New York Labor Law §193, Frequency of Pay, and Key Court Decisions: Vega and Grant

New York State has long maintained strict labor protections designed to ensure employees are paid fairly and on time. Two key statutes—Labor Law §193 and Labor Law §191—govern wage deductions and the frequency of pay, particularly for manual workers. Appellate court interpretations, especially the decisions in Vega v. CM & Associates Construction Management, LLC and Grant v. Global Aircraft Dispatch, Inc., have reshaped how these laws are enforced and what remedies are available to workers.

Labor Law §193: Unlawful Deductions

Labor Law §193 prohibits employers from making unauthorized deductions from an employee’s wages. Permitted deductions are limited and must be expressly authorized in writing by the employee or permitted by law, such as deductions for taxes or union dues. While §193 doesn’t specifically address when employees must be paid, it sets the foundation for wage protections in New York and interacts closely with §191 in certain legal contexts.

Labor Law §191: Frequency of Pay for Manual Workers

Labor Law §191(1)(a) requires that manual workers be paid weekly and no later than seven calendar days after the end of the workweek. The New York State Department of Labor defines “manual workers” as employees who spend more than 25% of their working time engaged in physical labor. These rules were designed to protect workers who are often lower-wage earners and are more vulnerable to financial hardship if their pay is delayed.

The Vega Decision

In 2019, the Appellate Division, First Department issued a groundbreaking ruling in Vega v. CM & Associates Construction Management, LLC. The court held that even if a manual worker is eventually paid in full, the failure to pay on a weekly basis, as required by §191, constitutes a violation of the Labor Law. This means an employee can recover “liquidated damages” under Labor Law §198—potentially 100% of the delayed wages—as a penalty for the delayed payment.

Prior to Vega, some courts dismissed pay frequency claims if the employee had received all owed wages, albeit late. Vega shifted the legal landscape by recognizing timely payment as a substantive right, not just a procedural technicality.

The Grant Decision

Following Vega, the legal debate continued over whether similar claims could proceed under other circumstances. In Grant v. Global Aircraft Dispatch, Inc. (2024), the Appellate Division, Second Department offered a contrasting interpretation, deepening the divide in the judiciary.

In Grant, the court declined to follow Vega, holding that Labor Law §198’s liquidated damages provision did not apply where wages were paid late but in full. The Grant court emphasized that §198 did not expressly authorize damages for late payment alone, absent underpayment or deduction.

This disagreement between appellate departments has created a split in authority in New York. While Vega remains binding in the First Department (which includes Manhattan and the Bronx), Grant governs the Second Department (covering Brooklyn, Queens, Long Island, and surrounding counties), making the legal outcome of a frequency-of-pay claim partially dependent on where the lawsuit is filed.

The 2025 Budget Settles the Law

The 2025 New York State Budget amends Section 1983 of the Labor Law. Effective as of May 9, 2025, the amendments effect all cases pending as of or commenced on or after May 9.

Specifically, the amendment limits damages available to employees who have been paid all their owed wages, but who may not have received timely wages under the frequency of pay law. The damages are generally capped to lost interest, set in accordance with the New York Banking Law.

But, for employers with a history of frequency of pay violations, employees may be entitled to liquidated damages equal to the wages due. To trigger this category of damages, the employer must have been subject to a finding or order. In other words, the employer must have been adjudicated in some way as having violated the law; prior allegations in a lawsuit or lawsuits concerning similar claims which were settled before adjudication, would not trigger liquidated damages.

What do the Amendments Mean

Certainly, the amendments are bad news for employees and plaintiff-side employment lawyers. The Vega decision triggered a wave of frequency of pay cases which highly lucrative for law firms, but very damaging for business. The amendments essentially quash an entire area of litigation. But, the flip side is good news for employers who tried to follow the law in good-faith, but may have made a mistake through mere ignorance of a tricky area of law.

Regardless of which side you’re on, the budget amendments settle an unsettled question of law. An issue that was set to be decided by the New York Court of Appeals, has now been settled by lawmakers and the governor. Clarity in the law is almost always a good thing.

Notably, the amendments do not change the availability of traditional wage and claims. Employees can still sue employers for failing to pay minimum wage and overtime. Liquidated damages of 100% also remain available for such claims.

If you have questions about frequency of pay claims, contact a New York minimum wage and overtime lawyer at Famighetti & Weinick PLLC at (631) 352-0050.

Additional resources:

Newsday issued an article here.

Governor Hochul’s press release is here.

The Long Island Employment Law blog is now available on Feedspot as a Top 30 employment discrimination law blog in the country!

Because federal and state wage laws frequently overlap in other areas of coverage — such as the requirement to pay non-exempt employees overtime — employees suing employers in New York for improper payment of wages often sue in federal court, asserting violations of both federal and state laws. Employers who violate wage and hour laws, oftentimes also fail to comply with the WTPA, so WTPA claims are usually included with claims alleging improper payment of wages. On August 30, 2023, the United States Court of Appeals for the Second Circuit issued a decision which may limit employees’ ability to bring WTPA claims in federal court. Today’s Long Island employment law blog explains.

Federal courts are courts of limited jurisdiction. This means that they can only hear certain cases as set forth in the Constitution and by law. Generally, federal courts can usually hear cases which involve issues concerning federal law. So, when a victim of wage theft sues an employer, if they want to bring the case in federal court, they sue under the Fair Labor Standards Act (FLSA), which is a federal law. If the employee uses only New York State’s Labor Law, unless some other basis of jurisdiction exists, the case would be dismissed from federal court because without a federal law at issue, the court has no jurisdiction to hear the case.

But, when an employee uses the FLSA, the employee can also bring related claims which arise under state law. This is known as asserting supplemental jurisdiction.

Jurisdiction is not the only bar to determining whether a case or a particular claim in a case can be pursued in a federal court. Article III of the Constitution requires that courts hear only “cases or controversies,” a concept typically referred to as standing. Standing, as interpreted by the Supreme Court, requires that a plaintiff show an actual injury or a concrete harm, in order to bring a case in federal court.

Standing is the issue that’s been waiting for employees asserting New York State WTPA claims in federal court. Some employers have argued and some federal District Courts have agreed (or raised the issue on their own), that employees do not have standing to bring WTPA claims in federal court. The reason offered by these employers and courts is that the WTPA provides for only a monetary damage based on a statutory violation. Based on a 2021 Supreme Court case referred to as TransUnion, where a plaintiff asserts claims seeking money damages based just on a statutory violation, the plaintiff must show a harm distinct from the violation to show standing.

Based on TransUnion, many federal District Courts in New York have dismissed WTPA claims. Others, however, have ruled that a separate injury is not required to be alleged, and have allowed WTPA claims to proceed. This divergence is a perfect storm for an appellate court to rule on the matter and indeed, in Guthrie v. Rainbow Fencing, Inc., New York’s federal appellate court, the Second Circuit, weighed in on the matter.

