Teoh v. Manhasset Restaurant, LLC et al

2:22-cv-04110NyedNov 18, 2025

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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REPORT AND
RECOMMENDATION
22-cv-4110 (NJC) (LGD)
BOON HOOI TEOH,
Plaintiff,
v.
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,
Defendants.
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LEE G. DUNST, Magistrate Judge:
When an employee establishes overtime violations under the Fair Labor Standards Act
(“FLSA”), courts calculate damages at one and one-half times the employee’s “regular rate of
pay.” 29 U.S.C § 207(a)(1). For a covered hospitality employee1 who is paid a salary, Section
146-3.5(b) of New York’s Hospitality Industry Wage Order provides that the:
[E]mployee’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. Comp. Codes R. & Regs. Tit. 12, § 146-3.5(b) (2025) (emphasis added).
1 12 N.Y.C.R.R. § 146-3.2 defines a covered employee as, subject to exceptions that are inapplicable here,
“any individual suffered or permitted to work in the hospitality industry by the operator of the establishment or by any
other employer.” N.Y. Comp. Codes R. & Regs. Tit. 12, § 146-3.2(a) (2025). The “hospitality industry.” consistent
with the definitions and exclusions outlined in 12 N.Y.C.R.R. §§ 146-3.2(b)-(d), “includes any restaurant or hotel.”
Id. § 146-3.2(a).
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This formula under Section 146-3.5(b), known as the “forty-hour denominator,” assumes that
employees are owed one-and-one-half times their regular hourly rate for every hour of overtime
work.
Following a four-day jury trial, District Judge Nusrat J. Choudhury entered judgment on
November 19, 2024, for Plaintiff against Defendants for $184,067.52, including $125,908.52 in
overtime damages. See Electronic Case Filing (“ECF”) No. 94 (the “Judgment”).
Defendants have moved to amend the Judgment entered by Judge Choudhury under
Federal Rule of Civil Procedure 59(e), challenging the lawfulness of Section 146-3.5(b) on
constitutional, statutory, and public policy grounds. See ECF No. 100 at 6–14 (the “Motion”).
Defendants argue that an employee’s salary should be divided by the number of hours actually
worked each week, entitling the employee to lower regular hourly rates and overtime
compensation. Id. at 3–5. Under their proposed calculation, Defendants request that the Court
amend the Judgment to “reduce Plaintiff’s initial calculation of overtime damages in the amount
of $125,908.52 and interest in the amount of $45,059.29 to $33,469.95 with interest calculated
accordingly.” Id. at 15. This motion is now before the undersigned for a Report and
Recommendation. See ECF No. 124.
For the reasons below, the undersigned respectfully recommends that the Court deny the
Motion.
I. 	BACKGROUND
The Court assumes knowledge of the factual and procedural background set forth in the
undersigned’s Report and Recommendation issued on July 1, 2025 (“First R&R”). See Teoh v.
Manhasset Restaurant, LLC, No. 22-CV-4110, 2025 WL 1819977, at *1–2 (E.D.N.Y. July 1,
2025). Accordingly, the Court discusses only the facts relevant to this Report and
Recommendation.
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On October 24, 2024, following trial before Judge Choudhury, the jury rendered a verdict
in favor of Plaintiff Boon Hooi Teoh (“Teoh”) against Defendants for unpaid overtime and
spread-of-hours wages under the New York Labor Law (“NYLL”). See ECF No. 92 at 2. The
jury also determined that Defendants’ NYLL wage violations were “good faith” mistakes, and,
as a result, the parties submitted post-verdict damages calculations that excluded liquidated
damages.2 See id.; see also ECF No. 93-1. Using the Section 146-3.5(b) formula, Judge
Choudhury entered judgment against Defendants for $125,908.52 in compensatory damages for
unpaid overtime wages, $13,099.71 in compensatory damages for unpaid spread-of-hours wages,
and $45,059.29 in prejudgment interest—for a grand total of $184,067.52. See ECF No. 94.
Defendants thereafter moved to amend the Judgment on constitutional, statutory, and
public policy grounds. See ECF No. 100. Specifically, Defendants argued that: (1) Section 146-
3.5(b) precludes employers’ “right to be heard” in violation of the Due Process Clauses of the
Fifth and Fourteenth Amendments to the United States Constitution, as well as Article I, Section
6 of the New York State Constitution; (2) the Judgment, as applied to Defendants, imposes a
“punitively excessive” overtime damages award that violates their federal due process rights;
(3) Section 146-3.5(b) “conflicts” with the NYLL and exceeds the New York Department of
Labor’s (“NYDOL”) statutory authority; and (4) Section 146-3.5(b) conflicts with New York
public policy pertaining to punitive damages. See id. at 6–14. On May 8, 2025, Judge
Choudhury referred that motion to the undersigned. See Electronic Order, dated May 8, 2025.
The First R&R was issued on July 1, 2025, and recommended that Judge Choudhury deny the
Motion on threshold procedural grounds and, therefore, did not address the substantive
2 NYLL § 198(1-a) provides for liquidated damages at “one hundred percent of the total amount of wages
found to be due,” unless “the employer proves a good faith basis for believing that its underpayment of wages was in
compliance with the law.” See N.Y. Lab. Law § 198(1-a).
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arguments. See Teoh, 2025 WL 1819977, at *3–5. Defendants objected to the First R&R. See
ECF No. 119.
On September 20, 2025, Judge Choudhury agreed with Defendants that there was no
procedural bar to Defendants’ various challenges. See Teoh v. Manhasset Restaurant LLC, No.
