On Wednesday, the Second Department of New York’s appellate court division issued a much-anticipated ruling in Grant v. Global Aircraft Dispatch Inc., holding that Sections 191 and 198 of the New York Labor Law do not expressly provide employees with a private right of action to sue their employers to recover damages because they are paid biweekly.
Background
NYLL Section 191 requires employers to pay any employee classified as a “manual worker” on a weekly (rather than biweekly or twice-monthly) basis. Decades of case law before 2019 had said that this requirement could not be enforced via a lawsuit by an employee against the employer. But in September 2019, the First Department of New York’s appellate court division held in Vega v. CM & Assocs. Constr. Mgmt., LLC, that NYLL Section 198 (1-a) did in fact give employees the right to sue to enforce the weekly pay requirement. This opened the floodgates to a deluge of class-action cases brought by employees seeking liquidated damages even though they received 100 percent of their wages on a bi-weekly basis.
This week’s decision
In a majority opinion, three of the four appellate judges of the Second Department of New York’s appellate court division reasoned that the “plain language” of NYLL Section 198 “supports the conclusion that this statute is addressed to nonpayment and underpayment of wages, as distinct from the frequency of payment.” The court concluded that “payment of full wages on the regular payday” does not constitute “nonpayment or underpayment.”
In addressing Mr. Grant’s claim for liquidated damages, the court went on to hold that Section 198 “provides for liquidated damages as an ‘additional amount,’ clearly contemplating recovery of an underpayment as the primary, foundational remedy. In other words, under the statute as written, the recovery of liquidated damages is dependent upon the recovery of an underpayment. Thus, absent an underpayment or nonpayment, liquidated damages are not available.”
What now?
The Grant decision creates a split at the New York appellate court level between the First Department and the Second Department. Mr. Grant has 30 days to appeal his decision to New York’s highest court, the New York Court of Appeals. Should he appeal, the Court of Appeals would be able to resolve the Department split. If not, courts in the First Department (New York and Bronx counties) will be bound to follow Vega, and courts in the Second Department (Kings, Queens, Nassau, Suffolk, Putnam, Westchester, Rockland, Orange, Richmond, and Dutchess counties) will be bound to follow Grant. Meanwhile, federal courts and New York state courts outside the First and Second Departments will be left with the unenviable task of choosing sides.
Relatedly, Democratic Gov. Kathy Hochul’s Executive Budget Proposal for fiscal year 2025 was released this week and included language that, if accepted by the legislature, would amend NYLL Section 198 to provide that “…liquidated damages shall not be applicable to violations of…section 191… where the employee was paid in accordance with the agreed terms of employment, but not less frequently than semi-monthly.” The budget is supposed to be passed by April 1 of each year, but that deadline often gets extended due to negotiations over the content. Assuming the Governor’s proposal does not run into a brick wall in Albany (the plaintiffs’ bar will surely lobby hard against this change), it would provide employers with fast and effective relief from class action litigation under Section 191. In the meantime, employers with “manual workers” would be wise to comply with NYLL Section 191 and pay those workers on a weekly basis, to avoid being targeted for class litigation.
We will provide further updates and analysis as it becomes available. In the meantime, if you need assistance, please do not hesitate to contact any member of Constangy’s Wage and Hour Practice Group.