In Guthrie, the Second Circuit confirmed that TransUnion is the controlling Supreme Court case. Based on TransUnion, the Second Circuit agreed that the courts which require showing of an actual or concrete harm, reached the proper decision. In so doing, the Court rejected the idea that an “informational injury” is sufficient harm. Under the theory advanced by Guthrie, by omitting information which the WTPA requires employers give employees, the employee has sustained an injury sufficient to have standing. The Second Circuit rejected this. In sum, the Second Circuit ruled that employees asserting WTPA claims in federal court must allege a concrete injury in fact.

The Second Circuit has not closed the door entirely though. In fact, the Court specifically explained circumstances which could establish an injury in fact, such as when an inaccurate or non-compliant wage notice prevents an employee from obtaining timely payment of wages. Moreover, the Court also pushed back on District Courts which required a higher showing of injury.

Of course, the decision applies only to WTPA claims in federal court. Cautious employees may decide the Guthrie decision means that they should rely on state claims in state court, instead of federal and state claims in federal court.

Though not outright endorsed by the Second Circuit, in a footnote, the Court alluded to other allegations which might show standing:

• wage statements which did not show full hours worked prevented employee from determining and seeking payment for the precise wages she was owed;
• a misclassified employee showed an injury because she wasn’t told she was supposed to be paid overtime, so she lost the opportunity to advocate for proper payment;
• inaccurate wage statements which did not state a calculation of hours and overtime, prevented the employees from knowing the extent of underpayment of wages.

In sum, the Second Circuit has settled a split in decisions coming out of federal courts in New York about whether standing to assert a WTPA claim requires a showing of concrete injury. It does. But, the Court has not ruled that WTPA claims can never be brought in federal court and the Guthrie decision lays out a blueprint which employees can use to build a WTPA claim which properly satisfies the standing requirement.

If you have questions about the Wage Theft Prevent Act, standing, overtime, minimum wage, or other wage and hour laws, contact an employment lawyer at Famighetti & Weinick PLLC. Our phone number is (631) 352-0050 and our website is http://linycemploymentlaw.com.

2,519 EMTs and Paramedics who worked for the City of New York joined a collective action alleging that the City failed to pay them overtime. In brief, the emergency workers alleged that they were required to perform work for the City for which they were not paid. The City required that the EMTs and Paramedics be ready to start work “ready for duty.” To be ready for duty, the workers must have already checked personal protective equipment such as their helmet, gloves, pants, coat, and respirator. Thus, they alleged they were not paid for the work done to check their personal protective equipment.

The jury determined that the City was liable for overtime pay, and that the City willfully violated the Fair Labor Standards Act, the federal law which requires certain workers to receive overtime pay. The jury awarded total damages of $17.78 million, comprised of actual damages, liquidated damages, and attorneys’ fees.

The primary question presented in the case is what happens when an employer requires its employees to report working overtime in order to receive overtime compensation, but the employee fails to do so. Does that mean the employer is liable for a violation of the wage and hour laws?

The Second Circuit noted that the law requires that an employer pay overtime if it was on notice of the work, even if the employee did not report the work. Notice may be actual notice or constructive notice, meaning that the facts and circumstances of the case show that the employer should have known that employees were working overtime but not reporting it.

The City argued that it cannot be liable unless it knew that the employees were not getting paid properly. In other words, because the workers were claiming that the City failed to pay overtime for only certain types of work — not as a matter of policy — and that they received overtime for other work, the City couldn’t know that it wasn’t paying the EMTs and Paramedics for the preparation work.

The appellate court rejected the argument, holding explicitly that “knowledge of non-payment is irrelevant.” The Court first determined that the plain language of the FLSA requires employers to pay employees for work it requires, knows about, or should know about. Second, the Court ruled that employees cannot waive the protections of the FLSA. To require employees to report work hours which the employer knows were worked be equivalent to an employee waiving his or her rights. Third, because the FLSA distinguishes between willful conduct and “ordinary” violations, the City’s proposed rule would destroy the boundary between willfulness and ordinary violations.

Accordingly, the Second Circuit affirmed the jury’s determination of FLSA liability.

The appellate court also ruled that the jury had sufficient factual evidence before it to determine that the employees in fact perform work for which they were not paid. The City maintained a policy which required that the employees be ready to respond to calls as soon as possible after the start of the shift, and set certain parameters to determine whether the employees were abiding by that policy. In order to complete these tasks in time to start responding to emergencies, the Court concluded that a jury could infer that the EMTs and Paramedics were required to arrive to work early to start their pre-shift responsibilities.

The City also argued that the jury could not have reasonably determined that the violations of the FLSA were willful, an argument also rejected by the appellate court. When conduct is willful under the FLSA, it extends the statute of limitations from two years to three years and it allows the plaintiff to recover liquidated damages of 100% of the actual damages.

An employer can willfully violate the FLSA when it knew or showed reckless disregard for conduct prohibited by the FLSA. In the context of overtime, willfulness is shown when the employer knew that it failed to properly pay its employees or was reckless with regard to that failure.

With this framework, the Court held that the facts supported the jury’s verdict that the City’s conduct was willful. Some of the facts supporting this decision included, testimony from the City’s senior labor lawyer that she advised the FDNY that supervisors must ensure that employees are paid for work that the City knows about; when the City implemented its time keeping system in 2005, EMTs and Paramedics asked whether it would account for the pre and post shift work they were doing; and two senior FDNY supervisors testified that employees were not allowed to request overtime for pre-shift work.

Finally, the City argued that the pre-shift work was de minimus, meaning the FLSA does not require that it pay its workers for such work. This argument was similarly dismissed by the Second Circuit. The Court determined that the work could be easily recorded by the City’s timekeeping system, that in the aggregate, the size of the work was not de minimus, and much of the work was performed regularly and some of it was required to be done every day.

The Perry decision is striking because of the size of the jury verdicts, but the case decided some very important legal issues related to FLSA litigation. Those issues include the level of knowledge an employer must have of its employees’ work to be liable under the FLSA, what evidence can show willful conduct under the FLSA, and what does de minimus work mean under the FLSA.

If you have questions about unpaid the FLSA, unpaid overtime, or unpaid wages for time worked, contact a Long Island employment lawyer. The lawyers at Famighetti & Weinick PLLC are experienced in handling unpaid wage and hour cases. Our phone number is (631) 352-0050.

Appellate Court Upholds $17.78 Million Verdict for EMTs and Paramedics

Unless an exemption applies, the FLSA requires that employers pay overtime to employees who work more than 40 hours in a workweek. Exemptions under the FLSA include employees who work in an executive, professional, or administrative capacity. In Helix, the court looked at the executive exemption.

The executive exemption to the FLSA generally applies to workers if a three part test is met. First, the employer must pay the employee on a salary basis. Second, the salary must meet a specified amount set by regulation. Third, the nature of the employee’s job must relate to executive responsibilities, as those responsibilities are established by law.

The Secretary of Labor has added some complexity to this test by creating slightly different rules for high income earners verse lower income earners. The “general rule” applies to workers who earn less than $100,000 inclusive of salary, commissions, and other compensation. The executive exemption applies to these workers if they are compensated on a salary basis at a rate of not less than $455 per week. The employees must also satisfy a duties test, requiring the employee to perform three duties: manage the enterprise, direct other employees, and exercise power to hire and fire employees.