22-CV-4110, 2025 WL 2689654 (E.D.N.Y. Sept. 20, 2025). Judge Choudhury summarized
Defendants’ claims as follows:
First, Defendants argue that the regulation's method of calculating the regular rate
of pay amounts to the imposition of punitive remedies on NYLL defendants
regardless of whether the defendant acted in “good faith” under the NYLL;
according to Defendants, this violates “fundamental public policy” under New
York law. Second, they argue that Section 146-3.5's calculation method has
resulted in the imposition of an “excessive punitive damages award[ ]” against the
Defendants in this action in violation of the Due Process Clause of the Fourteenth
Amendment to the United States Constitution. Third, Defendants argue that
Section 146-3.5, a regulation promulgated by the New York Department of Labor
. . . following the recommendation of the New York Wage Board, was enacted
outside the authority granted by NYLL § 655 . . . which does not expressly
authorize the Department of Labor to “enhance penalties or establish punitive
remedies.” 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 Clauses of the Fifth and Fourteenth
Amendments to the United States Constitution, as well as Article I, Section 6 of
the New York State Constitution.
Id. at *3 (citations omitted).
Judge Choudhury returned the motion challenging the Judgment to the undersigned “with the
instruction to provide a written report and recommendation as to the disposition of the Motion on
the basis of an analysis of the merits of Defendants’ arguments under the Due Process Clause of
the Fifth and Fourteenth Amendments to the United States Constitution, Article I, Section 6 of
the New York State Constitution, and the NYLL statutory scheme or public policy generally.”
Id. at *6.
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For the reasons discussed below, Defendants’ challenges fail to identify a clear error of
law or manifest injustice resulting from the Judgment entered by Judge Choudhury. Therefore,
the undersigned recommends that the Court deny Defendants’ Motion in its entirety.
II. 	LEGAL STANDARD
Rule 59(e) of the Federal Rules of Civil Procedure allows a party to move “to alter or
amend a judgment.” Fed. R. Civ. P. 59(e). “Rule 59(e) covers a broad range of motions,
including motions for reconsideration . . . .” Stollman v. Williams, No. 20-CV-8937, 2024 WL
4354987, at *2 (S.D.N.Y. Sept. 30, 2024) (alteration in original) (quoting Ass’n for Retarded
Citizens of Conn., Inc. v. Thorne, 68 F.3d 547, 553 (2d Cir. 1995)). Thus, a motion to amend a
judgment under Rule 59(e) is decided under the same standard as a motion for reconsideration.
See id. Either way, relief under Rule 59(e) is an “extraordinary remedy to be employed sparingly
in the interests of finality and conservation of scarce judicial resources.” New Falls Corp. v.
Soni Holdings, LLC, No. 19-CV-0449, 2020 WL 9211146, at *5 (E.D.N.Y. Sept. 30, 2020),
report and recommendation adopted, 2021 WL 855939 (Mar. 5, 2021) (internal quotation marks
omitted).
To succeed on a Rule 59(e) motion, “the movant carries a heavy burden.” Amelio v.
McCabe, Weisberg & Conway, P.C., No. 19-CV-8761, 2024 WL 2078244, at *1 (S.D.N.Y. May
9, 2024). The court will grant a Rule 59(e) motion “only when the movant identifies an
intervening change of controlling law, the availability of new evidence, or the need to correct a
clear error or prevent manifest injustice.” Johnson v. Maximus Servs. LLC, No. 23-CV-7672,
2025 WL 1561819, at *4 (2d Cir. June 3, 2025) (summary order) (internal quotation marks
omitted) (quoting Metzler Inv. Gmbh v. Chipotle Mexican Grill, Inc., 970 F.3d 133, 142 (2d Cir.
2020)). This standard “is strict, and reconsideration will generally be denied unless the moving
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party can point to controlling decisions or data the court overlooked . . . .” Liu v. Chau, No. 20-
CV-006369, 2022 WL 2274721, at *1 (E.D.N.Y. June 23, 2022) (quoting Shrader v. CSX
Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995)).
III. 	DISCUSSION
The undersigned has addressed Defendants’ four challenges to Section 146-3.5(b) and,
for the reasons set forth herein, finds that Defendants have failed to their heavy burden under
Rule 59(e) and recommends that Judge Choudhury deny Defendants’ motion to amend the
Judgment.
A. Section 146-3.5(b) is Constitutional under the Federal Due Process Clauses and
Article I, Section 6 of the New York State Constitution
Defendants claim that Section 146-3.5 “precludes the right to be heard” in violation of an
employer’s due process rights under the Fifth and Fourteenth Amendments of the United States
Constitution.3 See ECF No. 100 at 13–14. Although they ostensibly allege a procedural due
process violation, Defendants also claim that Section 146-3.5(b) punitively imposes more
damages than other Wage Orders.4 See id. at 13 (arguing that Section 146-3.5(b) creates an
“irrebuttable presumption” that “precludes the right to be heard”); but see id. at 2 (claiming that
Section 146-3.5 creates “a punitive scheme . . . that results in massively greater damages than in
3 Defendants also challenge Section 146-3.5(b) on the grounds that it violates Article I, § 6 of the New
York State Constitution. See ECF No. 100 at 1, 13–14; see also N.Y. CONST . art. I, § 6 (“No person shall be
deprived of life, liberty or property without due process of law.”). However, Defendants do not claim that the New
York State Constitution affords them greater due process protections than the United States Constitution. See ECF
No. 100 at 1, 13–14 (citing Article I, § 6 of the New York State Constitution but failing to differentiate it from the
United States Constitution). Subject to exceptions that are inapplicable here, “New York courts have interpreted the
due-process guarantees of the New York Constitution and the United States Constitution to be coextensive.” Oneida
Indian Nation of New York v. Madison Cnty., 665 F.3d 408, 427 n.13 (2d Cir. 2011). Thus, the Court discusses
Defendants’ due process challenge to Section 146-3.5(b) only in the context of the Fifth and Fourteenth
Amendments to the United States Constitution.
4 To date, the NYDOL’s Wage Orders provide “industry-specific” guidelines and wage rates for the
hospitality industry, building service industry, farm workers, non-profit organizations, and miscellaneous industries.
See Wage Orders, N.Y. STATE D EP’ T OF L AB ., https://dol.ny.gov/wage-orders [https://perma.cc/R3NJ-YDRU] (last
visited Nov. 17, 2025).
