The author states "Can New York employees – who were paid all wages due on a biweekly pay schedule – state a claim against their employer for violating the pay frequency provisions of §191 of the New York Labor Law? Well, it depends on who you ask – or, more accurately, where the plaintiff can file suit."
Can New York employees—who were paid all wages due on a biweekly pay schedule—state a claim against their employer for violating the pay frequency provisions of §191 of the New York Labor Law? Well, it depends on who you ask—or, more accurately, where the plaintiff can file suit.
Five years ago, the Appellate Division, First Department shook the bedrock of New York employment law world with its ruling in Vega v. CM & Assocs. Constr. Mgt., LLC. The First Department held that an alleged "manual worker" who was paid all wages due, but on a biweekly (rather than weekly) basis, could assert a pay frequency claim.
Since then, many plaintiffs have interpreted Vega as allowing themto recover the full amount of "late wages" as liquidated damages. Many employers have disagreed with this assessment, arguing that plaintiffs are entitled to minimal, if any, damages because these employees were paid all wages due, albeit on a biweekly basis.
Plaintiffs often assert these claims on a class basis, meaning that some employers have faced lawsuits where plaintiffs seek to recover roughly half of the employer's New York payroll over a six-year limitations period.
While pay frequency claims have proliferated over the last few years, much of the litigation to date has focused on the threshold question of whether Vega was correctly decided and a private right of action exists. In January 2024, the Appellate Division, Second Department considered the issue and held contrary to the First Department—finding there is no private right of action for a pay frequency violation. In so doing, the Second Department created a split in appellate authority.
Though ambiguities are common in life, law, and litigation, the unsettled nature of pay frequency claims is problematic, given that litigants often enter the courthouse with wildly different valuations of damages.
Additionally, half a decade into pay frequency litigation, few cases have considered the issue of which employees are "manual workers" and whether the damages plaintiffs seek comport with due process. These are significant questions that remain unsettled. As we enter 2025, this article looks backward to understand how litigation has progressed, and forward to anticipate the road ahead.
Looking Back...
The New York Labor Law ("NYLL") defines "manual worker" as a "mechanic, workingman or laborer." Section 191 of the NYLL provides that "manual workers" shall be paid weekly. For decades, the New York Department of Labor typically addressed pay frequency violations by imposing modest fines against an employer that was not in compliance with the weekly payment schedule, and it was generally understood that workers could not sue their employers for pay frequency violations.
The First Department upended this scheme in September 2019. In Vega, the plaintiff argued that she was a "manual worker," and her employer should have paid her on a weekly, rather than bi-weekly, basis. In holding she could state a claim, the First Department considered the dictionary definition of "underpay" and reasoned that a late payment could be considered an "underpayment of wages" pursuant to NYLL §198(1-a) because one week of each biweekly pay period was paid "late."
The court also noted that a defendant could assert full payment of wages as an affirmative defense to such a claim. The Vega decision left open many questions, including which employees are "manual workers" and how liquidated damages should be calculated.
With its slim, seven-paragraph decision, the First Department unlocked the courthouse doors, allowing plaintiffs and their attorneys to rush in. Soon after Vega, many New York employers found themselves facing pay frequency lawsuits in which plaintiffs sought to recover the full amount of the "late" payment as liquidated damages, often on a class basis. Most of these claims arose from scenarios where the employer had paid the full amount of the employee's wages, just on a biweekly pay schedule.
Employers across a variety of industries found themselves defending these claims, in part due to the fluid and undeveloped definition of "manual worker." Many plaintiffs satisfied their pleading burden by relying on the New York Department of Labor's 25% formulation, i.e., they alleged they are manual workers because they spent 25% or more of their time on the job engaged in physical labor. This broad formulation permitted employees across a range of positions and industry sectors to at least plead that they are "manual workers."
In the years following Vega, many defendants filed motions to dismiss in which they argued that Vega was wrongly decided. Most federal court judges followed Vega, though some expressed skepticism over its soundness while doing so. Vega remained the highest state court authority on the pay frequency question until the Second Department decided Grant v. Glob. Aircraft Dispatch, Inc. in January 2024.
In Grant, the Second Department found, contrary to Vega, that no private right of action exists for a pay frequency violation, and that being paid on a biweekly pay schedule does not result in an "underpayment." By expressly rejecting Vega, the Grant majority created an even split in authority between the intermediate appellate courts of New York.
Considering the divergent appellate authority, federal courts deciding motions to dismiss pay frequency claims are now tasked with predicting how the New York Court of Appeals would decide this threshold issue, and whether it is more likely to side with Grant or Vega. Most federal courts have continued to follow Vega. Until the Court of Appeals weighs in, however, uncertainty will continue. Additionally, though there have been some efforts to clarify pay frequency issues, none have resulted in new legislation.
For example, Gov. Kathy Hochul's Executive Budget Proposal for the 2025 fiscal year recommended that §198 be amended to provide that "... liquidated damages shall not be applicable to violations of . . . section 191 of this article where the employee was paid in accordance with the agreed terms of employment, but not less frequently than semi-monthly." This part of the proposal, however, was not enacted.
... And Forward
As it stands, litigants continue to grapple with the conflicting authority concerning whether a private right of action exists. Employers are also dealing with the odd result whereby a pay frequency claim is viable, for example, in New York County Supreme Court, which is in the First Department, but not in Westchester County Supreme, which is in the Second Department.
The Second Department's decision in Grant will likely make its way to the New York State Court of Appeals. The plaintiff has requested leave to appeal, and, if the Court of Appeals takes up the issue, it will likely resolve the split. But the timeline for resolution is uncertain.
Additionally, while some defendants have sought leave to appeal to the Second Circuit Court of Appeals (asking that court to certify the question to the New York State Court of Appeals), the Second Circuit recently denied leave in Birthwright v. Advance Stores Co., Inc., No. 24-2111 (2d Cir. Dec. 4, 2024)—suggesting that it is not inclined to advance this matter for resolution.
In addition, we still do not know how most courts will interpret "manual worker." It remains to be seen if they will follow the Department of Labor's non-binding guidance or the New York Industrial Board of Appeals' decisions interpreting the phrase.
It also remains to be seen how courts will analyze class certification issues considering the unsettled definition of "manual worker." Courts' analysis of the phrase could shape class treatment, i.e., if the inquiry is highly individualized, courts might find these claims are not well-suited for class treatment.
Another open issue is whether awarding the full amount of "late" wages as liquidated damages comports with due process. Because the damages plaintiffs seek are, at least arguably, disproportionate to any harm they claim to have suffered, courts might find such awards do not pass constitutional muster.
Where Does that Leave Us?
Though Vega is more than five years behind us, much remains unknown and unsettled. Given the numerous open issues, 2025 could prove to be another bumpy ride for litigants as they traverse this ever-evolving terrain. Here's hoping 2025 will provide some much-needed clarity.
Originally published by New York Law Journal, 28 January 2025
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