A recent change to New York labor law means employers will no longer face business-crippling lawsuits for minor frequency-of-pay mistakes, as long as they have not previously been found to have violated the state’s frequency-of-pay law.
The amendment to Section 198 of the state’s Labor Law limits damages in pending and future actions for purported frequency-of-pay violations. It was included in the package of bills implementing New York’s fiscal year 2025-2026 budget, which Gov. Kathy Hochul signed into law on May 9, 2025.
The limitation on damages took effect “immediately” and applies “to causes of action pending or commenced” after May 9, 2025.
The Scale-Back
A frequency-of-pay violation occurs when an employer pays an employee later than required under applicable law. As an example, under New York Labor Law section 191(1)(a), “manual workers” must be paid weekly, no more than seven days after the end of the workweek. If such workers were paid biweekly, even for the full amount to which they were entitled, the employer is violating the law.
The amendment addresses many employers’ concerns regarding New York’s former frequency-of-pay statute by greatly reducing the damages that an aggrieved individual can obtain for failing to be paid on a weekly basis. If an employer has no prior orders issued by a court or the Commission of Labor for violations of New York Labor Law section 191(a) and the individual was paid on a biweekly or semi-monthly basis and received all wages due, recovery is limited to “no more than one hundred percent of the lost interest found to be due” in accordance with Section 14-a of the Banking Law, which is currently 16% per year (approximately 0.3% per week). If manual workers are paid biweekly and have to wait seven days for their paycheck, their damages would be capped at 0.3% of the late wages.
Under that example, an employee earning $1,000 weekly would be entitled to a maximum award of about $3 per late payment. Under the previous law, they would have been entitled to damages equal to the late wages, or $1,000 per late payment.
Though the amendment took effect immediately, if a court or the Commissioner of Labor issues an order finding that the employer has violated New York Labor Law section 191(a)(1), an individual’s potential recovery increases significantly. In such event, if an employee subsequently sues, they can recover liquidated damages equal to 100% of the late-paid wages.
The History Behind the Amendment
The requirement to pay manual workers on a weekly basis has been the law in New York for a century. However, for most of that period, courts held that employees could not sue their employers if they were paid all wages due, even if on biweekly or semimonthly basis. That changed in 2019 when New York Supreme Court’s Appellate Division, First Department, held that manual workers who were not paid on a weekly basis could sue to recover liquidated damages equal to 100% of the late-paid wages. Essentially, the court held that if a manual worker was paid $2,000 biweekly, but was meant to receive $1,000 weekly, they would receive an extra $1,000 for that period because of the employer’s violation.
Following the 2019 appellate decision, employers who failed to pay manual workers on a weekly basis faced an epidemic of lawsuits in New York courts. Most were filed as class actions, and with New York’s six-year statute of limitations, the potential exposure was enormous. Exacerbating the problem was that the definition of “manual worker” was amorphous, creating great uncertainty as to what positions should be classified as “manual.”
The Takeaway and Caveat
With the amendment, employers caught on a technical late-payment violation will face far lesser damages and the number of class action frequency-of-pay lawsuits may eventually diminish.
However, repeat offenders of frequency-of-pay violations will not qualify for the limitation on damages. Therefore, it is still important for employers to ensure that manual workers are paid weekly and timely so they can avoid even the potential for frequency-of-pay lawsuits.
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