Dive Brief:

• Party City failed to pay a group of employees on time, in violation of New York labor law, a class action lawsuit alleged (Guzman v. Party City Corporation, No. 22-cv-00666 (S.D.N.Y., Jan. 25, 2022)). 
• The plaintiff worked in two New York Party City stores, and was paid an hourly rate of $16. His duties included unpacking and sorting inventory, reshelving returned items, stocking the aisles and sweeping and mopping. The plaintiff alleged the stores paid him every two weeks and therefore violated New York law, which states that manual laborers must be paid weekly.
• The worker's associates performed similar duties and were paid the same way. The lawsuit estimated that at least 40 workers could be eligible to join the lawsuit. Party City did not respond to request for comment by press time.

Dive Insight:

It's not uncommon to see a class action lawsuit connected with allegations related to pay, and there are a few compensation-related topics that tend to produce many such lawsuits.

Overtime is one such example. Last February, Jimmy John's agreed to pay $1.8 million to a group of employees who claimed the restaurant misclassified them as managerial workers and wrongly denied them overtime pay. Similarly, a group of Kohl's assistant store managers petitioned a court to sign a $2.9 million agreement last year that settled claims that the retailer failed to pay them overtime as required by the Fair Labor Standards Act.

Another common topic of compensation-related class action suits is auto-deducted meal breaks. In 2019, a California electronics company paid $4.9 million to 1,300 nonexempt employees following an auto-deducted meal breaks suit. Sprint paid $4 million to 2,290 former retail workers later that year after the workers alleged the store made illegal deductions from their pay.

As far as New York's labor law and the specific requirement cited in the lawsuit against Party City, the law stipulates that employers pay manual workers on a weekly basis, according to the New York Department of Labor. Clerical and other workers must be paid "at least twice per month."

The department says in guidance that large companies may apply for permission to pay manual workers bi-weekly if the company has had an average of 1,000 workers in New York for at least three years. The department considers financial and compliance factors when reviewing requests for permission, and it does not grant requests to organizations whose manual workers are represented by a union, unless the union gives consent.