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other New York Industrial Wage Orders or FLSA.”). While not specifically articulated by
Defendants, the latter argument appears to be a substantive due process claim for deprivation of a
property interest. To avoid any doubt, the undersigned addresses Defendants’ arguments as both
procedural and substantive due process claims.
In either case, the undersigned submits that the Court should reject Defendants’ argument
that facial due process challenges to Section 146-3.5(b).
i. 	Section 146-3.5(b) is Facially Consistent with Procedural Due Process
Requirements and was Constitutionally Applied to Defendants
First, Defendants claim that Section 146.3-5(b) imposes an “irrebuttable presumption that
a salary accounts for only the first 40 hours of work.” ECF No. 100 at 1–2 (emphasis in
original). Defendants maintain that Section 146-3.5(b) deprives them of their “right” to argue
that “Plaintiff’s salary constituted payment for all hours worked in a week.” Id. at 13, 14. The
undersigned recommends that the Court reject Defendants’ arguments.
Procedural due process claims have two elements: “(1) the existence of a property or
liberty interest that was deprived and (2) deprivation of that interest without due process.”
Bryant v. New York State Educ. Dep't, 692 F.3d 202, 218 (2d Cir. 2012). If a party has been
deprived of a cognizable property interest, they must “plausibly allege” that they were denied a
“constitutionally adequate pre-or post-deprivation process.” Henry v. City of New York, 638 F.
App'x 113, 115 (2d Cir. 2016). Laws that impose “irrebuttable presumptions”—which treat
stated facts as conclusive without affording litigants a process for challenging them—are
constitutionally suspect. See Vlandis v. Kline, 412 U.S. 441, 446 (1973) (“Statutes creating
permanent irrebuttable presumptions have long been disfavored under the Due Process Clauses
of the Fifth and Fourteenth Amendments.”); but see Black v. Snow, 272 F. Supp. 2d 21, 29–31
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(D.D.C. 2003), aff’d sub nom., Black v. Ashcroft, 100 F. App’x 130 (D.C. Cir. 2004)
(highlighting the demise of the irrebuttable presumption doctrine).
Hospitality employers indisputably have a property interest in unpaid overtime wages.
Contrary to Defendants’ argument, however, courts in this District have recognized that
employers can challenge the 40-hour workweek presumption under Section 146-3.5. See
Pichardo v. El Mismo Rincon Latino Corp., No. 17-CV-7439, 2018 WL 4101844, at *6
(E.D.N.Y. Aug. 7, 2018), report and recommendation adopted, 2018 WL 4100480 (E.D.N.Y.
Aug. 28, 2018) (“New York’s hospitality industry regulations determine hourly wage rate by
dividing weekly wages by the lesser of 40 or actual hours worked; the assumption embedded in
such a calculation is that, unless evidence suggests otherwise, none of the paid wages are to be
credited to overtime.”) (emphasis added); Lopez v. Royal Thai Plus, LLC, No. 16-CV-4028, 2018
WL 1770660, at *7 (E.D.N.Y Feb. 6, 2018), report and recommendation adopted, 2018 WL
1770555 (E.D.N.Y. Apr. 12, 2018) (same). 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.5
5 To the extent that Defendants challenge the logical basis for the 40-hour floor, the NYLL resolves that
challenge. New York law defines a “legal day’s work” as 8 hours, and employees—including hospitality
employees, like Plaintiff—are entitled to overtime wages for workweeks beyond 40 hours. See N.Y. Lab. Law
§ 160(3) (defining “a legal day’s work: [f]or all employees except those engaged in farm work” and certain public
servants as “eight hours”); see also Melo v. Milagro Grocery Corp., 750 F. Supp. 3d 38, 55–56 (E.D.N.Y. 2024)
(finding that a deli worker was entitled to overtime wages under FLSA and NYLL for 60- and 70-hour workweeks);
Fermin v. Las Delicias Peruanas Rest., Inc., 93 F.Supp.3d 19, 45 (E.D.N.Y 2015) (determining that a restaurant
employee “demonstrate[d] the complained-of overtime without the need for any inference because his set schedule
exceeded forty working hours per week”).
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Defendants here received far more than a “hearing” before Judge Choudhury. After three
days of depositions, the exchange of voluminous paper discovery, and an unsuccessful attempt at
mediation (see Electronic Order, dated August 26, 2024), Defendants failed to produce evidence
demonstrating that any of Plaintiff’s alleged damages were credited to overtime. Throughout
pre-trial motion practice, Defendants never sought to exclude Plaintiff’s wage record evidence
on the basis that Plaintiff had received overtime pay.6 During the four-day jury trial before
Judge Choudhury, defendants did not dispute the insufficiency of Plaintiff’s paystubs. See
Plaintiff’s Trial Ex. 6 at *P048–P234 (paystubs without definite numbers of hours per pay period
Teoh’s salaries compensated); c.f. id. at *P001–P047 (paystubs listing definite numbers of hours
compensated at hourly rates). Defendants’ only defenses to Plaintiff’s overtime claims were that
Plaintiff was “exempt” from overtime pay under the FLSA and NYLL. See ECF No. 75 at 3.
Following the jury’s finding that Plaintiff was entitled to overtime pay (ECF No. 92 at 2),
Defendants “[i]ndicate[d] that [they] still intend[ed] to challenge the method of calculation,” but
did not specifically controvert any of Plaintiff’s calculations. ECF No. 93; see also ECF No.
93-1 (Plaintiff’s overtime and spread of hours calculations). Even in their post-trial briefing,
Defendants do not argue that the Judgment improperly accounts for earlier paid overtime wages.
Throughout the more than three-year history of this case—and despite numerous opportunities to
be heard—Defendants have not shown that Plaintiff was compensated for any of his unpaid
overtime work.
Thus, the undersigned recommends that the Court deny Defendants’ procedural due
process challenge to Section 146-3.5(b), both facially and as applied to Defendants.
6 Defendants did not file any motions in limine. Plaintiff filed a motion in limine to exclude a culinary blog
post that Defendants sought to admit at trial. See ECF No. 60. Although Defendants initially opposed (ECF No.
