Seyfarth Synopsis: Federal courts within the Second Circuit have held that merely alleging a pay frequency violation under New York Labor Law § 191 is insufficient for standing under Article III of the United States Constitution. Could this be the tool to end the current onslaught of late-pay claims?
Section 191(1)(a)(i) of the New York Labor Law (NYLL) requires employers to pay “manual workers” on a weekly basis. For decades, courts held that employees could not sue their employers to redress violations of this provision. Instead, only the New York Department of Labor could enforce the law, and it was limited to modest administrative penalties.
In 2019, a New York appellate court held that the statute provides a private right of action, opening the door for employees to sue directly, including in class action lawsuits. The court also held that employees paid less than weekly could recover liquidated damages in the amount of 100% of the late-paid wages—so that even if employees had been paid in full, they could recover the full amount of wages that were not paid within a week of the work performed.
This decision triggered a tidal wave of class action litigation seeking liquidated damages for untimely wages. Few employers with significant numbers of “manual workers” have been spared.
A pair of recent federal court decisions may provide employers a new weapon to stem the tide.
In order to have standing to sue in federal court, a plaintiff has to show (among other things) that the defendant caused them a concrete injury. Building off the United States Supreme Court’s decision in TransUnion LLC v. Ramirez, which held that a plaintiff does not automatically satisfy this requirement by merely alleging a statutory violation, courts within the Second Circuit have held that while “the late payment of wages can constitute a concrete harm sufficient to confer standing,” there must be allegations demonstrating “that the plaintiff forwent the opportunity to invest or otherwise use the money to which he was legally entitled.”
In other words, plaintiffs cannot merely plead a pay-frequency violation to establish standing; they have to plead how that violation actually injured them. The rationale undergirding these decisions is that courts should not automatically assume that receiving wages one week late causes an injury, and that in many instances it does not.
These decisions have important implications beyond providing employers an opportunity to successfully move to dismiss threadbare NYLL § 191 allegations. Because plaintiffs must demonstrate standing at all stages of a federal court litigation, they will not only have to allege that they suffered a concrete injury but prove it as well. For many plaintiffs paid on a bi-weekly basis, that may be a difficult showing to make.
This is a welcome development for New York employers, who now have an additional shield against the barrage of NYLL § 191 lawsuits.