Crazy state law poses a huge new threat to New York jobs

New York shops and restaurants struggling after the pandemic are experiencing new headaches, along with inflation and crime.

A state court’s aggressive reinterpretation of a law more than a century old is putting companies on the hook for, perhaps, billions of dollars in unforeseen costs.

If you have a job, you are likely to be paid fortnightly—the most common schedule on which employers pay workers.

The federal government pays workers every two weeks, as does the city.

New York law has long specified an exception: “A manual laborer shall be paid a weekly wage.”

The weekly wage allotment dates back to 1890, when the legislature decreed that “every manufacturing, mining, quarrying, logging, or trade . . . establishment . . . shall be paid weekly.”

Purpose, as the discussion around Clarified amendment of 1935, was to “protect the employees” of the companies and the individuals “who will set up the business”. . . , postpone the payment of wages” and then “disappear”.

Well and good — but for decades, it’s been all but ignored.

In 2018, a construction worker named Irma Vega won a judgment against a New York firm, CM & Associates. A civil court in the Bronx found that CM, by paying her every two weeks, broke the law. In 2019, the Court of Appeal upheld the ruling.

But the new aspect of Vega’s ruling was that the New York court reinterpreted it consequences Or not following the law in an entirely new way.

The court found that Vega could receive dollar “damages” equal to 100% of the back wages.

The law could cost tens of thousands of retail and restaurant jobs, as businesses large and small are sued for bankruptcy.
Getty Images/Alexei Rosenfeld

This means that CM will have to pay an amount additional a week’s wages for each of his fortnightly wages, if, on being paid fortnightly, he has delayed payment of one of the fortnightly wages.

This new interpretation came despite the fact that the law, as written, only allows such lawsuits for bad faith.”Underpayments“,” and no late payments per week.

Although Vega has only worked for CM for a year, the statute of limitations for this act is six years.

And: The definition of a manual laborer, which no one has thought much about before, applies to any worker who earns less than $900 a week and does “physical labor”—interpreted as standing—more than 25% of the time.

That means hundreds of thousands of employers statewide, from large chains to convenience stores, could face the huge liability of paying half of their weekly paychecks for six years — billions of dollars.

The attorneys have filed class-action lawsuits against employers ranging from makeup chain Sephora to Walmart to Urban Outfitters.

This, at retail and restaurant Industries are still missing 96,000 jobs statewide, compared to before COVID. Other businesses, too, are in the trap, from those hiring nurse’s assistants to security guards.

One small business owner said, “This is going to kill my company.”

The law applies even to nonprofit organizations, including nonprofits that hire homeless outreach and day care workers under contracts with city government.

Large companies, with more than 1,000 employees in the country, can apply for an exemption and pay workers every two weeks.

This exemption confirms the intent of the 19th century law, to prevent fraud by which a company would hire people and then promptly go out of business.

But big companies he did not do Applying for an exemption cannot be obtained retroactively—plus, the exemption gives chains an advantage over small businesses.

    restaurant window
The retail and restaurant industries are missing 96,000 jobs statewide.
Getty Images / Spencer Platt

The New York Supreme Court has not ruled on this issue and may do so in another case. Federal courts may also have a say, as such a disproportionate penalty may be unconstitutional.

But New York’s civil court schedule is crowded, and companies may not get a final ruling on them years.

The governor and state legislators can fix this, without waiting for the courts: All they need to do is amend the state labor code to clarify retroactively whether workers can sue, and recover such serious damages, on the fact that they were paid fortnightly instead of every week.

So far, though, a state senator. Kevin Thomas of Nassau County introduced a bill limiting fines to $3,000, which went nowhere, with no counterpart from the Assembly. The ruler did not say a word.

Fixing this mess should be easy: do no one but harm Trial lawyerwho have found a new profitable business.

no By contrast, reforming the law could cost tens of thousands of retail and restaurant jobs, as businesses large and small are sued for bankruptcy.

Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal.

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