61), they later agreed to strike the blog post from the evidence list in the Joint Pretrial Order, and Plaintiff’s motion
was withdrawn. See Electronic Orders, dated October 12, 2024, and October 18, 2024.
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ii. 	Section 146-3.5 Comports with Hospitality Employers’ Substantive Due
Process Rights under the Fourteenth Amendment
Second, Defendants variously claim that there is a supposed “irrebuttable presumption”
under Section 146-3.5(b) that imposes greater costs on hospitality employers than other
employers for overtime violations. See, e.g., ECF No. 100 at 2 (“[D]amages are nearly four
times as much merely by being paid a salary in the hospitality industry.”); id. at 13 (“Nothing in
the regulatory history states that § 146-3.5(b) justifies the use of forty hours as a fixed divisor or
the harsh results.”). These arguments resemble an economic substantive due challenge to
Section 146-3.5(b) for hospitality employers’ property interest in unpaid overtime wages.
Indeed, Plaintiff treats these arguments as a substantive due process claim. See ECF No. 121 at
10 (“A statute adjusting the burdens and benefits of economic life is presumptively
constitutional, and the burden is on one complaining of a substantive due process violation to
establish that the legislature has acted in an arbitrary and irrational way.” (internal quotation
marks and citations omitted)). In any event, the Court should reject this challenge to Section
146-3.5(b).
It is well-established that due process challenges to economic statutes and regulations are
subject to rational basis review. See In re Chateaugay Corp., 53 F.3d 478, 486 (2d Cir. 1995)
(“Under the due process standards set forth by the Supreme Court, we review laws ‘adjusting the
benefits and burdens of economic life’ for arbitrariness and irrationality.”) (quoting Usery v.
Turner Elkhorn Mining Co., 428 U.S. 1, 15 (1976)). To survive rational basis review, an
economic regulation “need only be ‘rationally related to legitimate government interests.’” See
74 Pinehurst LLC v. New York, 59 F.4th 557, 569 (2nd Cir. 2023) (quoting Washington v.
Glucksberg, 521 U.S. 702, 728 (1997)). Put differently, an economic regulation “must be upheld
if there is any conceivable state of facts that could provide a rational basis” for implementing it.
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Home for Aged of Little Sisters of the Poor v. McDonald, 711 F. Supp. 3d 81, 116 (N.D.N.Y.
2024), appeal withdrawn, No. 24-387, 2024 WL 3803195 (2d Cir. Mar. 22, 2024) (internal
quotation marks and citation omitted).
Such regulations are presumptively constitutional, and complaining parties must
demonstrate that an agency, in promulgating an economic regulation, “acted in arbitrary or
irrational way.” Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15 (1976); see also Beatie v.
City of New York, 123 F.3d 707, 711 (2d Cir. 1997) (“Legislative acts that do not interfere with
fundamental rights or single out suspect classifications carry with them a strong presumption of
constitutionality.”); Winston v. City of Syracuse, 887 F.3d 553, 560 (2d Cir. 2018) (“[T]he
burden is on the one attacking the legislative arrangement to negative every conceivable basis
which might support it”) (citation omitted). Courts should avoid “broadly constru[ing]” the Due
Process Clause as putting lawmakers in a “‘strait jacket when they attempt to suppress business
and industrial conditions which they regard as offensive to the public welfare.’” Columbus Ale
House, Inc. v. Cuomo, 495 F. Supp. 3d 88, 94 (E.D.N.Y. 2020) (quoting New Motor Vehicle Bd.
of California v. Orrin W. Fox Co., 439 U.S. 96, 107 (1978)); see also Williamson v. Lee Optical
of Oklahoma Inc., 348 U.S. 483, 488 (1955) (“The day is gone when this Court uses the Due
Process Clause of the Fourteenth Amendment to strike down state laws, regulatory of business
and industrial conditions, because they may be unwise, improvident, or out of harmony with a
particular school of thought.”).
The regulatory history of Section 146-3.5(b) makes clear the New York Department of
Labor’s (“NYDOL”) rationale for implementing the regulation. In March 2009, the NYDOL’s
Commissioner appointed a Wage Board to review and recommend changes to Hotel and
Restaurant Wage Orders, which governed the minimum wage and overtime rates of restaurant
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and hotel workers. See Report and Recommendation from the Minimum Wage Board to the
Commissioner of Labor 1 (Sept. 9., 2009) (on file with author) (“Hospitality Wage Board
Report”); see also N.Y. Comp. Codes R. & Regs. Tit 12, §§ 137, 138 (2011). Given the
“commonalities” of the hotel and restaurant industries, the Wage Board recommended
combining Hotel and Restaurant Wage Orders into a single Wage Order—the “Hospitality Wage
Order”—“to afford employer and employees a clearer understanding of laws affecting their
industries.” Hospitality Wage Board Report at 7. One industry-wide commonality was overtime
violations. Id. at 11 (“Overtime 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.”). To ensure that hospitality employees were compensated for their overtime
work, the Wage Board recommended that the Commissioner mandate hourly pay rates. Id.
Ultimately, the Commissioner followed the Wage Board’s overtime recommendations.
In an October 2010 Proposed Rulemaking, the New York Department of Labor noted that, “[f]or
hours worked in excess of forty per week, the employee must be paid time plus one half the
regular rate. This requirement, well established in case law, is not well known, and multitudes of
overtime violations result from payment of weekly rates.” New York State Department of
Labor, “Notice of Proposed Rulemaking: Hotel and Restaurant Wage Orders,” NYS Register
(Oct. 20, 2010) (“October 2010 Notice of Proposed Rulemaking”). Thus, the NYDOL proposed
a regulation—codified as Section 146-3.5(b)—that barred hourly pay rates for hospitality
employers. Id. If hospitality employers did not pay hourly rates, the NYDOL could calculate an
employee’s overtime compensation by dividing an employee’s weekly earnings by the lesser of
40 hours or the actual number of hours worked. Id.