The HCE rule, or the highly compensated employee rule, applies to employees earning at least $100,000 per year in total compensation. Under the HCE rule, employees meet the executive exemption by completing just one of the three responsibilities, i.e. managing/directing/hiring and firing. The salary basis and salary level tests are the same as the general rule.

This leads to the issue presented in Helix – the salary basis test. FLSA regulations concerning the salary basis test require that employees receive a pre-determined amount of compensation through a “preset” weekly salary. The salary cannot be subject to reduction based on the number of days worked by the employee.

Regulations permit employers to pay salaried employees based on an hourly, daily, or shift basis, but employers must meet two other rules. First, the employer must gaurantee the employee earns at least $455 per week regardless of how many hours the employee works. Second, the guaranteed amount must bear a reasonable relationship to the amount actually earned in a week.

In Helix, the employee worked on an offshore oil rig as a tool pusher. He oversaw a dozen or so workers, reported directly to the captain, and oversaw various aspects of the rig’s operations. He usually worked 12 hours each day, seven days week, for 28 days straight. In other words, he worked roughly 84 hours in a workweek.

The employer paid the employee based on a daily rate which ranged from $963 to $1,341. He was paid every two weeks by calculating the number of days worked by the particular daily rate. He did not receive overtime pay. The employee earned more than $200,000 annually.

The employee sued the employer alleging he was owed overtime pay. Although he conceded that he met most of the requirements of the executive exemption, he argued that he was not paid on a salary basis. Ultimately, the question of whether they payment method used by Helix met the salary basis test was decided by the Supreme Court.

The Supreme Court ruled that Helix did not satisfy the salary basis test. The court wrote that regardless of income level, to meet the salary basis test, an employer must pay an employee by the week, not per day. Daily rate workers only meet the salary basis test if the employer guarantees a minimum pay per week. Helix did not make such a guarantee to the employee, so the salary basis test was not satisfied.

In sum, employees who are otherwise exempt under the executive exemption must receive a guaranteed minimum weekly salary regardless of how many days or hours are worked. Otherwise, the employer risks violating the salary basis test as interpreted by the Helix decision.

If you have questions about the Helix decision, the FLSA, minimum wage, or overtime, contact a Long Island wage and hour attorney at Famighetti & Weinick PLLC. Our attorneys are available at (631) 352-0050.

Supreme Court Decides Salary Basis Test Case for FLSA

In Whiteside v. Hover-Davis, Inc., the plaintiff worked for the defendant corporation as a “Quality Engineer.” The company classified the plaintiff as a salaried employee exempt from overtime. But, after almost a decade, the company transferred the plaintiff to a different position with different responsibilities. The company continued to pay the plaintiff via a salary, even though other workers with the same title were paid hourly and the worker who the plaintiff replaced had been paid via a salary.

In the new position, the plaintiff worked 45 to 50 hours per week, for four years. Although the FLSA requires that employers pay workers an overtime premium for all hours worked over 40 in a week, the plaintiff’s employer did not pay him overtime. On January 8, 2019, the worker filed a lawsuit alleging a number of claims, including that he was not paid properly under the FLSA and the New York Labor Law.

The company moved to dismiss the plaintiff’s lawsuit. The trial court was persuaded to dismiss all of the plaintiff’s federal claims, including the FLSA claim. The court dismissed the FLSA claim because it determined that the complaint did not adequately willful conduct, necessary for the three year statute of limitations. Based on the two year statute of limitations which would then apply to the claim, no FLSA claims were timely.

Before delving into the particulars of the FLSA, it’s necessary to review some mundane federal civil procedure rules. All courts maintain rules of procedure. Rules of procedure set forth instructions for how litigants must make motions, conduct discovery, and file and respond to case initiating documents, such as complaints. Federal courts use the Federal Rules of Civil Procedure. Each state uses its own set of procedures, but in New York, courts use the Civil Practice Law and Rules (CPLR).

In addition to the written rules, litigants must be aware of judicial decisions which interpret the rules and give guidance on how to use the rules. For plaintiffs in federal court, one of the most important decisions in recent history is known as Ashcroft v. Iqbal. In Iqbal, the Supreme Court interpreted the federal rules as requiring that plaintiffs plead sufficient facts to render their legal claims plausible. Federal courts across the country now use this plausibility standard to evaluate whether complaints should be dismissed, or allowed to proceed in court.

In Whiteside, the issue was whether this Iqbal standard applies to the FLSA willfulness requirement to get a three year statute of limitations, or whether plaintiffs can simply allege in a conclusory manner that the defendants’ conduct was willful. To resolve this question, the Whiteside court first noted that appellate jurisdictions across the country are divided on the answer and that trial courts within this jurisdiction are also split.

The Second Circuit Court of Appeals ultimately decided that Iqbal’s plausibility requirement controls, meaning plaintiffs must allege facts which support the claim that the defendants acted willfully. The Court was persuaded of this, in part, because the plaintiff bears the burden of proving willfulness. Though the plaintiff was correct to argue statute of limitations is an affirmative defense, meaning the defendant bears the burden of proof, the plaintiff was not correct to argue that this means plaintiffs are relieved of the burden of proving willfulness. Thus, the Court held that willfulness is an independent element of the cause of action which the plaintiff must plead and prove.

Applying the plausibility rule to the allegations in Whiteside, the Second Circuit held that the standard was not met. The Court determined that the complaint did not allege any facts from which the Court could infer that the defendants failure to pay overtime was willful. Specifically, the complaint did not show facts that could establish the company acted with actual knowledge of a violation or by reckless disregard. Instead, the complaint showed mere negligence. Because the two year statute of limitations applied, and because no unlawful acts under the FLSA occurred within those two years, the Court held that the trial court properly dismissed the case.

Notably, Judge Chin dissented, arguing the majority required too much of a factual showing at such an early stage of the litigation.

If you are troubled that the company may have gotten away with improperly paying the plaintiff because of a technicality, fret not. New York’s labor law provides for a six year statute of limitations. With some exception, New York’s wage laws mirror the federal law. Once the Whiteside court dismissed the federal claims, the court lacked jurisdiction to hear the state law labor claim (a subject for another blog). But, Whiteside was likely able to re-file those claims in a New York State court.

If you have questions about unpaid wage and overtime cases, the FLSA, the New York Labor Law, statute of limitations, or pleading requirements for lawsuits in New York, contact a Long Island employment lawyer at 631-352-0050.

Remember, our Hudson Valley office is now open in Middletown, New York and we are accepting unpaid minimum wage and unpaid overtime cases from Orange County, Putnam County, and Ulster County, among others. Call us at 845-669-0040.

Statute of limitations in unpaid wage cases

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With Covid-19, employees are working from home or being subject to new workplace requirements, such as health screenings, before starting work. These new workplace realities, employers may stumble into new pitfalls concerning properly paying employees. Today’s Long Island employment law blog discusses situations where employers may be improperly paying employees and what employees should do if are they are not being paid correctly.

