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New York Labor Law (NYLL) Section 191 establishes specific wage payment requirements for different categories of employees. It is crucial for employers to understand this section, as it dictates the timing and method of wage payments in New York State.
Most employees must be paid according to the agreed terms of employment and not less frequently than semi-monthly. However, manual workers must be paid on a weekly basis, within seven calendar days of earning their wages. New York employers are frequently being sued for failing to pay employees as often as required by the NYLL, and now face the risk of liquidated damages, the consequences of which can be severe. Cases are being brought both as individual claims and on a class basis.
The Proposed Bill has Structured Damages
The proposed bill introduces a nuanced damages structure for such violations related to wage payment timing, but importantly eliminates liquidated damages unless an employer acts egregiously. If enacted, recoverable damages against employers who pay wages on a regular payday (at least semi-monthly), will be calculated based on lost interest, with different penalty levels depending on the frequency and severity of violations. For the first violation, employers may be subject to up to 100% of lost interest calculated daily; for repeated violations, damages could increase to 300% of lost interest. Only employers with multiple prior orders, and with another violation occurring after the effective date of the bill, may be subject to liquidated damages equal to 100% of the total amount of wages found to be due. However, the violation will not trigger liquidated damages for a first violation or for any employer not subject to a previous finding and order for such a violation. The changes, if approved, will take effect immediately and apply to both pending and new lawsuits.
Manual Workers
Labor Law § 191(1)(a)(1) requires that employers pay manual workers on a weekly basis, absent a waiver from the Commissioner of Labor to pay less frequently. New York State’s Department of Labor has a broad definition of who is considered to be a “manual worker,” defining a manual worker as employees who spend 25% or more of their time engaged in physical labor. The term “physical labor” has been construed broadly, even including employees who spend a lot of time on their feet. The duties an employee performs, not their title, determines whether the employee is a manual worker.
Vega Decision – Appellate Division, First Department
In 2019, the Appellate Division, First Department, in Vega v. CM & Associates Construction Management, LLC, recognized for the first time a private right of action for employees to sue their employer under Section 198(1-a) of the NYLL for delayed wage payments in violation of NYLL Section 191(1)(a) and allowed plaintiffs to recover liquidated damages equal to the amount of the late - paid wages, even for those who were paid bi – weekly on a regular basis. Currently, employees are suing their employers for paying them in full but on a bi-weekly or semi-monthly basis as opposed to weekly and they are recovering sizeable liquidated damages even though they were paid.
Grant v. Global Aircraft Dispatch – Appellate Division, Second Department
In January 2024, in Grant v. Global Aircraft Dispatch Inc., the Appellate Division, Second Department, departed from the holding in Vega. In contrast to Vega, the Court held that the payment of full wages on the regular biweekly payday does not constitute nonpayment or underpayment. The Grant Court explained that “[t]he plain language of Labor Law § 198(1–a) supports the conclusion that this statute is addressed to nonpayment and underpayment of wages, as distinct from the frequency of payment.” See Labor Law § 198(1–a) (referring to an employee being “paid less than the wage to which he or she is entitled.”). The Court further declined to follow Vega’s holding recognizing a private right of action against employers for paying manual worker’s wages in full but not on a weekly basis. Instead, the Grant Court concluded “that Labor Law § 198 does not expressly provide for a private right of action to recover liquidated damages, prejudgment interest, and attorneys’ fees where a manual worker is paid all of that worker’s wages biweekly, rather than weekly, in violation of Labor Law § 191(1)(a).”
New York Courts Are Split both at the State and Federal Level
As a result of these two rulings, the New York courts are split on the issue of liquidated damages in frequency-of-pay claims. The Federal Courts in the Eastern and Southern Districts of New York sometimes follow Vega while the Western District of New York seems to be following Grant, as it held in Galante v. Watermark Servs. IV, LLC, 722 F. Supp. 3d 170, 187 (W.D.N.Y. 2024) that manual workers do not have a private right of action under Section 198(1-a). The Eastern and Southern District of New York have lately been ordering stays given the split in New York state courts, There is a pending motion in Grant, filed by Plaintiff’s counsel, requesting re-argument or a leave to appeal to the New York Court of Appeals.
What Are the Available Damages for a Court That Follows Vega?
If an employer is sued in the First Department or in the Southern or Eastern Districts of New York for failure to pay an employee weekly as opposed to semi-monthly, that employer could be subject to liquidated damages equal to the amount of the late-paid wages if the employee is deemed to be a manual worker. So, for example, if an employee earns $700 per week and is considered a manual worker, but that employee is paid $1,400 semi-monthly, then that employee may be entitled to $700 in liquidated damages even though the employee was paid but was not paid weekly.
Relief May Be On the Way and What You Can Do to Help
Relief may be on the way for New York employers facing frequency of pay lawsuits, pending agreement from either the Court of Appeals with the Second Department’s interpretation in Grant or the New York State legislature moving forward with Governor Hochul’s proposed legislation. The New York State budget is due April 1, 2025. We encourage you to contact state senators and assembly members and voice your support for Governor Hochul’s proposed legislation and to encourage your friends and colleagues to do the same. Contact information for elected leaders is prominently displayed on their individual websites.
We will continue to monitor further developments of New York’s frequency of pay laws, and prepared to assist employers with their pay schedule practices in the future.
Should you have any questions or comments, as always, please feel free to contact:
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