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Considering this regulatory history, Section 146-3.5(b) was a rational means to address
the “multitude” of overtime violations in the hospitality industry. It is more than “conceivable”
that Section 146-3.5(b) would reinforce employers’ obligation to pay premiums for overtime
work because Section 146-3.5 explicitly requires it. By setting a 40-hour floor for overtime
calculations, the NYDOL clarified that all hospitality employees—even those paid salaries or on
a piece-meal basis—must receive an overtime premium for hours worked beyond the 40-hour
workweek. In other words, Section 146-3.5(b) put hospitality employers on notice of their
overtime obligations under the NYLL. If employers failed to pay overtime premiums, Section
146-3.5(b) provided an enforcement mechanism, whereby the NYDOL could calculate overtime
compensation based on the NYLL’s 40-hour floor. Moreover, Section 146-3.5(b) places
employees in a position as if their employers had paid them an overtime premium for hours
worked beyond the 40-hour workweek.
In an unsuccessful to show the irrationality of this state scheme, Defendants’ claim that
Section 146-3.5(b)’s “[m]ore convenient” calculation methods “do[] not justify” its “harsh
result.” ECF No. 100 at 13. As noted above, this Court should not strike down Section
146-3.5(b) merely because it might believe that it “unwise[ly]” or “improvident[ly]” imposes
greater costs on hospitality employers. Lee Optical, 348 U.S. at 488. It is enough that Section
146-3.5(b) could ameliorate overtime violations in the hospitality industry; the NYDOL should
not be placed in a regulatory “strait jacket.” Columbus Ale House, 495 F. Supp. 3d at 94.
Regardless, the NYDOL has addressed similar arguments in the past. When the NYDOL
adopted Section 146-3.5(b) in December 2010, the NYDOL recounted one objector’s concern
that Section 146-3.5(b) “would increase costs to businesses and hurt jobs.” New York State
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Department of Labor, “Notice of Adoption: Hotel and Restaurant Wage Orders,” NYS Register
(Dec. 29, 2010) (“Notice of Adoption”). The NYDOL responded that:
[T]he cost of keeping hours records under both the old and new regulation is the
same and the cost of wages owed can be the same . . . A salary can be converted
to an hourly rate plus overtime at 1½ times the hourly rate for the average number
of hours worked by the employee . . . Only 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, as the employer will owe more back
overtime pay under the new regulation than under the old one.
Id. (emphasis added). Moreover, the NYDOL acknowledged that some businesses —
those failing to adequately account for their employees’ overtime—could face increased
costs. The NYDOL determined that Section 146-3.5(b)’s benefit to employees
outweighed its costs for non-compliant businesses, and this Court will not second-guess
the NYDOL’s rationally-based judgment.
The NYDOL undoubtedly has a legitimate aim in ensuring compliance with the NYLL’s
overtime laws. When enacting the “Minimum Wage Act” (which is Section 146-3.5(b)’s
enabling statute), the New York State Legislature recognized that some workers were being paid
“wages insufficient to provide adequate maintenance for themselves and their families.” N.Y.
Lab. Law § 650. As the state legislature viewed it, insufficient pay threatened workers’ “health,
efficiency, and wellbeing,” created “unfair competition” among businesses, reduced employees’
“purchasing power,” and increased reliance on public assistance. See id. Accordingly, the state
legislature proclaimed that it was New York’s “policy . . . that such conditions be eliminated as
rapidly as practicable without substantially curtailing opportunities for employment.” Id.
Considering the State Legislature’s policy directive, the NYDOL legitimately decided
that overtime violations in the hospitality industry should be rectified. In its Proposed
Rulemaking, the NYDOL noted that in 2008, hotels and restaurants employed approximately
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567,000 people in New York. See October 2010 Notice of Proposed Rulemaking. Because
hospitality workers comprised a substantial portion of New York’s workforce, the NYDOL
understandably viewed overtime violations as a threat to employees’ health and well-being and,
more broadly, to New York’s economy. Defendants do not dispute that the NYDOL was
empowered to regulate the hospitality industry’s overtime practices and protect employees’
health and well-being.7 See Beatie, 123 F.3d at 712 (characterizing “the promotion of public
health safety or welfare” as a legitimate government objective). Because Section 146-3.5(b) is a
rational means to address the “evil” of overtime violations in the hospitality industry, this Court
will not supplant the NYDOL’s decision-making. Lee Optical, 348 U.S at 488.
Therefore, the undersigned recommends that the Court reject Defendants’ substantive due
process challenge to Section 146-3.5(b).
B. As Applied to Defendants, The Court’s Method of Calculating Damages Did Not
Violate the Fourteenth Amendment’s Due Process Clause
Defendants also challenge the constitutionality of Judge Choudhury’s Judgment on an as-
applied basis. Specifically, they contend that the Judgment “exceeds the Constitution limits for
punative [sic] damages” under the Fourteenth Amendment’s Due Process Clause by imposing
overtime damages that are “nearly four times higher than would be required in any other
industry.” 	ECF No. 100 at 9, 10. The undersigned recommends that the Court reject this
challenge.
For one, Defendant’s incorrectly assume that the Judgment imposes punitive damages.
Defendants concede that, because the jury determined that they had acted in “good faith,”
Plaintiff was not entitled to liquidated damages which have been considered “punitive” in nature.
7 Defendants concede that the NYDOL’s and its Wage Boards’ “powers include setting ‘overtime or part
time rates . . . [and] excessive spread of hours and weekly guarantees . . . .” ECF No. 100 at 11 (quoting N.Y. Lab.
Law § 655).
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See ECF No. 100 at 5; see also Villanueva v. 179 Third Ave. Rest Inc., 500 F. Supp. 3d 219, 243
(S.D.N.Y. 2020) (“[L]iquidated damages under the NYLL are considered punitive in nature”);
see also N.Y. Lab. Law § 198(1-a) (providing for liquidated damages at “no more than one
hundred percent of the total amount of wages found to be due”); id. § 198(3) (allowing
employees to recover “liquidated damages accrued during the six years previous to the
commencing of such action”). Consequently, Judge Choudhury never calculated liquidated
damages. Plaintiff’s overtime damages were not “liquidated damages”—and thus, were not per
se “punitive”— simply because they were greater than Defendants would prefer after losing at
trial.