Non-exempt hourly employees must be paid for all time spent working. Generally, this is not a complicated issue. Most employees come into work and clock in or “punch in.” This records the time the employee reported in for work. After clocking in, the employee starts work.

At the end of the day, the employee finishes work and “punches out” or clocks out. This records the time the employee has stopped working and left the workplace for the day.

But, what happens when an employee is at home and doesn’t have the opportunity to punch in and out at the workplace’s time clock? Some employers have methods for remote workers to record work time. Employers may use phone apps, websites, or computer applications to track employee time. All work time, however, is compensable. For example, if an employee decides to check work emails while eating breakfast and before “officially” logging in for the day, that time may be compensable and an employer may be liable for not paying the employee for that work time.

Employees reporting for work may also be missing out on compensable work time. With COVID-19, many employers are requiring that employees undergo medical screenings, temperature checks, and/or health questionnaires, before entering the workplace. Time spent waiting in lines and undergoing these safety measures, may be considered work time, meaning employers may be required to pay employees for this time.

Further, if employees regularly work forty hour work weeks, but the time spent undergoing pre-work medical screenings takes the workweek over forty hours per week, the employer may be liable for overtime wages in addition to the employee’s regular hourly wage.

Unpaid wage and overtime claims against employers can be costly. If an employee proves that an employer did not pay proper wages, the employer may be required to pay the employee actual damages. This means the employer must pay the employee all the wages which should have been paid, but were not. In New York, the statute of limitations for unpaid wage claims is six years, so employers may be required to pay back as much six years of unpaid wages.

In addition to actual damages, New York law allows employees to recover liquidated damages of 100%. This essentially means that employers are liable for twice as much as the actual damages. In other words, if an employee proves she is owed $10,000 in wages, the employer may be liable for $20,000 after including liquidated damages.

New York and federal law also allow victims of unpaid wages to recover attorneys fees. This means that if the employee proves that the employer violated the wage and hour laws, the employer may be required to pay the employee’s lawyer for the hours worked on the case.

Employers who violate wage and hour laws may also be liable under New York’s wage theft prevention act. The WTPA requires employers to provide employees with accurate wage statements. When employers fail to properly pay employees, some courts have determined that the wage statements issued to the employees are not accurate and thereby violate the WTPA. The WTPA provides for statutory damages of up to $5,000.

COVID-19 has created new challenges in many areas of life. As employees work from home and face medical screenings before entering workplaces, employees may not be receiving proper and lawful wages from their employers. The employment law firm Famighetti & Weinick PLLC offers free consultations for employees to determine whether their employer is complying with the law.

More information is available at http://linycemploymentlaw.com. To speak to a Long Island employment lawyer, call 631-352-0050.

Employee pay issues relating to COVID-19

As the prevalence of lawsuits concerning improper payment of wages has continued to rise over the past few years, one area of increased litigation is whether unpaid interns are considered employees and are thus entitled to the protections of minimum wage and overtime laws such as the Fair Labor Standards Act (FLSA). The law in this area became clearer after the Second Circuit Court of Appeals considered the Glatt case in 2016.

Glatt and the unpaid intern line of cases typically involve students who perform work for companies to obtain real-life experience in their field of study. For example, law students often take internships with judges or law firms while in law school to gain practical legal experience. Interns may work for the film industry, as they did in the Glatt case, or with financial services companies.

Because employers view interns as working for the benefit of the intern, oftentimes, employers will not pay interns. This became the source of the litigation concerning whether interns are considered employees and are thus protected by workplace laws such as the minimum wage laws like the FLSA.

Though not an intern case, the Second Circuit, April 2020, decided another FLSA case which touches on the same principles as the Glatt/intern cases. In Vaughn v. Phoenix House New York Inc., the plaintiff entered a rehabilitation center as part of a court ordered agreement. Under the agreement, the plaintiff participated in a drug and alcohol rehabilitation program in exchange for avoiding jail time. Initially, the plaintiff was in an inpatient program, but then transferred to an outpatient program.

After violating a condition of the agreement, he was reassigned to an inpatient program and was required to perform work duties. He performed work from April 2011 to January 2012, working 8 hours per day, 6 days per week.The plaintiff alleges he was not paid for his work, in violation of the FLSA and New York Labor Law (NYLL). He asserted other claims, not relevant to this blog.

To review Vaughn’s claim, the appellate court noted the applicable test is the primary beneficiary test. The three “features” of the test are:(1) determining what the intern receives in exchange for the work; (2) examining the economic realities of the relationship; and (3) acknowledging the unique considerations arising from the educational or vocational benefits of the internship.

Specifically, the Second Circuit noted that it has promulgated a list of seven factors which courts should use to evaluate the primary beneficiary test:

1. the parties’ understanding about whether compensation should be expected;
2. whether the internship provides training similar to that given in an educational environment;
3. whether the internship is connected to the intern’s formal education program;
4. whether the internship accommodates the worker’s academic schedule;
5. if the internship’s duration is limited to provide beneficial learning;
6. whether the intern’s work complements or displaces paid employees;
7. whether the parties understand that the internship is conducted without expectation of a paying job at the end of the internship.

No one factor is dispositive and the list of factors is not inclusive of all the considerations a court should look at.

In the Vaughn case, the trial court determined that three factors – one, five, and seven, weighed strongly against finding Vaughn was an employee. Factor six weighed in Vaughn’s favor, but the remaining factors were mixed.

In summarizing, the Second Circuit believed the plaintiff obtained “significant benefits” from working at the rehab center. Notably, he was given food and shelter, therapy, and training, while avoiding jail time. Accordingly, the Second Circuit affirmed the trial court’s ruling that Vaughn was not an employee.

Many employers are not informed of the evolving laws concerning unpaid interns. Employers continue to believe that unpaid interns can be used as an unpaid workforce. If you are participating in an internship and are unsure whether you are entitled to minimum wage and overtime pay, contact a Long Island wage and hour employment lawyer at Famighetti & Weinick PLLC. Violations for improperly paying employees in New York can entitle workers to actual damages, liquidated damages, statutory damages, and attorneys fees.

Our employment lawyers are available by telephone at 631-352-0050.

Primary Beneficiary test

Federal immigration law makes it unlawful for an employer to hire an alien “knowing” that the individual is not unauthorized to work in the United States. But, federal law does not prohibit the employment of illegal aliens.

When hiring employees, immigration law requires employers to attest that they have verified the employee is not an unauthorized alien on form I-9. To do so, employers must review approved documents such as a passport. Failure to follow this verification law may result in civil and criminal penalties. Per the law, employers should make and retain copies of the I-9 and the supporting documents provided by the employee.

The immigration law does not impose duties solely on the employer. The employee must also complete the I-9 and must similarly attest their authorization to work in the country. Further, the employee must attest to their personal information, including name, address, date of birth, social security number, and telephone number. Although the law criminalizes falsifying information on an I-9 or providing fraudulent documents concerning the I-9, the law does not criminalize an individual working without authorization. Indeed, in circumstances where an illegal alien works in the United States and the employer violates wage and hour laws by improperly paying the illegal alien, the employer is nonetheless liable for damages and the employee may sue to recover owed unpaid wages and overtime.

