I recently had a conversation with Paul Aloe of Kudman Trachten Aloe & Posner LLP. He was telling me that there are strict laws right now to pay manual workers weekly as opposed to bi-weekly.
Here are some of the questions I asked.
What Defines a Manual Worker?
While the definition of a “manual worker” seems narrow, a “manual worker” is “a mechanic, workingman or laborer.” The Labor Department interprets this to mean that individuals who spend more than 25% of their working time fit within the definition. This includes countless physical tasks performed by employees, like clerks for example.
Another example is a barber, even though not much physical effort is involved.
According to Paul Aloe, “Even though New York Labor Law § 191 has strict rules for how frequently employees must get paid, until recently, frequency of pay was an issue without much consequence. In the past, even if an employee claimed that his or her employer violated these provisions, there was hardly any practical penalty for an employer who did so. An employee who should have been paid weekly, but was paid every other week, would have little damage other than say the interest on the delayed payment.”
“All that changed in 2019 when the Appellate Division, First Department in Vega v CM and Assoc. Constr. Mgt., LLC, ruled that an employer which violates the frequencies of payment obligations of NY Labor Law § 191 subjects itself to the liquidated damage provision of New York Labor Law § 198-(1-a) Section 198-(1-a) which provides for liquidated damages of 100 percent of the amount not paid plus an attorney fee,” he said.
Why is this important for Employers?
Paul agrees that a little math exercise can show how impactful such a violation might be.
He said, “for example, let’s say we have an employee who must be paid weekly but is paid every other week. And let’s say that the employee made $600 a week, no overtime. On this hypothetical example, the employer would be faced with Labor Law § 198-(1-a) liability of $31,200 (the annual wages of this employee) for as long as the employee was employed, up to the statute of limitations.
Given that the statute of limitations is six years, the employee could be owed as much as $187,200, and that’s without statutory interest, which in New York is nine percent per year. The interest alone, over a six-year period, would exceed $50,000.”
He told me that Prior to Vega, the most that an employer might be liable for would be the interest from the day of payment, which would be approximately $322 on the above hypothetical.
Do We Have to Give Weekly Payroll to Our Support Crew?
Given that Labor Law § 190(2) has a broad definition of “employee” to include “any person employed for hire by an employer in any employment” the potential reach is extensive and would extend far beyond what one might typically think is a “mechanic, workingman or laborer.”
Employers are better safe than sorry, and while weekly payroll may prove inconvenient and even costly, the alternative may be even more costly.
Paul H. Aloe is a partner at Kudman Trachten Aloe Posner LLP. He concentrates his practice in the following areas: commercial and complex litigation, bankruptcy, zoning and land use, commercial real estate, business reorganizations, business law, and employment litigation. He is a past chair of the New York State Bar Association Committee on Civil Practice Law and Rules. He handles employment litigation both for employers and employees and recently won a large class action settlement based on overtime pay practice under New York’s Labor Law and the federal Fair Labor Standards Act. He graduated salutatorian from Maurice A. Deane School of Law at Hofstra University in 1983. He received his BA with honors from The George Washington University in 1980. You can reach Paul at [email protected].