In any event, the Judgment lacks the characteristics of a liquidated damages award.
Liquidated damages are mandatory for overtime violations unless the employer can “prove[] a
good faith basis for believing that its underpayment of wages was in compliance with the law.”
N.Y. Lab. Law § 198(1-a); see also Cabrera v. Canela, 412 F. Supp. 3d 167, 184 (E.D.N.Y.
2019) (“Under the NYLL, liquidated damages are presumed unless defendants can show
subjective good faith.”) (internal quotation marks and citation omitted). Courts calculating
liquidated damages have, consistent with Section 198, imposed them at 100% of unpaid wages
and in addition to compensatory damage awards. See, e.g., Brathwaite v. Martini Collections
Inc., No. 22-CV-4929, 2025 WL 99108, at *8 (S.D.N.Y. Jan. 14, 2025), report and
recommendation adopted, 2025 WL 448040 (S.D.N.Y. Feb. 10, 2025) (recommending an
additional liquidated damages award of $14,607.27, which represented the totality of the
plaintiff’s unpaid wages); Rowe v. CC Restaurant & Bakery, Inc., No. 14-CV-1423, 2019 WL
4395158, report and recommendation adopted, at *9 (E.D.N.Y. 2019) (recommending an
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additional award of $304,618.96 in liquidated damages, which represented 100% of the
defendants’ overtime violations).
In contrast to the necessary “good faith” finding necessary for an award of liquidated
damages, Defendants’ good faith was irrelevant to Judge Choudhury’s calculation of overtime
damages. The jury already had determined that Defendants’ overtime violations were good faith
mistakes, meaning that Plaintiff was not entitled to liquidated damages. See ECF No. 92 at 2.
Nor did Judge Choudhury impose another category of damages in addition to Plaintiff’s
compensatory award. Excluding pre-judgment interest—and accounting past-due overtime
($125,908.52) and spread-of-hours ($13,099.71) wages—Judge Choudhury imposed
$139,008.23 in compensatory damages. If Judge Choudhury had ordered Defendants to pay
liquated damages, they would have been responsible for an additional $139.008.23. In other
words, if the Judge Choudhury had imposed liquidated damages, Defendants would have been
responsible for twice the damages that they allege are punitive.
In any event, even if Plaintiff’s overtime damages award was punitive, it was not so
“grossly excessive” as to offend Defendants’ due process rights. See BMW of N. Am., Inc. v.
Gore, 517 U.S. 559, 568 (1996) (“Only when an award can fairly be categorized as ‘grossly
excessive’ in relation to these interests does it enter the zone of arbitrariness that violates the Due
Process Clause of the Fourteenth Amendment.”). Generally, a punitive damages award poses a
due process concerns when, compared to compensatory damages, it exceeds a single-digit ratio.
See State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003) (explaining that “few
awards exceeding a single digit-ratio between punitive and compensatory damages . . . will
satisfy due process”); see also Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 23–24 (1991)
(noting that a punitive damages award that was “more than 4 times the amount of compensatory
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damages . . . may [have] be[en] close to the line . . . of constitutional impropriety”). Here, the
overtime damages constituted $125,908.52 of Plaintiff’s total compensatory damages award of
$139.008.23,8 less than a one-to-one ratio. ECF No. 94 at 1. By this standard, the Judgment was
not “too punitively excessive to be enforceable.” ECF No. 100 at 11.
Similarly, Defendants’ argument that they were assessed greater overtime damages “for
paying Plaintiff on a salary basis” misses the mark. Id. at 9. As previously noted, employers can
pay salaries in compliance with Section 146-3.5(b) so long as the salaries are “converted to an
hourly rate plus overtime.” December 2010 Notice of Adoption. “[O]nly if a business does not
comply with [Section 146-3.5(b)] and fails to pay an hourly rate plus overtime [does Section
146-3.5(b)] make it more costly for the employer.” Id. Defendants thus were not per se
prohibited from paying a salary to Plaintiff. Had Defendants maintained their timekeeping
records and accounted for Plaintiff’s overtime in his salaried paychecks (which they did not),
they would not be responsible for overtime damages. Defendants violated the NYLL by failing
to pay Plaintiff a premium for hours worked beyond the 40-hour workweek and, for that, they
owe him $125,908.52 in lost overtime wages.
C. Section 146-3.5(b) Falls within the New York Department of Labor’s Statutory
Mandate
Defendants challenge Section 146-3.5(b) as “conflict[ing] with the legislative mandates
of the NYLL.” ECF No. 100 at 11. In particular, they argue that “[t]here is nothing in NYLL
§ 198, 655 or 656 – or elsewhere in the NYLL – that confers authority to the [NYDOL] to
promulgate regulations that establishes an additional punitive remedy.” Id. Because Section
8 As noted above, Plaintiff’s compensatory damages award was comprised of $125,908.52 in unpaid
overtime wages and $13,099.71 in unpaid spread-of-hours wages, for a total of $139.008.23 in compensatory
damages. See ECF No. 94 at 1.
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146-3.5 comports with the NYDOL and Hospitality Wage Board’s statutory authority, the
undersigned recommends that the Court reject this challenge.
Chief Judge Margo K. Brodie’s decision in Rocha v. Bakhter Afghan Halal Kababs, Inc.,
44 F. Supp. 3d 337 (E.D.N.Y. 2014), is instructive. Rocha concerned a FLSA class action suit
seeking, among other things, overtime compensation pursuant to N.Y.C.R.R. § 142-2.2 (“Section
142-2.2”) for employees working at a Halal restaurant in Flushing, Queens.9 Id. at 340; see also
N.Y. Comp. Codes R. & Regs. Tit. 12, § 142-2.2 (2025). The Rocha defendants moved to
dismiss the NYLL overtime claims, arguing that, by enacting Section 142-2.2, the
“Commissioner of Labor . . . [had] overstepped the authority delegated to him in imposing
substantive obligations upon employers beyond that required by the Legislature.” Rocha, 44 F.