Kansas v. Garcia concerns a Kansas state law. The Kansas law criminalizes the using of personal identifying information which belongs to another person with intent to defraud someone for a personal benefit. Kansas courts understand that the statute covers using another person’s social security number to obtain the benefit of employment.

In Garcia, three individuals were convicted in Kansas courts of using other individuals’ identities to complete I-9 forms to apply for work. These individuals were not authorized to work in the United States. They also used the false identities to complete federal and state tax withholding forms.

Before their trials, each individual argued that the Kansas criminal statute was preempted by the federal immigration laws. For simplicity, preemption means that, since federal laws are the supreme laws of the land per the Constitution’s supremacy clause, states cannot enact laws which conflict with federal laws. Thus, if the Kansas law conflicted with federal immigration law, the Kansas law could not stand as constitutional and the individuals could not be convicted.

After the issue wound its way through the Kansas state courts, the issue came before the United States Supreme Court. Writing for the majority, Justice Alito reviewed the law concerning how the court should determine the question of preemption. The precise details of this legal analysis are necessary for purposes of our employment law blog, but Justice Alito determined that the Kansas law was (1) not expressly preempted by federal law, meaning the federal immigration laws did not expressly state they were preempting state laws; and (2) not preempted by implication, meaning Congress did not intend to so comprehensively legislate an area of law which left no room for further regulation by the state.

In sum, the Supreme Court determined that the Kansas law was not preempted and was thus constitutional.

Notably, the “liberal” justices of the court dissented to the part of the majority’s decision concerning preemption by implication. The justices argued that the immigration laws “structure, context, and purpose,” showed that Congress intended the law to control the area of policing fraud related to showing an individual’s authorization to work in the country.

What are the implications of the Garcia decision? First and foremost, Garcia confirms the long standing principle that the act of working unlawfully in the country is not criminal. This is an important reminder as employers continue to try to exploit the availability of undocumented workers by working them long hours while refusing to pay them in accordance with minimum wage and overtime laws.

But, Garcia opens the door to further efforts by states to enforce laws against undocumented workers, which may not have been enacted with the intent to target illegal aliens. These efforts may further inhibit undocumented workers from seeking to their rights to be paid lawful wages when employers similarly violate immigration laws by employing workers not authorized to work in the country.

If you have questions about the intersection of employment laws with other areas of the law such as immigration law and criminal law, contact a Long Island employment lawyer by phone or email. Our number is 631-352-0050 and our e-mail contact form is available at https://www.linycemploymentlaw.com/contact-us.html.

Employment law meets immigration and criminal law

The Cheeks case provided general guidelines about how Courts should review agreements, but uncertainty remained. Parties have continued to litigate the expansiveness of Cheeks and Judges have struggled to understand their roles. On February 4, 2020, Judge Chin, writing for the Second Circuit, issued a decision further clarifying court’s responsibilities concerning FLSA settlements. Today’s Long Island employment law blog discusses the decision in Fisher v. SD Protection Inc.

In Fisher, the employee was hired as a “chaperone,” responsible for monitoring the halls in a hotel when student tour groups stayed. As alleged by the employee, the employer failed to pay him overtime for the nine hours of overtime he worked per week. Additionally, the employer did not provide to him paystubs, in violation of New York’s Wage Theft Prevention Act (WTPA).

Based on these alleged pay violations, the employee sued the employer in federal court seeking actual damages, liquidated damages, statutory damages, and attorneys fees. The case was litigated for months, and required depositions and motion practice concerning the discovery. Ultimately, the parties attended a settlement conference with the Magistrate Judge and were able to reach a settlement in principle. The District Court ordered the parties to submit the agreement and a “Cheeks fairness submission.”

In accordance with the order, the parties submitted a letter detailing the settlement’s fairness. It noted the total settlement about was $25,000 and that $23,000 was allotted for attorneys’ fees and costs while $2,000 was allotted as payment to the employee. The plaintiff’s lawyer noted that $5,140.39 was attributable to costs and that his total attorneys’ fees recorded for the case exceeded $50,000.

The District Court approved the total settlement, but denied the breakdown of the amount. Instead, the Court directed that the employee receive $15,055, which was $3,885 more than his damages were calculated to be. Further, the court reduced the attorneys’ fees to $9,610, finding the proposed amount to be excessive, then reduced costs to $1,695, finding the proposed costs to be unsupported. The plaintiff appealed.

On appeal, the Second Circuit reviewed the manner in which District Courts assess FLSA settlements. First, the overall fairness is determined by looking at the “Wolinsky” factors. Then, if attorneys’ fees and costs are part of the settlement, Courts review their reasonableness. In Fisher, the Court was required to review the reasonableness of settlements which incorporate attorneys’ fees into the settlement amount.

Turning to the question of costs, the Court held that reimbursable expenses must be reasonable and incidental to the representation. Court and process server fees, hotels and transportation, and working meals may be reasonable expenses. Further, the expenses must be documented. In Fisher, the Court determined that the District Court abused its discretion in denying many costs to the plaintiff.

On the question of attorneys’ fees, the Appellate Court observed that the District Court believed attorneys’ fees could not, as a matter of policy, exceed 33%. The Court may several other holdings. First, reasonable fees does not mean that fees must be proportional to the recovery. Indeed, the Court noted that the Fisher case is a prime example of why attorneys’ fees should not be tied to recovery. Many FLSA litigants earn “modest” wages, meaning the possible recovery is not significant. Without incentive to recover attorneys’ fees perhaps greater than the amount of unpaid wages, attorneys would not take cases, in contravention of the remedial purpose of the FLSA.

Further, the Second Circuit held that the District Court exceeded its discretion in re-writing the agreements. The Court noted that while District Courts have a responsibility to review agreements for fairness and to prevent abuse, courts cannot re-write agreements which they find objectionable. Rather, the court must indicate to the parties the portion or portions of the agreement which are not acceptable, and provide them an opportunity to revise the agreement.

If you have questions about the Fisher decision, unpaid wages or overtime, or the Cheeks requirements, speak to a Long Island employment lawyer. Our phone number is 631-352-0050. More information about wage theft and unpaid wages and overtime is available on our website at http://linycemploymentlaw.com.

Reviewing attorneys fees in FLSA settlements

In Isett v. Aetna Life Insurance Company, the plaintiff-employee worked as an appeals nurse for an insurance company. Isett was required to hold a license as a registered nurse. Her job involved reviewing appeals for authorization for medical services which were initially denied by the health insurance claims department. Isett made a clinical determination about whether the service is medically necessary. For her work, Isett was paid on a salary.

To perform her duties, Isett reviewed the patient file, including clinical documents, as well as the initial insurance review documents. Isett then compared the information to the company’s guidelines to determine whether the service is medically necessary. If the patient’s coverage did not meet the company’s criteria, the file was forwarded to a medical director (a doctor) for further review. In other words, Isett did not work in a clinical setting.

