Recently, as a result of a new appellate court decision, the state of New York enacted a new section to New York Labor Law, §191(a)(i), which mandates that all manual workers be paid weekly. New York employers may now face liquidated damages for failing to pay employees as frequently as required by the New York Labor Law.  In a recent unexpected decision that departs from the conventional wisdom and older precedent, the Appellate Division of the New York Supreme Court for the First Department, in Vega v. CM & Associates Construction Management, LLC, held that “manual workers” who were paid in full, but paid on a biweekly or later basis, could recover liquidated damages for the employer’s failure to pay them weekly as required by state law.

New York Labor Law §190(4) of the New York State Labor Law defines a “manual worker” as “a mechanic, working-person or laborer.” It has been the long-standing interpretation of this Department that individuals who spend more than 25% of working time engaged in “physical labor” fit within the meaning of the term “manual worker.” Furthermore, the term “physical labor” has been interpreted broadly to include countless physical tasks performed by employees.

NYSDOL Opinion Letter RO-08-0061 “Pizzeria workers are engaged primarily in the pizzeria business wherein pizzas are made and sold. Implicit in this work is the physical preparation, packaging, and clean up involved in the making and sale of pizzas and other food items. Activities in connection with this job could include lifting and carrying large bags of flour, heavy pitchers of water, and boxes filled with tomatoes, sauce, cheese and other ingredients; cleaning and operating of dough mixing equipment; preparing dough for proofing and stacking and moving proofing racks; and cleaning of the prep area, pots and pans, and the food service area and floors at the end of the day. Employees who spend more than twenty-five percent of their working time in such activities would be manual workers.”

What is the rollout timing of the law?

 

This is not a new law; however, with the recent court decision in Vega v. CM & Associates Construction Management, LLC may make employers rethink the frequency of payroll even if it is just a cautionary measure.  A prudent employer would pay employees whose position might be considered to be within the meaning of “manual worker” not less than once a week since such frequency would satisfy the most stringent requirements prescribed by New York Labor Law §191.

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What are the penalties if the law is not followed?

New York Labor Law §218 Where the violation is for a reason other than the employer’s failure to pay wages, “the order shall direct payment to the [NYSDOL] of a civil penalty in an amount not to exceed one thousand dollars for the first violation, two thousand dollars for a second violation or three thousand dollars for a third or subsequent violation.”

In its September 10, 2019 decision, the panel of five justices of the First Department unanimously affirmed a lower court’s holding that New York’s weekly pay requirement does provide employees a private right of action. The First Department held liquidated damages could be recovered where an employee is paid in full, but paid late.

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How can RSI assist restaurants to remain in compliance with the law?

Included in RSI’s many services, at no extra cost, is the value of our Weekly Payroll! Restaurants are among the most labor-intensive industries and labor is one of the largest line items on your balance sheet. Keeping control of labor expenses can be one of the best ways to increase profit and contribute to the success of your business. Adjusting weekly schedules and pro-actively regulating the clock-ins, clock-outs, and how many employees you have on the clock compared to daily sales are critical tasks tied to achieving your financial goals.

In addition to Weekly Payroll, RSI produces Weekly Financial Statements, so rather than reacting to any surprises when you finally receive a P/L, our service enables you to take proactive steps so can correct any areas of opportunity thus further improving your bottom line profitability. It goes without saying that one of the most important parts of owning a restaurant, or any small business for that matter, is understanding your cash flow, and without sufficient cash, you can’t cover payroll for your staff, pay your vendors, maintain your equipment or fund marketing campaigns to build sales. By analyzing your payroll and financials on a weekly basis, you can assess how your sales and corresponding cash flow ebb and flow over time.

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Resources

 

For more information and FAQs: https://newyork.public.law/laws/n.y._labor_law_section_191