manual labor + biweekly wages = double pay?

Why paying your employees biweekly instead of weekly may require you to pay double compensation

By: Israel Klein

Every business owner knows that employees must be paid for their work. What many business owners do not know is that they can still be personally liable to pay potentially millions of dollars in back wages even though they paid their employees’ wages in full. 

This happened to one of my clients who operated a number of pet stores throughout New York City. Although my client paid his employees for their work, he was served with a class action lawsuit because he paid his employees every two weeks (as most businesses do) instead of every week.

Do not let this happen to you.

Section 191 of the New York Labor Law requires employers to pay their “manual laborer” employees weekly. Although the New York Labor Law does not precisely define “manual laborers,” the New York Department of Labor has interpreted “manual laborers” to include employees who spend at least 25% of their work time performing “physical labor.” See N.Y. Dep’t of Labor Opinion Letter, No. RO-09-0066 (May 21, 2009). The New York Department of Labor broadly interprets “physical labor” to include many activities, such as lifting items, unpacking items, stocking shelves, bagging purchases and standing for prolonged periods of time. This includes many positions within the retail and service industries, such as cashiers, customer service and sales associates, bartenders, baristas, pizza makers, hairdressers, retail store workers, supermarket employees, restaurant employees, pharmacy technicians, janitors, security guards, carpenters, mechanics and chauffeurs.

As there is no precise definition as to what work constitutes “manual” or “physical” labor, employers should consult with an experienced attorney to ensure that they are properly classifying their employees and timely paying their employees’ wages. This is critical as the failure to timely pay “manual laborers” weekly wages can result in significant fines.

In Vega v. CM and Associates Construction Management, LLC, 175 A.D.3d 1144 (1st Dep’t 2019), the New York State Appellate Division, First Judicial Department, held that “manual laborer” employees can sue their employers who fail to timely pay their weekly wages, and that the penalty for the untimely payments is 100% liquidated damages plus attorneys’ fees. The court held that this penalty applies even where the employer fully paid all wages at a later time. See id. at 1145.

Thus, pursuant to the First Department’s ruling in Vega, employers who fail to pay their “manual laborer” employees weekly must pay them double compensation for each late payment plus attorneys’ fees. For example, if a “manual laborer” employee earning $100,000 annually is paid every two weeks instead of every week, then 50% (or $50,000) of the employee’s wages will have been paid late. In this case, the employer would be liable to pay the employee an additional $50,000 on top of the employee’s $100,000 annual salary plus attorneys’ fees (which can be significant).

The harshness of this penalty is severely compounded when factoring in New York State’s six year statute of limitations for wage violations. See N.Y. Labor Law § 1983(3). Thus, if the employee in the above example worked for the employer for the past six years, the employer would be liable to pay the employee an additional $50,000 for each of those six years, totaling an additional $300,000 on top of the employee’s annal salary plus attorneys’ fees. Moreover, as many unpaid wage lawsuits are filed as a class action on behalf of all employees, this penalty can be multiplied by every “manual laborer” employee on the employer’s payroll for the past six years plus attorneys’ fees.

Unsurprisingly, many business owners faced with these lawsuits are forced to consider corporate and even personal bankruptcy. Indeed, business owners and other individuals exercising oversight and control over employees (such as a manager) can be held personally liable for these fines under Section 190(3) of the New York Labor Law, Section 630(a) of the New York Business Corporation Law and Section 609(c) of the New York Limited Liability Company Law.

In light of the potentially devastating consequences of this penalty, the New York State legislature recently amended Section 198 of the New York Labor Law to reduce the penalty for first time offenders to “one hundred percent of the lost interest found to be due for the delayed payment of wages calculated using a daily interest rate for each day payment is late based on the annual rate of interest then in effect, as prescribed by the superintendent of financial services pursuant to section fourteen-a of the banking law,” which is currently 16%. N.Y. Labor Law § 198(1-a)(i).

Furthermore, in its recent decision in Grant v. Global Aircraft Dispatch, Inc., 223 A.D.3d 712 (2d Dep’t 2024), the New York State Appellate Division, Second Judicial Department, disagreed with the First Department’s ruling in Vega, and held that “manual laborer” employees cannot sue their employers and cannot recover 100% liquidated damages plus attorneys’ for the biweekly payment of their weekly wages.

However, the Second Department’s ruling in Grant is only binding in the Counties of Kings, Queens, Richmond, Nassau, Suffolk, Westchester, Dutchess, Orange, Putnum and Rockland. Employers conducting business in New York and Bronx Counties are still bound by the First Department’s ruling in Vega. Moreover, even employers conducting business in the Counties of Kings, Queens, Richmond, Nassau, Suffolk, Westchester, Dutchess, Orange, Putnum and Rockland can still be subject to the First Department’s ruling in Vega if they are sued in federal court. See Cooke v. Frank Brunckhorst Co., LLC, 734 F. Supp. 3d 206, 218-19 (E.D.N.Y. 2024) (collecting cases declining to follow the Second Department’s ruling in Grant and relying on the First Department’s ruling in Vega).

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