Isett worked from home with little supervision. She relied on her knowledge and experience as a nurse, to perform her duties.

Isett sued Aetna alleging that the company misclassified her as a non-exempt employee who was not entitled to overtime. The trial court disagreed and dismissed the case.

On appeal the Second Circuit had to determine whether or not the professional exemption applies to nurses in Isett’s position. The FLSA requires employers pay overtime to workers who work more than 40 hours in a week. Excluded from this requirement, are classes of workers, including those employed in a bona fide professional capacity.

The Department of Labor furthers defines professional capacity as a worker whose primary job duties requires knowledge of advanced type in a field of science or training acquired by prolonged course of specialized intellectual instruction. Federal regulations explicitly address the professional exemption’s application to nurses noting registered nurses who are licensed by the state are generally exempt, whereas licensed practical nurses generally do not meet the exemption’s requirements.

The Court determined that Isett’s job met two important elements which suggest the professional exemption applies. First, the Second Circuit determined that registered nurses, such as Isett, require acting independent of direction. Second, Isett’s primary duties required her to use the discretion and judgment of a registered nurse and to act independently. Accordingly, her primary duties met the professional exemption.

But, the Court also had to determine whether her position required specialized instruction. The Court had little difficulty finding that Isett had advanced knowledge received from the core of her specialized training and this training enabled her to perform her job. In sum, the appeals nurses at issue in the Aetna case were exempt from the FLSA’s overtime requirements.

Notably, many employers and employees believe that the test for whether an employee receives overtime is whether the employee is salaried or not. Sometimes, salary is a factor in determining whether an employee is exempt or not, but it is never the sole factor. Classifying employees as exempt verse non-exempt can be tricky. Employers can find themselves in deep financial trouble if employees are misclassified causing employees who should have received overtime, to not receive overtime.

If you have questions about the classification of registered nurses as exempt or non-exempt from overtime, or about the requirement for other categories of workers to receive overtime, contact a Long Island overtime lawyer at Famighetti & Weinick PPLC. Our wage and hour attorneys are available for free consultation. Overtime violations can result in significant actual, liquidated, and statutory damages, as well as attorneys fees. Our overtime attorneys are available at 631-352-0050. More information about New York’s wage and hour laws is available on our website at http://linycemploymentlaw.com.

Are registered nurses exempt from overtime pay requirements?

In 2015, the United States Court of Appeals for the Second Circuit issued a decision which sent employment lawyers in New York into a panic. The decision, known as Cheeks, essentially requires that when parties settle a lawsuit arising under the Fair Labor Standards Act (FLSA), a court or the Department of Labor must approve the settlement. In other words, in the normal course, parties may settle cases under whatever mutually agreeable terms they decide on and the court has no say in the matter. Cheeks altered this practice for FLSA cases (the federal statute regulating minimum wage and overtime).

Moreover, Cheeks requires that when deciding whether to approve FLSA settlements, courts must review the settlement agreement for fairness and other requirements, including that the release is limited to wage claims and that the agreement does not require confidentiality. Further, courts review any amount of the settlement allotted for attorneys fees to ensure their reasonableness.

In the wake of Cheeks, employment lawyers worried about its implications. Defendants were concerned about the limitations it imposed on settlement agreements, barring standard language such as confidentiality and comprehensive general releases, two terms which typically entice settlement. Plaintiffs were worried that attorneys’ fees would be scrutinized and that the settlement would be rejected by a court, notwithstanding the fact that the employee believed it to be fair.

So, some lawyers tried to be creative to work around the Cheeks approval requirement. One such method employed was to use Federal Rule of Civil Procedure 68 (Rule 68). Rule 68 allows a party to make an offer of judgment to the other. Basically, Rule 68 says that a party can make an offer to settle the case to the other party. If the offeree accepts, judgment is entered against the offeror and the case is over. Rule 68 provides other incentives to use the rule (and to accept the offer), but those points are not relevant here.

When lawyers have used these creative methods to avoid Cheeks, some courts have noticed, and intervened to stop it. This is precisely what happened in Mei Xing Yu v. Hasaki Restaurant, Inc. There, the defendants made a Rule 68 offer to the plaintiff, who accepted it. Before the clerk could enter judgment, the court intervened and ordered the parties to submit the settlement to the court for approval. The parties objected, arguing that a Rule 68 offer is not subject to review pursuant to Cheeks. The court disagreed, but allowed the parties to immediately appeal, which they did.

On appeal, the Second Circuit reviewed of the history of the law leading up to the Cheeks decision. Relevant to determining the outcome of the Hasaki case, the Court specifically reviewed the history of Rule 68, and the legislative and judicial history of the FLSA. Ultimately, the majority determined that Rule 68 concerns judgments, and nothing in the FLSA or Rule 68 allows for judges to intercede to review entry of a stipulated judgment. In other words, Cheeks review does not apply to Rule 68 offers.

Notably, Judge Calabresi dissented. His dissent argues that the FLSA prohibits unsupervised settlements, and Rule 68 is essentially an unsupervised settlement.

The Hasaki decision makes clear that Rule 68 is a viable option for parties trying to avoid Cheeks approval. Whether lawyers will begin to routinely use it is another question. Most practitioners likely agree that Cheeks has not proven to be terribly burdensome, although sometimes court approvals can take many months which delays settlements. We’ll have to wait to see if there is a shift in strategy for settling FLSA cases.

If you have questions about unpaid wage or overtime cases, contact a Long Island wage theft attorney at Famighetti & Weinick PLLC. Our phone number is 631-352-0050 and our website, with more information about wage cases, is available at http://linycemploymentlaw.com.

Rule 68 and Cheeks

Under the FLSA, employers must pay minimum wage to employees. Currently, the federal minimum wage is $7.25 per hour. States may set higher rates, though. For instance, in New York, the minimum wage rate varies depending on county, but it is at least $11.10 per hour and can be as high as $15 per hour in New York City (as of 2019).

The FLSA also requires that employers pay overtime to employees. Overtime pay is one and one half times the employee’s regular rate of pay and kicks in when the employee works more than 40 hours in a workweek. But, not at all employees are entitled to overtime pay. The FLSA classifies employees as either exempt or non-exempt. Exempt employees are not entitled to overtime pay and typically are paid by salary, which remains they receive the same pay no matter how many hours the employee works. Non-exempt employees are typically paid on an hourly basis (or commission) and must be paid overtime hours.

But, whether an employee is paid by salary or hourly is not the dispositive factor as to whether employees must be paid overtime. Rather, the rules set forth the criteria for determining whether an employee is exempt or non-exempt. These rules are the subject of the Department of Labor’s 2019 changes.

In 2004, the Department of Labor created a standard duties test which set three criteria for employers to determine whether an employee is exempt or non-exempt: (1) the employee must be paid on a salary; (2) the salary level must meet a minimum salary level (currently $455 per week); and (3) the employee’s duties must either be executive, administrative, or professional, as further defined by the Department’s regulations.