Supp. 3d at 355.
The Rocha court rejected these arguments. Initially, Chief Judge Brodie noted that
agency “[r]egulations promulgated . . . pursuant to legislatively delegated authority are upheld
unless they ‘exceeded the scope of [their] constitutional authority by engaging in inherently
legislative activity.’” Id. (quoting Med. Soc'y of State v. Serio, 100 N.Y.2d 854, 865 (2003)).
Put differently, agencies must “operate within the substantive scope of the enabling legislation”
and avoid “enacting regulations that are not ‘in harmony with the statute's over-all purpose.’” Id.
at 356 (quoting Gen. Elec. Capital Corp. v. New York State Div. of Tax Appeals, 2 N.Y.3d 249,
254 (2004)).
Citing to the NYDOL’s Notice of Adoption of Section 146-3.5(b), the Rocha court
reasoned that the Commissioner of Labor did not make any “broad-based policy determinations”
9 In relevant part, Section 142-2.2 mandates that “[a]n employer shall pay an employee for overtime at a
wage rate of one and one-half times the employee's regular rate.” N.Y. Comp. Codes R. & Regs. Tit. 12, § 142-2.2
(2025).
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when enacting Section 142-2.2. Id. (citing December 2010 Notice of Adoption). Instead,
pursuant to the Minimum Wage Act, the Commissioner adopted Section 142-2.2 “upon the
recommendation of a wage board” that he had appointed “during the course of his investigation
into the adequacy of the established minimum wage law.”10 Id. Moreover, the Wage Board was
specifically empowered to recommend regulations pertaining to overtime rates. Id.; see also
N.Y. Lab. Law § 655(5)(b) (allowing the wage board to make recommendations that “include,
but are not limited to, regulations governing . . . overtime or part-time rates”). Because he sought
to “safeguard minimum wages . . . includ[ing] overtime,” the court determined that the
Commissioner had acted within his delegated authority when adopting Section 142-2.2. Rocha,
44 F.Supp.3d. at 357 (quoting N.Y. Lab. Law § 655(5)(b)); see also N.Y. Lab. Law § 656
(allowing the Commissioner to adopt or modify a wage board’s recommendations); id. § 21(11)
(vesting the Commissioner with the power “to issue such regulations governing any provision of
[the NYLL] as he finds necessary and proper”).
If the Rocha court determined that NYDOL could issue a regulation mandating overtime
compensation at “one and one-half times the employee's regular rate,” it follows from that
reasoning that the NYDOL should be permitted to regulate the sufficiency of that “regular rate”
for hospitality employees’ overtime compensation. As detailed above, the Hospitality Wage
Board recommended Section 146-3.5(b) to remedy overtime miscalculations that denied
employees a premium for their work beyond the 40-hour workweek. See Hospitality Wage
Board Report at 11. Consistent with his authority to adopt the Hospitality Wage Board’s
10 NYLL § 653(1) provides that, “[i]f, on the basis of information in his possession with or without such an
investigation, the commissioner is of the opinion that any substantial number of persons employed in any occupation
or occupations are receiving wages insufficient to provide adequate maintenance and to protect their health, he shall
appoint a wage board to inquire into and report and recommend adequate minimum wages and regulations for
employees in such occupation or occupations.” N.Y. Lab. Law § 653(1).
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recommendations, the Commissioner enacted Section 146-3.5(b) and set a 40-hour floor for
overtime calculations. See N.Y. Lab. Law § 656. Inasmuch as the NYLL mandates overtime
pay for workweeks exceeding 40 hours, Section 146-3.5(b) provides the NYDOL with an
enforcement mechanism to ensure that employees receive their overtime pay. The
Commissioner could reasonably believe that such a regulation would “safeguard minimum
wages . . . includ[ing] overtime.” 	Id. § 655(5)(b).
Contrary to Defendants’ arguments, the Commissioner did not create an extra-legislative,
punitive remedy. See ECF No. 100 at 11–12. The Minimum Wage Act is a “broad enabling
statute” that, as explained above, charges the NYDOL with ameliorating the effects of
“insufficient rates of pay.” Rocha, 44 F. Supp. 3d at 355; N.Y. Lab. Law § 650. Notably, the
NYLL does not establish overtime rates; the state legislature has expressly granted the NYDOL
the power to regulate overtime rates. See Ballard v. Cmty. Home Care Referral Serv., Inc., 264
A.D.2d 747, 747 (N.Y. App. Div. 1999) (“There are no provisions governing overtime
compensation in the [NYLL]. In addition to making recommendations regarding minimum
wages, the wage board may recommend such regulations as it deems appropriate with respect to .
. . overtime rates.”); N.Y. Lab. Law § 655(5)(b) (allowing the wage board to make
recommendations that “include, but are not limited to, regulations governing . . . overtime or
part-time rates”). Pursuant to that authority, the NYDOL promulgated Section 146-3.5(b), which
uses the NYLL’s definition of a “legal workweek”—40 hours per week—as the basis for
overtime calculations. If anything, Section 146-3.5(b) reinforces existing law. Accepting
Defendants’ arguments would contravene the Minimum Wage Act’s stated purposes and neuter
the NYDOL’s ability to regulate overtime rates. Therefore, the undersigned recommends that
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the Court reject Defendants’ challenge and hold that Section 146-3.5(b) comports with the
NYDOL’s statutory mandate.
D. The Judgment’s Did Not Violate a Fundamental “Public Policy” of the NYLL.
Defendants claim that the Judgment offends “New York public policy that punitive
damages can[not] be awarded without any enhanced culpability.” ECF No. 100 at 8. According
to Defendants, Section 146-3.5(b) imposes heightened damages regardless of whether an
employer acted in “good faith” to comply with overtime laws. See id. at 7–8. As explained
below, the undersigned recommends that the Court reject Defendants’ public policy argument
because Section 146-3.5(b) comports with the Minimum Wage Act’s policy directives.
