As a result of a new appellate court decision, New York employers may now face liquidated damages for failing to pay employees as frequently as required by the New York Labor Law. In a recent unexpected decision that departs from the conventional wisdom and older precedent, the Appellate Division of the New York Supreme Court for the First Department, in Vega v. CM & Associates Construction Management, LLC, held that “manual workers” who were paid in full, but paid on a biweekly or later basis, could recover liquidated damages for the employer’s failure to pay them weekly as required by state law. This decision could have significant implications for employers in New York.
New York’s Requirements Regarding Frequency of Pay for Manual Workers
State law requires employers to pay “manual workers” no less frequently than on a weekly basis.1 A manual worker is defined in the applicable statute as “a mechanic, workingman or laborer.”2 Notwithstanding this seemingly narrow definition, the New York State Department of Labor (NYSDOL) has broadly interpreted “manual worker” to include individuals who spend 25% or more of their working time engaged in physical labor.3 “Physical labor,” according to the NYSDOL, includes “countless physical tasks” and is not limited to heavy lifting. Thus, the NYSDOL has opined that employees, such as hairdressers, whose work encompassed only ancillary physical activities, are manual workers and therefore must be paid no less frequently than weekly.4
Older Precedent and Recent Litigation Regarding New York’s Frequency of Pay Law
It has long been the conventional wisdom, backed by uniform court precedent, that the remedy for violations of New York’s “frequency of pay” requirements is the NYSDOL’s imposition of civil penalties,5 and employers that pay their manual worker employees in full, but on a bi-weekly or later basis instead of on a weekly basis, were thought to be subject only to these NYSDOL penalties.6
More recently, however, private litigants have found more success in bringing civil lawsuits under New York’s weekly pay requirement where employees were paid in full, but paid less frequently. In these lawsuits, employees have sought to recover liquidated damages and interest on wages paid late, plus attorneys’ fees and costs associated with bringing the action. The respective federal and state courts, ruling on the employers’ motions to dismiss, have disagreed on whether New York’s weekly pay requirement provides a private right of action.7
Vega, Appellate Division, First Department Decision
In its September 10, 2019 decision, the panel of five justices of the First Department unanimously affirmed a lower court’s holding that New York’s weekly pay requirement does provide employees a private right of action.8 The First Department held liquidated damages could be recovered where an employee is paid in full, but paid late.9
Given the uncertainty in this area of law and its significance to employers and employees, the First Department’s decision might be appealed to the New York Court of Appeals. However, the six-year statute of limitations on New York Labor Law claims may result in substantial liability for employers, which would be well-advised to review and perhaps revise their pay frequency practices, particularly considering the NYSDOL’s broad interpretation of the “manual workers” who may be covered by the weekly pay requirement.