​New York’s Labor Law creates a two-tiered system where certain rights apply to all workers, but high-earning executives are excluded from others. Wage-related protections are among those that can vary depending on a worker’s salary and job duties. As an example, executives are not entitled to minimum wage and overtime.

A recent appellate court decision examined the scope of an executive’s right to wages, addressing whether an executive can sue for unpaid severance in the same way as other workers.

Labor Law § 198-c(3) excludes those employed in an executive, administrative or professional capacity who earn more than $1,300/week ($67,600/year) from benefiting from some legal protections. However, they do have other rights. In 2021, New York’s Labor Law was amended to clarify that all employees, including executives, can sue employers for earned, but unpaid, wages, benefits and wage supplements. They can also recover attorney’s fees and liquidated damages if their claim is successful.

In Patel v. Maybank Kim Eng Sec. USA Inc., the New York Appellate Division, 1st Department, clarified how to apply these amendments to claims for unpaid severance. The case involved an executive who had only been paid three months, rather than the agreed-upon five months of severance.

The trial court dismissed the suit, finding that the severance pay was a wage supplement, and executives were precluded from pursuing such claims for unpaid amounts under the Labor Law.

The Appellate Division reversed the decision. It found that the trial court improperly relied on limiting language in Labor Law, § 198-c. That provision created a misdemeanor for employers who fail to pay wages within thirty days, but excludes claims by executives, restricting them to civil recovery. The Court clarified that the exclusion contained in Section 198-c applied to criminal penalties only. Further, in light of the 2021 amendments to the Labor Law, it was clear that all employees, including executives, are entitled to pursue civil recovery for unpaid earned wages and wage supplements, as well as associated attorneys’ fees and liquidated damages. Accordingly, the executive could pursue his claim for unpaid severance.

If you need assistance with a claim for unpaid wages or have questions about your rights and obligations under New York’s Labor Law, contact one of our attorneys for a consultation.