In 2014, President Obama directed the Department of Labor to “modernize” the overtime regulations. Accordingly, the Department issued new rules in 2016 increasing the minimum salary level to $913 per week and implementing a procedure whereby the level automatically adjusts every three years. Soon after the rule was issued, 21 states sued the Department of Labor challenging the lawfulness of the rule. A Texas federal court agreed that the Department exceeded its jurisdiction by implementing the rules in the manner it did and invalidated the rule.

The 2019 rule seeks to update the Department’s regulations consistent with the Texas court’s decision. The rule changes the law in at least four ways: (1) the minimum salary level is raised from $455 per week to $684 per week (roughly $35,568 per year); (2) highly compensated employees qualify as employees earning $107,432 per year (increased from $100,000); (3) 10% of an employee’s non-discretionary bonuses and incentive pay can be used to satisfy the standard salary level if the payments are made at least annually; and (4) revisions to the special salary levels for employees in U.S. Territories and motion picture industry.

In a Department press release, the Acting Secretary of Labor noted that the changes are the first in more than 15 years. The Department expects that 1.3 million more workers will be eligible for overtime under the revised rules.

The revisions are good news for employees. Though not as expansive as the 2016 proposed rules, the 2019 rules nonetheless offer an expansion of overtime coverage for employees.

Employers must take note of the changes. Employees currently considered exempt may no longer be exempt under the changes. This could mean that employers will not pay overtime to employees who should be receiving overtime. Failure to pay overtime can result in significant penalties as aggrieved employees may be entitled to actual damages, liquidated damages, and attorneys fees. The rule becomes effective on January 1, 2020 so the time for employers to do compliance checks is right now.

If you have questions about minimum wage, overtime, the FLSA, or the Department of Labor’s changes to the overtime rules, contact a Long Island employment lawyer at 631-352-0050. More information about wage and hour compliance and overtime rules can be found on our website at http://linycemploymentlaw.com.

New Overtime Rules

The lawsuit was served on the defendant corporation and an owner, but the defendants refused to defend themselves. Accordingly, the firm asked the court to enter a default judgment against them. As part of the motion, partner Matt Weinick set forth the applicable laws under the Fair Labor Standards Act and New York Labor Law concerning overtime pay. Weinick discussed how the affidavits submitted by the two employees established that the employer violated the wage and hour laws.

Next, the firm calculated the damages owed to each employee. Weinick set forth the hours each employee worked and how much each was owed for the overtime worked. Weinick also set forth the statutory damages the employer owed for not providing proper wage statements and the amount of liquidated damages allowed for under the FLSA and NYLL.

Finally, Weinick discussed the propriety of the Court awarding attorneys fees and the appropriate amount of those fees in this case. The Court agreed that Matt Weinick earned a reasonable hourly rate of $350 per hour based on attorney rates in this district.

In total, the Court ordered the employer to pay $193,536.00 in damages and attorneys fees.

The case serves as yet another reminder about the dangers of employers improperly paying employees. If you have a question about overtime laws, the FLSA, NYLL, minimum wage, or wage theft, contact a Long Island wage lawyer at Famighetti & Weinick PLLC. Our phone number is 631-352-0050 and our website is http://linycemploymentlaw.com.

Wage theft lawsuit won

Under the FLSA, employers must pay overtime to employees who work more than 40 hours in a workweek. Overtime must be 1.5 times the employee’s regular rate of pay.

But, some employees are exempt from this requirement. To be exempt, the employee must receive a minimum weekly salary and the employee’s job responsibilities must meet the definition of one of the law’s exemptions. In 2004, the Department of Labor set the salary requirement to $455 per week, and that amount has remained unchanged since then.

The new rule would increase the minimum salary level under the FLSA to $679 per week, which equates to approximately $35,308 per year. The Department of Labor estimates that an additional one million workers will become eligible for overtime.

The rule will not change overtime rules of nurses, police officers, firefighters, paramedics, laborers, and non-management employees in certain maintenance and construction occupations.

The rule will also not make changes to the duties tests, the second part of the inquiry after determining the employee’s minimum salary. Under the duties test, employees may be exempt if they work in administrative, executive, or professional positions.

Under the administrative exemption, the employee’s duties must be non-manual, must relate to the management or business operations of the employer, and must include the exercise of discretion of independent judgment. Under the executive exemption, the employee’s duties must relate to managing the enterprise (or a subdivision of it), direct the work of at least two subordinates, and must have authority to hire and fire employees (or make those recommendations). For the professional exemption, the employee must perform work which requires advanced knowledge in a field of science or learning and the knowledge must have been acquired in course of instruction.

These exemptions are not all inclusive and employers classifying employees as exempt or non-exempt should consult with an experienced and knowledgeable employment law attorney. Mistakes in classifying employees can result in crippling wage and overtime lawsuits.

The proposed DOL minimum salary rule may have significant impacts on employers and employees. Employers who want to avoid overtime requirements will have to review their employees’ salaries and raise them to align with the new rules. If current exempt employees’ salaries are not raised, employers must pay overtime or risk incurring damaging FLSA overtime violations.

Employees who believe they have not been classified properly or are not receiving lawful overtime pay, should consult with an experienced overtime pay lawyer on Long Island. Overtime lawsuits can help recover unpaid overtime for employees.

If you have questions about the DOL’s proposed minimum salary rule, overtime, or employee classification concerning exempt or non-exempt status, contact an experienced wage and overtime lawyer at Famighetti & Weinick PLLC. Our employment attorneys are available at 631-352-0050. Our website with more information is at http://linycemploymentlaw.com.

minimum salary test

Generally, federal and state labor laws, such as the Fair Labor Standards Act or FLSA, and the New York State Labor Law or NYLL, require that all employees receive, at least, the minimum wage for the hours they perform work for their employer. So, if interns are considered employees, then companies must pay their interns. But, are interns employees entitled to minimum wage or other pay?

In 2015, the Second Circuit faced, for the first time, the question of whether a company must pay temporary interns. The case, known as Glatt v. Fox Searchlight Pictures, set forth a primary beneficiary test. In its simplest form, the test seeks to determine who is the primary beneficiary of the internship. For instance, if the internship genuinely provides the intern with a learning experience or other opportunity which benefits the intern more than the company, then the intern is not owed wages. If, on the other hand, the company receives the primary benefit, then the intern is considered an employee and must receive wages.

For example, if a law student works for a law firm and accompanies the firm’s lawyers to court to observe proceedings, to depositions to observe how to examine witnesses, or sits in on client meetings to learn interview techniques, then the intern is receiving the primary benefit, since this arrangement truly resembles a learning experience. But, if the law student is assigned responsibilities such as filing, opening mail, and answering the phone, then the internship more closely resembles a paralegal or assistant position, which primarily benefits the law firm, since it provides little, if any, opportunity for the student to learn. In this latter example, the law firm would be liable for wages to the intern.

