A Day Late and Potentially Many Dollars Short: NY Appellate Court OK’s Liquidated Damages in Late Payment Case

Seyfarth Synopsis: A New York appellate court recently held that New York employers may be liable for liquidated damages for failure to pay employees on a timely basis, even where the employees have been paid in full.

In Vega v. CM & Assoc. Constr. Mgmt., LLC, a construction worker sued her employer for paying her and her co-workers on a bi-weekly basis in violation of the New York Labor Law, which requires that non-exempt “manual workers” be paid on a weekly basis. As a remedy, the construction worker sought liquidated damages.

On September 10, 2019, the Appellate Division, First Department, affirmed the lower court’s order permitting the construction worker to proceed with her case. The decision, available here, held that liquidated damages are available where an employer pays its employees in full but fails to pay them on a timely basis.

The court rejected the employer’s argument that it had cured any potential violation “by paying the wages that [were] due before the commencement of [the] action,” holding that by that logic, employers could avoid liability for any wage violations by simply paying their employees whatever is owed prior to commencement of a lawsuit.

The court was similarly unconvinced by the argument that the New York Labor Law provides remedies only for nonpayment or partial payment of wages – but not late payment. The court noted that even if employees are eventually paid their full wages, the late payments deprive them of “the use of money” during the delay.

Notably, this decision involved non-exempt “manual workers,” which the New York Department of Labor broadly interprets to include any employees who spend more than 25 percent of their working time performing physical labor of any type, regardless of title or job description. Under this expansive definition, pizzeria workers, hairdressers, and even chauffeurs have been brought within the ambit of the pay frequency provisions governing “manual workers.” Exempt employees, commissioned salespersons, clerical workers and railroad workers are not subject to the weekly pay requirement under the New York Labor Law.

Employer Takeaways

Vega highlights the significant liability that employers can incur based on a failure to timely remit wages. While this is just one appellate court decision, which may ultimately result in resolution by the Court of Appeals, employers would be well-served by reviewing their pay frequency practices to ensure that their employees are being paid on time.