2024 has gotten off to a hot start for New York employers. We have already seen significant developments regarding the New York Labor Law’s (NYLL) pay frequency requirements. These developments are particularly significant given the unrelenting onslaught of lawsuits alleging that “manual workers” (interpreted to be any employee who spends more than 25 percent of their working time performing physical labor) who were not paid weekly are entitled to liquidated damages in the form of 50 percent of their total pay (the untimely paid wages under a biweekly pay scheme) throughout the entirety of New York’s generous six-year statute of limitations, in addition to their attorneys’ fees and statutory prejudgment interest.
The first major development was Governor Hochul’s announcement of the Executive Budget Proposal for Fiscal Year 2025, which contains language amending the NYLL that would basically eliminate plaintiffs’ ability to recover damages for pay frequency violations under certain circumstances. This is welcome news for employers, as an amendment to the NYLL would put an end to this extremely costly and at times “bet the company” class action litigation. The governor’s proposal would amend NYLL § 198 to provide that liquidated damages are not available for alleged pay frequency violations where “the employee was paid in accordance with the agreed terms of employment, but not less than semi-monthly.” In short, this amendment would eliminate monetary damages for manual worker pay frequency violations so long as employers timely remit wages on an agreed-upon biweekly or semimonthly basis. Employers should keep in mind that New York’s budget is required to be passed by no later than April 1 of each year, so we will not know where this proposed amendment stands until at least that date.
The second significant development took place just the next day, with the Appellate Division, Second Department, issuing its long-anticipated decision in Grant v. Global Aircraft Dispatch, Inc. The Grant court held, inter alia, that there is no private right of action under the NYLL for pay frequency violations. Indeed, the Grant court expressly rejected the reasoning espoused by the First Department in its landmark 2019 Vega v. CM & Associates Construction Management decision. Another huge relief for New York employers, the Second Department stated that the plain language of NYLL § 1981(1-a) and the law’s legislative history clearly support the conclusion that this statute addresses nonpayment and underpayment of wages, not the frequency of those payments. Further disagreeing with the First Department, the Grant court set forth its position that payment of full wages on the standard biweekly payday does not constitute nonpayment or underpayment of wages under the NYLL.
Although there is a clear Appellate Division split, both Vega and Grant are good law. The only means by which this conflict can be fully resolved is to either have the New York Court of Appeals issue a decision on the issue or have the Legislature amend the NYLL itself, which is exactly what Hochul has set in motion. Until such time as one of these events occurs, courts within the First Department are compelled to follow Vega, while courts within the Second Department must follow Grant. Therefore, employers should be keenly aware of the counties in which they are currently employing manual workers, in an effort to avoid any pay frequency-related lawsuits.
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