In Velarde, the plaintiff was a student at a for-profit cosmetology training school. The school provided, as a benefit to its students, the opportunity for hands on experience practicing on members of the public, who paid the school for the services they received. The plaintiff took this opportunity and provide cosmetology services to the public, under the supervision of the school. The plaintiff worked many hours per week, but was not paid, so he sued the school.

In looking at this relationship, the Second Circuit determined that the plaintiff intern was the primary beneficiary of the internship. The Court relied on several facts to draw this conclusion, including that the plaintiff gained significant benefits by working for the school such as he able to complete a minimum number of hours of practical work, necessary to sit for a licensing exam. Moreover, the supervision he received prepared him for the licensing exam.

The Court was unpersuaded by the plaintiff’s argument that he should be considered an employee because the school profited from his internship.

Questions about whether an intern should or should not be paid must be resolved on a case by case basis. The analysis hinges on highly fact specific questions. Those using interns in their workplace should consult with an experienced employment lawyer to determine whether pay is appropriate or not.

Interns not receiving pay should similar consult with an experienced wage attorney to discuss whether the minimum wage and/or overtime laws have been violated.

The Long Island employment employers at Famighetti & Weinick PLLC are experienced in handling unpaid wage and overtime matters. If you have questions about your internship, pay, minimum wage, or overtime, contact one our Long Island employment attorneys at 631-352-0050 or visit our website at http://linycemploymentlaw.com.

Unpaid intern lawsuit

The New York Labor Law (NYLL) and the federal Fair Labor Standards Act (FLSA) both require that employers pay minimum wage and overtime to non-exempt employees. But, who is an employer? Is it just the corporation or can individuals also be considered employers. In the Second Circuit Court of Appeals case, Tapia v. Blch 3d Ave., LLC, the court revisited this question.

In Tapia, the plaintiffs alleged, among other things, that the defendants failed to pay overtime, minimum wage, spread of hours pay, and that they failed to provide wage statements to the employees. After a trial, the District Court judge found in favor of the plaintiffs on all the counts. In addition to a corporation, two individual defendants who owned the corporation were also named as defendants. The District Court determined that one defendant, Ajit Bains, was personally liable, but that another individual defendant, Satinder Sharma, was not liable. The plaintiff appealed that decision.

The FLSA and NYLL create liability for unpaid wages against an employer who violates the wage laws. An employer can be an individual and/or a corporation. To determine whether an individual is an employer within the meaning of the statute, courts look at whether the person possessed “operational control” relating to the plaintiff’s employment. Operational control, in turn, means whether the person’s role in the company entails affecting the conditions of the plaintiffs’ employment.

In analyzing the Tapia case, the Second Circuit turned to the Carter factors, four factors established by prior case law which courts should use to determine whether an individual is an employer. The Carter factors are: (1) the power to hire and fire employees; (2) whether the person supervised and controlled work schedules or other employment conditions; (3) whether the person set rates and methods of employee pay; and (4) whether the person maintained employment records.

Applying the factors to the Tapia case, the Court determined that only the fourth factor weighed slightly in favor of finding Sharma an employer. But, the court held that no one factor is dispositive alone so it did not find error in the District Court’s decision.

The Tapia case also touched on another important point of unpaid wage and overtime claims. The FLSA and NYLL allow wronged employees to recover liquidated damages. In other words, employees who establish that a defendant did not pay proper wages or overtime, may recover those unpaid wages, but then may also recover an additional amount as further damages. The Tapia plaintiff tried to argue that he could recover liquidated damages under both the NYLL and the FLSA. The Second Circuit reminded the plaintiff that it recently held that liquidated damages may be recovered under only one of the statutes based on similar conduct.

Employers who do not pay proper minimum wage or overtime are playing with fire. Wage and overtime lawsuits can be crippling because of the liquidated damages and liable employers must also pay plaintiffs’ attorneys fees. Further, improper wage payment practices are typically not isolated incidents, meaning employers usually use the improper practice across many employees. This leads to class action lawsuits in which damages can quickly pile up. The Tapia case is reminder that corporate shareholders and owners cannot hide behind the corporate veil. Individuals who participate in employment decision can be personally liable as employers.

If you have questions about the FLSA, NYLL, minimum wage, overtime, or the potential personal liability of shareholders, contact a Long Island employment lawyer at 631-352-0050 or visit Famighetti & Weinick PLLC’s website at http://linycemploymentlaw.com.

Shareholder liability in wage cases

In the case of Matter of Vega, heard and decided by New York’s Third Department, the company, Postmates, Inc. “engaged” individuals to perform work for the company. As noted, Postmates operated a website whereby customers can place orders at local restaurants and stores. The orders are picked up by couriers, such as Vega, and delivered to the customers.

Postmates, however, terminated Vega alleging, among other things, that it had received negative customer feedback about him. So, Vega filed for unemployment insurance benefits, but Postmates challenged the claim. Initially, a worker’s compensation Administrative Law Judge decided that Vega was not eligible for unemployment benefits because he was not an employee. On appeal to the Unemployment Insurance Appeal Board, however, the Board reversed that determination and decided that Vega was indeed an employee, making him eligible for benefits.

Postmates appealed the decision to New York’s Appellate Division, Third Department where the case was heard by a panel of three judges. The Appellate Court noted the high standard of review which is applicable to appeals which come before the Court from administrative agencies, such as the Unemployment Appeal Board. The standard is that the Court must uphold the agency’s determination if it is supported by substantial evidence.

The Appellate Court also restated the law concerning whether an employer-employee relationship exists in New York, at least for purposes of unemployment insurance benefits. In New York, Court will look at whether the purported employer exercises control of the results of the work or the means used to obtain the results. But, an employer’s incidental control is not enough to establish an employer-employee relationship.

Turning to the facts of the Vega case, the Third Department determined that Postmates required only a minimal application process, requiring candidates download a form from its websites and provide only basic pedigree information. The Court noted that although Postmates performs a criminal background check and requires couriers to undergo a software orientation session, there is little supervision thereafter. The Court found persuasive the fact that couriers retain complete discretion as to whether they want to ever log into the Postmates’ system to obtain work and if they choose to work, they can work as much or as little as they want.

Further, the Court determined that while couriers were logged into the system indicating their availability to make deliveries, they remained free to work for anyone else, including competitors. Finally, the Court determined that the couriers decide which mode of transportation to use, which route to use, and they don’t wear a uniform or other identification.

On the other hand, the Court found some level of control, including that Postmates sets the fees and rates to be paid, tracks deliveries, and handles customer complaints, the Court ultimately was not persuaded that substantial evidence existed to support the conclusion that the couriers are employees.

Notably, Justice Lynch dissented and indicated he would have held that substantial evidence does exist to support an employer-employee relationship. Justice Lynch noted the criminal background check point, the orientation, and other requirements Postmates places on couriers.

In sum, the Vega decision shows the difficulties in determining whether workers are employees or independent contractors. The determination has important implications for minimum wage and overtime laws, workers compensation, and unemployment insurance benefits rules. If you have a question about how to classify a worker as an independent contractor or employee, speak to a Long Island employment lawyer today at 631-352-0050.

Is there an employer-employee relationship?