Now, they face an additional burden: a state court's rewriting of a more-than-century-old law that could saddle them with billions of dollars in unexpected costs.
According to the law, which dates back to 1890, manual workers must be paid weekly. This provision was enacted to protect employees from unscrupulous employers who would hire them and disappear without paying them. In 2018, a court ruling in the case of Irma Vega vs. CM & Associates established that firms not following the law could be liable for damages equal to 100% of the wages paid late.
This interpretation was applied even though the law specifically targeted underpayments, not late payments. With this ruling, any worker earning less than $900 a week who does physical labor more than 25% of the time could sue for six years' worth of back pay, amounting to a massive liability for businesses statewide.
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This comes at a particularly difficult time for New York's retail and restaurant industries, as 96,000 jobs are still missing relative to pre-COVID. Large companies with more than 1,000 employees can apply for an exemption and pay workers every other week, but small businesses are put at a disadvantage.
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The state's highest court has not ruled on the matter, though the governor and lawmakers can amend labor law and retroactively limit fines to $3,000. Failure to do so could result in tens of thousands of job losses, as businesses are sued into bankruptcy. It is clear that making the necessary adjustments to state law as soon as possible is essential to preserving the livelihoods of workers and businesses across New York.
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