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A Hidden Danger: NY Labor Law Frequency of Pay Requirements
Two recent court decisions are demonstrating a technical peril for employers hiding in plain sight under New York State Labor Law (“NYLL”) §191(1)(a) that could cost employers millions in statutory damages – the requirement that manual workers be paid on a weekly basis: Scott v. Whole Foods Market Group, Inc., No. 18-CV-0086(SJF)(AKT), 2019 WL 1559424 (E.D.N.Y. April 9, 2019) and Vega v. CM and Assoc. Construction Management, LLC, No. 23559/16E, 2019 WL 4264384 (1st Dept., Sept. 10, 2019). While this frequency of pay requirement does not sound dangerous at first blush, employers who get caught violating NYLL §191(1)(a) potentially owe a significant amount of money in liquidated damages under NYLL §198 for their technical payroll mistake despite having paid all wages earned by their employees.
Thus, the new million-dollar question for New York employers is: what constitutes a manual worker under the NYLL? Unfortunately, the answer is not as clear as one would hope for such a serious issue which is why the frequency of pay requirement under §191(1)(a) is a hidden danger for all employers alike.
Review of the Law: Section 191 of the NYLL provides in pertinent part.
Every employer shall pay wages in accordance with the following provisions:
Manual worker—(i) 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; provided however that a manual worker employed by an employer authorized by the commissioner pursuant to subparagraph (ii) of this paragraph or by a non-profitmaking organization shall be paid in accordance with the agreed terms of employment, but not less frequently than semi-monthly.
According to NYLL §190, “manual worker” is defined as “a mechanic, workingman or laborer.” Additionally, New York State Department of Labor (“NYS DOL”) has opined both in its frequently asked questions materials posted on its website and in past published opinion letters that “[i]t has been the long-standing interpretation of this Department that individuals who spend more than 25% of working time engaged in ‘physical labor’ fit within the meaning of the term ‘manual worker.’ Furthermore, the term ‘physical labor’ has been interpreted broadly to include countless physical tasks performed by employees.”
The question of whether an employee qualifies as a “manual worker” is a fact intensive inquiry into the type and overall number of physical tasks the employer asks the employee to perform. Consequently, there are numerous categories of employees that might qualify as “manual workers” under NYLL §191 which employers might not have previously considered to be manual workers. For example, food service workers, mail room workers, hairdressers, pizzeria workers warehouse clerks, drivers and chauffeurs have in certain instances been found to be manual workers by the NYS DOL.
Where there exists a violation of the frequency of pay provision for manual workers under NYLL §191, the remedial provisions set forth in NYLL §198 provide the possible damages. Section 198 provides in pertinent part:
In any action instituted in the courts upon a wage claim by an employee or the commissioner in which the employee prevails, the court shall allow such employee to recover the full amount of any underpayment, all reasonable attorney’s fees, prejudgment interest as required under the civil practice law and rules, and, unless the employer proves a good faith basis to believe that its underpayment of wages was in compliance with the law, an additional amount as liquidated damages equal to one hundred percent of the total amount of the wages found to be due.
Based on the above quoted section, any manual worker who was not paid on a weekly basis is arguably entitled to recover prejudgment interest on all wages that were not timely paid, liquidated damages in the amount of 100% of all wages that were not timely paid and reasonable attorney’s fees expended in pursuing their claim. Moreover, as it is unlikely that the frequency of pay practices of any given employer would only apply to a single employee, a violation of the NYLL §191 easily lends itself to class action treatment there by increasing the employer’s damages exponentially with every affected employee. The viability of such claims was upheld in both Scott v. Whole Foods Market Group, Inc. and Vega v. CM and Assoc. Construction Management, LLC.
Section 191(1)(a) of the NYLL poses a serious danger for those employers who are not aware of the broad interpretation assigned to the term “manual workers.” A local employer operating a pizzeria may assume that its employees can be paid bi-weekly as they are not manual workers in traditional sense of a mechanic or assembly line worker. However, according the NYS DOL, pizzeria workers may be manual workers under NYLL §191(1)(a) if they spend more than 25% of their time working engaged in physical labor, including, but not limited to, lifting and moving bags/boxes of heavy ingredients and cleaning their work stations. Such a mistake would expose the employer to liquidated damages in the amount of 100% of delayed wages – the wages earned every other week that are paid one week late – even though the employer properly paid all wages earned and owed in accordance with all other statutory requirements (e.g. minimum wage, overtime wage and spread-of-hours compensation).
To demonstrate the gravity of these damages, assume that the aggrieved employee earned $15 per hour and worked an average of 35 hours per week. Since there are 52 weeks in one year, the employee’s wages were paid late for approximately 26 weeks and would be subject to 100% liquidated damages. Calculated out: 35 hours x $15.00 x 26 weeks x 100% liquidated damages = $13,650.00 per year for as many years the employee worked within the statutory period under the NYLL (i.e., 6 years from date civil action is filed). If the aggrieved employee was a long-term employee who had worked the entire statutory period, the employee could be owed as much as $81,900.00 in statutory damages plus prejudgment interest and reasonable attorney’s fees. Now imagine this claim on a class action basis at a warehouse with 40 or more employees; the damages easily reach into the millions. It seems unimaginable how any employer could survive such steep penalties for a mere technical violation involving the frequency of pay.
With the popularity of this claim seemingly on the rise within the plaintiffs’ bar, it is imperative that all New York employers review their pay practices in detail and be extra cautious of hidden dangers under the NYLL, especially the frequency of pay statute.