Opinion ID: 2959941
Heading Depth: 3
Heading Rank: 2

Heading: An Executive as an “Employee”

Text: Section 193 provides that: “[n]o employer shall make any deduction from the wages of an employee,” except for authorized deductions for insurance premium payments, pension or health and welfare benefits, contributions to charitable organizations, payments for United States bonds, union dues, and “similar payments for the benefit of the employee.” N.Y. Labor Law § 193(1) (emphasis added). Section 190 defines “employee” as “any person employed for hire by an employer in any employment.” Id. § 190(2). Based on these provisions, section 193 appears to broadly apply to all “employees” including executives. A separate provision of Article 6, section 191, details the frequency of payments for specific workers – manual workers, railroad workers, commission salesmen, and “clerical and other worker[s].” N.Y. Labor Law § 191. Section 190 defines the latter three categories to exclude employees working in an executive capacity. Id. § 190(5)-(7). Our consideration of section 190 in relation to sections 191 and 193 suggests that section 193 applies to all employees regardless of their position, while section 191 applies only to nonexecutive employees in the specified categories.3 New York courts, however, do not agree on whether section 193 (or any of the other provisions of Article 6) protects executives. See Hart v. 3 In addition, section 198-c, which makes an employer’s failure to pay benefits or supplements a misdemeanor, provides that “[t]his section shall not apply to any person in a bona fide executive, administrative, or professional capacity whose earnings are in excess of six hundred dollars a week.” N.Y. Labor Law § 198-c(3). Again, the limitation appears to apply only to that particular section and sheds little light on the appropriate scope of section 193. 5 Dresdner Kleinwort Wasserstein Sec., LLC, No. 06 Civ. 0134, 2006 U.S. Dist. LEXIS 56710, at -12 (S.D.N.Y. Aug. 9, 2006) (“Courts in New York are divided as to whether executives are covered under Article 6.”). The disagreement arises from varying interpretations of the New York Court of Appeals decision in Gottlieb v. Kenneth D. Laub & Co., 82 N.Y.2d 457 (1993), where the Court said in dicta that “[e]xcept for manual workers, all other categories of employees entitled to statutory protection under [section 191] are limited by definitional exclusions of one form or another for employees serving in an executive, managerial or administrative capacity.” Id. at 461. The court also said that “[c]ertainly nothing in the language of that enactment [Article 6] suggests that it was intended to provide any remedy whatsoever for the successful prosecution of a common-law civil action for contractually due remuneration on behalf of employees who in all other respects are excluded from wage enforcement protection under recodified article 6 of the Labor Law.” Id. at 462 (emphasis added). In reliance on Gottlieb, federal district courts and New York appellate courts have concluded that executives are not covered by section 191 and Article 6. See, e.g., Bierer v. Glaze, Inc., No. Cv-05-2459, 2006 U.S. Dist. LEXIS 73042, at  (E.D.N.Y. Oct. 6, 2006) (noting that courts have construed statute so that “Article 6 does not cover employees in executive, administrative, or professional capacities”); Kaplan v. Aspen Knolls Corp., 290 F. Supp. 2d 335, 340 (E.D.N.Y. 2003) (“[E]mployees serving in an executive capacity are excluded from the protection of Labor Law Article 6.”); Rice v. Scudder Kemper Invs., Inc., No. 01 Civ. 7078, 2003 U.S. Dist. LEXIS 14239, at -12 (S.D.N.Y. Aug. 14, 2003) (following Gottlieb and holding that 6 “[p]laintiff's status as an executive also deprives him of the ability to recover attorney's fees and costs under § 198.”); Craven v. Verify Med., Inc., No. 96 Civ. 6091, 2001 U.S. Dist. LEXIS 23833, at  (E.D.N.Y. Dec. 5, 2001) (“The New York Court of Appeals has recognized that the Labor Law does not apply to ‘employees serving in an executive, managerial or administrative capacity.’” (quoting Gottlieb, 82 N.Y.2d at 461)); Davidson v. Regan Fund Mgmt., 13 A.D.3d 117, 118, 786 N.Y.S.2d 47, 49 (1st Dep’t 2004) (citing Gottlieb and holding that “[p]laintiffs cause of action under Labor Law § 198(1-a) was properly dismissed on a finding that he was employed in an executive capacity”); Taylor v. Blaylock & Partners, L.P., 240 A.D.2d 289, 292, 659 N.Y.S.2d 257, 260 (1st Dep’t 1997) (“A claim for attorneys’ fees predicated on Labor Law § 198 is limited to wage claims based upon violations of one or more substantive provisions of Labor Law article 6 which excludes salary claimed by an executive.” (internal quotation marks and citations omitted)); Carlson v. Katonah Capital, LLC., 814 N.Y.S.2d 889 (table), 2006 N.Y. Misc. LEXIS 129, at -4 (N.Y. Sup. Ct. 2006) (“[t]he Appellate Division, First Department, relying on Gottlieb . . ., has made clear that executives do not qualify as employees for the purposes of asserting wage claims under Article 6.”). On the other hand, since Gottlieb, a number of federal district courts and New York state appellate courts have held that section 193 covers executives. See, e.g., Monagle v. Scholastic, Inc., No. 06 Civ. 14342, 2007 U.S. Dist. LEXIS 19788, at -4 (S.D.N.Y. March 9, 2007) (assuming, without deciding, that “there is no basis for excluding executives . . . from § 190(2)'s broad definition of ‘employee’”); Hart, 2006 U.S. Dist. LEXIS 56710, at -14 (holding that executives are covered under section 194 in spite of the Gottlieb dicta); Miteva v. Third Point 7 Mgmt. Co., 323 F. Supp. 2d 573, 585 (S.D.N.Y. 2004) (ruling that the text of Article 6 supports a broad reading of the term “employee” so as to include executives, administrators and managers); Gennes v. Yellow Book of N.Y., Inc., 23 A.D.3d 520, 521, 806 N.Y.S.2d 646 (2d Dep’t 2005) (upholding application of Labor Law § 193 to “account executives”); Tuttle v Geo. McQuesten Co., 227 A.D.2d 754, 755-56, 642 N.Y.S.2d 356, 57-58 (3d Dep’t 1996) (“[S]ince the specific statutory violations alleged here make continual reference to the general term ‘employee,’ plaintiff must be afforded statutory protection.” (internal citations omitted)). While our inclination would be to defer to the text of section 193 and conclude that executives are covered, we are reluctant to do so in light of the sharp disagreement in the courts over this issue of state law. The issue is self-evidently fundamental to Article 6 since its resolution potentially affects large numbers of employees and employers throughout New York.4 Consequently, we believe this question is best resolved by the Court of Appeals.