that Defendants “submitted
appropriate undisputed evidence . . . to rebut the presumption of the 40-hour workweek under
Section 146-3.5.” (Second Obj. at 9.)4 Defendants’ procedural due process challenge to Section
146-3.5 as applied thus boils down to another iteration of their contention that the parties had an
express agreement that Teoh’s salary was payment for all of the hours worked, including hours
beyond 40 per week. I have already explained why that contention is incorrect. See Discussion
Sections I, II.B, supra.
Second, the Second R&R correctly noted that Defendants were given an adequate
opportunity to be heard on the question of whether the parties had an agreement that the various
salaries paid to Teoh were intended to compensate him not just for 40 hours of work per week
but also for all overtime hours. (Second R&R at 9.) Defendants engaged in three days of
depositions, the exchange of voluminous discovery, and four days of trial. At trial, Defendants
questioned Teoh about his salary and his hours worked, but never explicitly asked him whether
he had an express agreement with Defendants that any hours above 40 hours per week were
compensated by his salary. (See Tr. 524:10–525:25.) At the close of Teoh’s case, Defendants
also moved for judgment as a matter of law on this issue but failed to point to any specific
evidence in support, and I denied the motion. (Id. 588:12–591:15.) Prior to commencement of
4 See First R&R Order at 8 (“Defendants’ submissions on the Motion [to Amend] do not provide
the relevant record citations from which to assess whether Defendants preserved their ability to
raise challenges to Section 146-3.5.”).
trial, the parties stipulated to the average number of hours worked by Teoh and the annual and
weekly salaries that Teoh was paid during the relevant time period, and during the charge
conference, the parties agreed to include these stipulations in the Jury Charge. (See Corrected
Stip. ¶¶ 6–14; Jury Charge at 20–21.) But nowhere did the parties capture any agreement that the
salary was intended to cover all hours worked above 40. Nor did Defendants point to trial
testimony showing that Teoh had such an understanding. See Second R&R at 9; Shanfa Li, 812
F. App’x at 52.
Finally, Defendants also rely on their contention that Teoh was paid a salary intended to
compensate him for his overtime hours in arguing that their successful good faith defense to
liquidated damages somehow demonstrates that the application of Section 146-3.5 in this action
denied them of notice and an opportunity to be heard. (See Second Obj. at 9.) However, as
already discussed at length above and in Discussion Section II.A, supra, Defendants are incorrect
that the parties had any such agreement. Moreover, Defendants have not articulated any reason
why procedural due process requires them to be afforded an opportunity to be heard as to
whether their good faith should result in a reduction of the compensatory damages awarded to
Teoh for a successful NYLL claim for failure to pay overtime wages, particularly where the New
York State Legislature and NYDOL have not decided that good faith is even relevant to the
computation of compensatory damages for a NYLL overtime claim.
IV. NYDOL Authority and Fundamental Public Policy under the NYLL
Defendants maintain that the NYLL “does not permit the Department or a Wage Board to
impose punitive-effect remedies, rewrite underlying facts surrounding salary arrangements, or
create mandatory damages formulas unrelated to minimum wage or overtime rates.” (Second
Obj. at 6.) Defendants first argue that the NYLL limits the scope of the NYDOL’s authority,
which does not include the power “to [r]egulate [s]alaries.” (Id.) Defendants maintain that
Section 146-3.5 “deems every hospitality salary to cover exactly 40 hours, regardless of intent or
evidence,” “prevents employers from showing that a salary was intended to compensate all hours
worked,” and “requires courts to use a fictional denominator as a matter of law, which is not a
rate but an evidentiary presumption.” (Id. at 7.)
Defendants mischaracterize Section 146-3.5, which does not regulate “salaries,” as
Defendants contend, but the calculation of compensatory damages for an employer’s failure to
abide by the New York Labor Law requirement to pay overtime to non-exempt employees—
which falls well within the NYDOL’s authority, as Defendants recognize. (See id. at 6 (“The
Minimum Wage Act empowers NYDOL to define rates”).) The jury found that Defendants
misclassified Teoh as an employee exempt from the overtime requirements, and the parties
stipulated that Defendants never paid Teoh time-and-a-half overtime wages for any hours that he
worked above 40 hours per week. The Wage Board noted the difficulty of calculating a worker’s
hourly rate of pay in instances where employers compensate non-exempt workers by salary. (See
Second R&R at 12 (quoting the finding of the Wage Board Report that “[o]vertime calculations
for those who are paid at a weekly or piecework rate are complicated and, as a result, frequently
figured incorrectly, denying workers their proper overtime rate”).) Defendants fail to show that
Section 146-3.5 is outside of the bounds of the NYDOL’s authority.
For these same reasons, the Second R&R correctly identified Rocha v. Bakhter Afghan
Halal Kababs, Inc., 44 F. Supp. 3d 337 (E.D.N.Y. 2014), as “instructive.” (Second R&R at 19.)
There, the court expressly rejected defendants’ challenges to a provision mandating the payment
of time-and-a-half overtime wages for workers in miscellaneous industries, 12 N.Y.C.R.R.
§ 142-2.2 (“Section 142-2.2”), and found that the NYDOL passed the regulation in an exercise of
its authority. Rocha, 44 F. Supp. 3d at 350–58. Defendants’ efforts to distinguish Rocha as
pertaining to “a materially different regulation” are unpersuasive. Both Section 146-3.5 and
Section 142-2.2 are derived from the Minimum Wage Orders for their respective industries.
Defendants’ contention that the NYDOL is authorized to define the overtime rate of pay as one-
and-a-half times the regular rate of pay, but is not authorized to define the “regular rate of
pay”— focuses on a thin distinction that is unsupported by the text of the NYLL.5
Next, Defendants argue that the state legislature “has expressly limited punitive-effect
remedies under the NYLL,” “even where the employer acted in complete good faith.” (Second
Obj. at 7–8.) Defendants’ argument on this point simply repeats their arguments already
advanced in their First and Second R&R Objections as well as their Motion to Amend the
Judgment, which this Court has already rejected. See Discussion Section I supra.
CONCLUSION
For the reasons set forth above, I adopt the thorough and well-reasoned recommendation
set forth in the Second R&R that I deny Defendants’ Rule 59 Motion to Amend the Judgment
(ECF No. 98, 100) in full. Defendants’ Motion is denied.
5 See, e.g., N.Y. Lab. Law § 655.5(b) (“In addition to recommendations for minimum wages, the
wage board may recommend such regulations as it deems appropriate . . . to safeguard minimum
wages. . . . Such recommended regulations may also include, but are not limited to, regulations
governing . . . overtime or part-time rates . . . .”) (emphasis added).
The Judgment entered on November 19, 2024 (ECF No. 94) and the Amended Judgment
on Attorney’s Fees entered on March 30, 2026 (ECF No. 131) remain unchanged.
Dated: Central Islip, New York
March 30, 2026
/s/ Nusrat J. Choudhury
NUSRAT J. CHOUDHURY
United States District Judge