How often you pay your employees could land you in hot water

How often you pay your employees could land you in hot water

May 26, 2022

One of the core philosophies of our law firm is that we are here and ready to vigorously fight for our clients when trouble arises, but we work equally hard to help them avoid trouble before it starts.

Many issues, especially in the area of employment law, arise simply because the rules are complex and ever-changing, and employers may inadvertently run afoul of any number of regulations. To that point, we like to offer these client reminders of things that, while most of our clients are aware of, others may not be. In fact, some very large corporations operating in New York State appear to be unaware of the rules.

I was scrolling through social media last night and an ad populated in my feed promoting a potential class-action lawsuit against a multi-billion dollar, publicly traded American corporation. Their sin, according to the ad, was paying their laborers every two weeks.

In another case, a proposed class-action lawsuit was filed in January against Party City. The national chain store is alleged to have violated the law by paying its workers who were engaged in manual labor, on a bi-monthly basis.

There was a time when virtually all companies paid their employees every week.  Then, companies began to migrate to bi-monthly pay periods. It simplifies payroll and accounting, and can streamline costs (processing 26 payrolls per year instead of 52). It sounds pretty harmless, until you remember that in New York State, the Department of Labor has specific rules about frequency of pay.

Specifically, the DOL says:  “New York State Labor Law requires manual workers to be paid weekly.”

This of course begs the question, who qualifies as a manual worker? The DOL addresses that issue (sort of) by saying:

Section 190(4) of the New York State Labor Law defines a “manual worker” as “a mechanic, workingman 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.

There are, of course, exceptions to the rule. Federal state and local government workers are exempt, as our commissioned salespeople. Additionally, large private employers that meet certain criteria can petition for an exemption to the rule.

The bottom line is this: If you are a private company in New York State, and you are paying your employees in any form other than weekly, it is a good idea to examine your workforce and make sure you are covered. If you have questions or concerns, or want to explore seeking an exemption for your company from this rule, we are here to help. It is always better to invest resources on the front end for prevention, than on the back end to fight costly litigation.

New York State Department of Labor Frequency of Pay

Kevin Burke’s practice includes wide ranging federal and state court experience in civil litigation within employment law, environmental defense, class actions, product liability defense, corporate dissolution and shareholder disputes, and “business divorce,” breach of contract, OSHA and insurance coverage disputes.

Kevin counsels employers on recent developments in employment law, and the implementation of policies and procedures which enable employers to be in compliance with federal and state laws.

He can be reached at 716-854-4300 ext. 292 or [email protected]