In another potential win for businesses employing manual workers, on January 16, 2024, Governor Kathy Hochul introduced her proposed 2025 budget.
New York Appellate Division’s Second Department Finds No Private Right of Action for Frequency of Payment Claims Under New York Labor Law
A recent New York Appellate Division Second Department decision handed employers a big victory in a state where business-friendly decisions have become rarer as New York State has increasingly passed employee-friendly legislation. On January 17, 2024, the Second Department held that “manual workers” in New York do not have a private right of action for claims brought pursuant to New York Labor Law (NYLL) § 191(1)(a) alleging an employer’s failure to pay manual workers their wages on a weekly basis. A “manual worker” is defined as “a mechanic, workingman or laborer.” It has been the longstanding interpretation of the New York Department of Labor (NYDOL) that individuals who spend more than 25 percent of working time engaged in “physical labor” fit within the meaning of the term “manual worker.” Further, according to the NYDOL, the term “physical labor” has been interpreted broadly to include countless physical tasks performed by employees.
The Second Department’s January 17, 2024, decision in Grant v. Global Aircraft Dispatch, Inc. held that the trial court properly dismissed a case filed by a plaintiff alleging he was a manual worker unlawfully paid wages biweekly rather than weekly, claiming entitlement to liquidated damages, interest and attorneys’ fees. The plaintiff, who worked as a manual worker primarily lifting and handling passenger luggage at John F. Kennedy International Airport, filed the class action case on behalf of himself and similarly situated employees against his employer―a business providing customer baggage handling at the airport. The case was one filing in a long line of similar lawsuits brought by “manual workers” against employers paying them their wages on a less frequent basis than weekly. The Second Department holds jurisdiction over Richmond, Kings, Queens, Nassau, Suffolk, Westchester, Dutchess, Orange, Rockland and Putnam counties, and the recent decision binds all trial courts in each county.
The many recent frequency of payment cases in New York were spurred on by a 2019 New York State Appellate Division decision in the First Department, Vega v. CM & Assoc. Constr. Mgt., LLC. 175 A.D.3d 1144 (1st Dep’t 2019). Vega held that “manual workers” did have a private right of action to bring frequency of payment claims and to seek liquidated damages, interest and attorneys’ fees when employers did not pay them their wages on a weekly basis. The Vega decision in the First Department, which is the New York appellate court holding jurisdiction over New York and Bronx counties, was a victory for manual workers in New York and their attorneys, since prior to this week, it was the only New York appellate court decision on this question. Moreover, federal courts interpreting the NYLL’s frequency of payment provision in the time since Vega have regularly cited to and followed the Vega opinion in the absence of contradictory authority. This changed on January 17, 2024, with the Second Department’s Grant decision reaching the exact opposite conclusion, finding no private right of action and providing authority for state courts outside the First Department, as well as federal courts, to dismiss these cases early on.
Directly contradicting Vega, the Grant court concluded that
[N]either the language nor the legislative history of [NYLL] § 198 supports the plaintiff’s contention that this statute expressly provides a private right of action to recover liquidated damages, prejudgment interest, and attorneys’ fees for a violation of [NYLL] § 191(1)(a) where, as here, the employer pays wages pursuant to a regular biweekly pay schedule.
Grant also specifically cited to Vega, stating:
We respectfully disagree with the reasoning of Vega and decline to follow it. The plain language of [NYLL] § 198(1-a) supports the conclusion that this statute is addressed to nonpayment and underpayment of wages, as distinct from the frequency of payment … and we do not agree that payment of full wages on the regular biweekly payday constitutes nonpayment or underpayment.
New York Governor Hochul’s Proposed 2025 Budget Also Seeks to Limit NYLL Frequency of Payment Claims
In another potential win for businesses employing manual workers, on January 16, 2024, Governor Kathy Hochul introduced her proposed 2025 budget. The governor’s proposal seeks to amend the NYLL to limit plaintiffs’ recovery of liquidated damages for violations of the frequency of payment provision in the NYLL where employees were paid regularly on at least a semi-monthly basis. The governor noted that under NYLL § 191, employers are required to pay “manual workers” on a weekly basis, and that most employers are unaware of this little-known and archaic statute. Governor Hochul warned that failure to comply with this law can subject an employer to a private right of action and liquidated damages for a period of up to six years (the statute of limitation), plus interest and attorneys’ fees. The budget proposal would clarify that the NYLL does not entitle a plaintiff to 100 percent liquidated damages if they were paid at least semi-monthly, thereby avoiding unnecessary financial harm to employers.
What This Means for Employers
The Grant decision creates a split between the Second Department and the First Department’s decision in Vega. With these two appellate level courts reaching contradicting conclusions as to the existence of a private right of action for frequency of payment claims under the NYLL, the issue is now on track for New York’s highest court―the Court of Appeals―to weigh in. Moreover, employers should be sure to track the governor’s proposed 2025 budget, specifically the proposal to limit liquidated damages in frequency of payment violation cases where plaintiffs were paid on at least a semi-monthly basis. Until there are further developments on either front, employers should monitor state court decisions on the issue in courts sitting outside the First Department, as well as federal courts in New York to track whether judges will follow Grant’s analysis and dismiss frequency of payment cases at the outset. In order to best limit potential claims, businesses employing “manual workers” should strive to pay such workers on a weekly basis, while monitoring both the court dockets and Governor Hochul’s proposed 2025 budget for possible future relief.
For More Information
If you have any questions about this Alert, please contact Eve I. Klein, Katelynn Gray, Maria Cáceres-Boneau, Gregory Slotnick, Liran Messinger, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.
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