Employment legislation and litigation are often about trends. In the mid-to-late 2010’s, for instance, lawmakers across the U.S. enacted numerous bills concerning paid time off for employees, such as for sick and family leave. A more recent trend involves regulatory and legislative attempts to limit or even outright ban non-compete agreements.
In New York State, the unquestionable employment litigation trend over the past several years has revolved around frequency of pay claims under Section 191 of the New York Labor Law (NYLL). This trend was born out of a radical 2019 appellate court decision that broke from more than a century of judicial precedent.
As more fully discussed below, however, two recent developments – one legislative and one judicial – suggest that the flood of frequency of pay lawsuits may soon be a thing of the past.
New York’s frequency of pay law
By way of background, NYLL § 191 requires that employers pay “manual workers” in New York on a weekly basis and not more than seven days in arrears. Specifically, § 191 provides that “[a] manual worker shall be paid weekly and not later than seven calendar days after the end of the week in which the wages are earned[.]”
The NYLL defines “manual worker” somewhat loosely as “a mechanic, workingman or laborer.” Legislative history provides little insight or clarification on the term “manual worker” or its interpretation. Over the years, the definition of “manual worker” has evolved, as courts and the New York State Department of Labor (NYSDOL) have issued decisions and guidance that have developed and shaped the understanding of who qualifies as a manual worker.
The rule of thumb at present is that employees are manual workers if they spend “more than 25 percent of their working time performing physical labor,” which can include a range of physical activities undertaken by employees.
A 2019 decision changes the legal landscape
For over a century, the law was clear that, where manual workers were paid in full but late – e.g., on a bi-weekly basis – the worker’s sole remedy was an administrative civil penalty imposed by the NYSDOL (typically in the low four figures). This is because NYLL § 198(1-a), which sets forth the enforcement mechanism for certain violations of the NYLL (including § 191), does not provide a remedy for the allegedly untimely payment of wages that are paid in full.
However, a September 2019 New York State intermediate appellate court decision – Vega v. CM & Associates Construction Management LLC – drastically shifted the landscape. In Vega, the First Appellate Department, which covers New York and Bronx counties, concluded that manual workers may recover liquidated damages – which are typically measured as the full amount of the underpayment – in cases where they were paid late, even if they had been paid in full.
In essence, the Vega decision authorized a private right of action pursuant to NYLL § 191, and potentially the recovery of liquidated damages, attorneys’ fees, and prejudgment interest, by manual workers who were paid on any frequency other than a weekly basis – again, even if the workers were ultimately paid their full wages. In practice, this meant that employees who are manual workers and are paid bi-weekly could seek 26 extra weeks of pay per year – i.e., the amount of the wages that were paid “late.” And because the NYLL has a six-year statute of limitations, the scope of damages is potentially substantial.
But the tide may be turning
Not surprisingly, the Vega decision spurred a rash of frequency of pay lawsuits by manual workers seeking to recover liquidated damages under NYLL §§ 191 and 198. Most of these suits are styled as proposed class actions and filed in New York federal court (where, as opposed to New York State court, liquidated damages are recoverable in a class action).
Within the past week, however, two important developments have unfurled to suggest that the high tide of frequency of pay lawsuits may soon recede.
First, on January 16, 2024, Governor Kathy Hochul announced her annual executive budget proposal. In that proposal, the Governor proposed an amendment to NYLL § 198 that would make clear that liquidated damages are not available or applicable under § 191 so long as the manual worker was paid “in accordance with the agreed terms of employment, but not less frequently than semi-monthly.” If enacted, the amendment would effectively remove the primary incentive for plaintiffs’ side employment lawyers and manual workers to pursue frequency of pay lawsuits in court.
Then, on January 17, 2024, a New York State intermediate appellate court (the Second Appellate Department) concluded that the “reasoning of Vega” was incorrect and, thus, that NYLL § 191 does not confer a private right of action on manual workers. Specifically, the court found that NYLL § 198(1-a) addresses nonpayment and underpayment of wages – not frequency of payment – and that the payment of full wages bi-weekly (rather than weekly under § 191) does not constitute nonpayment or underpayment of wages. On that basis, the court determined that liquidated damages are not available under § 191 because § 198(1-a) contemplates liquidated damages as recovery for nonpayment and underpayment of wages.
In its ruling, the court underscored that violations of the NYLL resulting in a reduction of wages do not automatically fall within the purview of § 198(1-a) and emphasized that the legislative history of § 198(1-a) focuses on remedying the failure to pay wages, not the frequency or timing of payment. The court ultimately concluded that there is no express or inferred private right of action under § 198(1-a) for liquidated damages, attorneys’ fees, or prejudgment interest for manual workers not paid in compliance with § 191. This decision is binding on state courts located in Nassau, Suffolk, Westchester, Kings, Queens, Richmond, Rockland, Orange, Dutchess, and Putnam counties.
While there is not yet complete judicial or legislative consensus as to frequency of pay claims under NYLL § 191, employers should be cautiously optimistic about these recent developments and the future viability of such claims. Given that there now exists a split between Appellate Departments as to whether a private right of action exists under § 191, there is at least a reasonable likelihood that the New York Court of Appeals, which is the state’s highest court, will weigh in and provide a final answer on this issue. In the meantime, however, the Second Department’s decision, together with Governor Hochul’s proposal, gives employers additional ammunition when defending against threatened or pending frequency of pay claims. We will continue to monitor for updates concerning these issues.