Defendants’ reliance on Chauca v. Abraham, 30 N.Y.3d 325 (2017), is misplaced.
Chauca pertained to allegations of sex and employment discrimination under, in relevant part,
the New York City Human Rights Law (“NYCHRL”). See id. at 329–30; see also N.Y.C.
Admin. Code § 8-107(1) (making it an “unlawful discriminatory practice . . . [f]or an employer .
. . because of the actual or perceived . . . gender. . . of any person . . . to refuse to hire or employ
or to bar or discharge from employment such person”). The plaintiff proceeded to trial in the
Eastern District Court of New York and requested a jury instruction on punitive damages. See
Chauca, 20 N.Y.3d at 329; see also N.Y.C. Admin. Code § 8-502 (sanctioning punitive damages
for “unlawful discriminatory practices”). Relying on the punitive damages standard found in the
Civil Rights Act of 1964, the Court rejected the proposed jury instruction: “[t]here [was] no
showing of malice, reckless indifference, that there was an intent to violate the law.” Chauca, 20
N.Y.3d at 329. After the jury rendered a verdict for the plaintiff—which did not include punitive
damages—she appealed, claiming that the district court erred in using Title VII’s punitive
damages standard. Id. (citing Chauca v. Abraham, 841 F.3d 86 (2nd Cir. 2016)). Upon
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certification from the Second Circuit, the New York Court of Appeals was tasked with
answering the following question: “[w]hat is the standard for finding a defendant liable for
punitive damages” under the NYCHRL? Id. at 330.
The New York Court of Appeals found that, despite “the clear intention to make punitive
damages available,” the NYCHRL did not elucidate the standard for when punitive damages
were appropriate. Id. Rejecting the district court’s use of Title VII, the New York Court of
Appeals determined that a common-law standard applied and a plaintiff was entitled to punitive
damages under the NYCHRL when “the wrongdoer ha[d] engaged in discrimination with willful
or wanton negligence, or recklessness, or a ‘conscious disregard of the rights of others or
conduct so reckless as to amount to such disregard.’” Id. at 334 (quoting Home Ins. Co. v.
American Home Prods. Corp., 75 N.Y.2d 196, 203–04 (1990)).
Defendants’ reliance on Chauca is misplaced. In contrast to the NYCHRL, the Minimum
Wage Act at issue in this case does not authorize the NYDOL to impose punitive damages for
good faith failures to pay overtime compensation.11 The Minimum Wage Act also does not
include the phrase “unlawful discriminatory practice,” nor does it mention “wanton negligence,”
“recklessness,” or “conscious disregard.” It is unclear how Chauca, which established a standard
for awarding punitive damages in NYCHRL sex discrimination cases, has any bearing on “public
policy” governing overtime compensation under the Minimum Wage Act, the NYLL, or state
law generally.
11 NYLL § 198 provides for liquidated damages at 300% of wages due if an employer enforces pay
differentials because of an employee’s “protected class” status. See N.Y. Lab. Law § 198(1-a) (citing N.Y. Lab.
Law § 194 (prohibiting an employer from paying “protected class” status employees at rates less than employees
without protected status for “equal” or “substantially similar” work)). If Defendants were found liable for wage
discrimination akin to the Chauca defendants’ alleged discriminatory conduct, Plaintiff would be entitled to
$417,024.69—three times his compensatory damages award of $139.008.23—in liquidated damages; far more than
Plaintiff’s supposedly “punitive” overtime damages award.
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What the Minimum Wage Act clarifies, however, is the state legislature’s policy
determination that “insufficient rates of pay threaten the health and well-being” of New Yorkers
and “injure[] the overall economy.” N.Y. Lab. Law § 650. Consistent with the state legislature’s
judgment, the NYDOL is entrusted to “eliminate” those conditions “as rapidly as practicable.”
Id. The NYDOL can implement the legislature’s directive by regulating “minimum wages . . .
includ[ing] overtime.” 	Id. § 655(5)(b). Section 146-3.5(b)—promulgated because of rampant
overtime violations in the hospitality industry—does so by simplifying prior Wage Orders and
clarifying the NYLL’s overtime premium requirements. Moreover, Section 146-3.5(b) protects
hospitality employees like Plaintiff from “insufficient rates of pay,” even if it operates more
“harshly” than Defendants would prefer. Romero v. Rung Charoen Sub, Inc., No. 16-CV-1239,
2017 WL 4480758, at *32 n.11. (E.D.N.Y. Sept. 30, 2017).
IV. 	CONCLUSION
For the reasons set forth in this Report and Recommendation, the undersigned finds that
Defendants have not met their burden under Rule 59(e) and have not demonstrated that the
Judgment entered by Judge Choudhury presented clear error of law or resulted in manifest
injustice. Accordingly, the undersigned recommends that the Court deny Defendants’ Motion in
its entirety.
V. 	OBJECTIONS
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b)(2), the parties shall have fourteen (14)
days from service of this Report and Recommendation to file written objections. See also Fed.
R. Civ. P. 6(a) & (d) (addressing computation of days). Any requests for an extension of time
for filing objections must be directed to Judge Choudhury. FAILURE TO FILE TIMELY OBJECTIONS
SHALL CONSTITUTE A WAIVER OF THOSE OBJECTIONS BOTH IN THE D ISTRICT C OURT AND ON LATER
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APPEAL TO THE UNITED S TATES C OURT OF APPEALS . See Thomas v. Arn, 474 U.S. 140, 154–55
(1985); Frydman v. Experian Info. Sols., Inc., 743 F. App’x 486, 487 (2d Cir. 2018); McConnell
v. ABC-Amega, Inc., 338 F. App’x 24, 26 (2d Cir. 2009); F.D.I.C. v. Hillcrest Assocs., 66 F.3d
566, 569 (2d Cir. 1995).
SO ORDERED:
Dated: Central Islip, New York
November 18, 2025 	s/ Lee G. Dunst
____________________
LEE G. DUNST
United States Magistrate Judge
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