Employment law, whether shaped by legislation or litigation, is often driven by trends. For instance, in the mid-to-late 2010’s, lawmakers across the U.S. enacted numerous bills concerning paid time off for employees, such as for sick and family leave. A more recent trend involves regulatory and legislative efforts to limit or even outright ban non-compete agreements.
In New York State, the most significant employment litigation trend over the past several years has revolved around frequency-of-pay claims under Section 191 of the New York Labor Law (NYLL). This trend emerged from a radical 2019 appellate court decision that broke from more than a century of judicial precedent.
On May 9, 2025, however, Governor Kathy Hochul approved an amendment to the NYLL that should largely put an end to the flood of frequency-of-pay lawsuits.
New York’s frequency-of-pay law
By way of background, NYLL § 191 requires that employers pay “manual workers” in New York on a weekly basis and not more than seven days in arrears. Specifically, § 191 provides that “[a] manual worker shall be paid weekly and not later than seven calendar days after the end of the week in which the wages are earned[.]”
The NYLL defines “manual worker” somewhat loosely as “a mechanic, workingman or laborer.” Legislative history provides little insight or clarification on the term “manual worker” or its interpretation. Over the years, the definition of “manual worker” has evolved, as courts and the New York State Department of Labor (NYSDOL) have issued decisions and guidance that have developed and shaped the understanding of who qualifies as a manual worker.
The current rule of thumb is that employees are considered manual workers if they spend “more than 25 percent of their working time performing physical labor,” which can include a range of physical activities undertaken by employees.
A 2019 decision changes the legal landscape
For over a century, the law was clear that, where manual workers were paid in full but late – e.g., on a bi-weekly basis – the worker’s sole remedy was an administrative civil penalty imposed by the NYSDOL, typically in the low four figures. This is because NYLL § 198(1-a), which sets forth the enforcement mechanism for certain violations of the NYLL (including § 191), does not provide a remedy for the allegedly untimely payment of wages that are paid in full.
However, a September 2019 New York State intermediate appellate court decision – Vega v. CM & Associates Construction Management LLC – drastically shifted the landscape. In Vega, the First Appellate Department, which covers New York and Bronx counties, concluded that manual workers may recover liquidated damages, which are typically measured as the full amount of the underpayment, in cases where they were paid late, even if they had been paid in full.
In essence, the Vega decision authorized a private right of action pursuant to NYLL § 191, and the potential recovery of liquidated damages, attorneys’ fees, and prejudgment interest, by manual workers who were paid on any frequency other than a weekly basis – again, even if the workers were ultimately paid their full wages. In practice, this meant that employees who are manual workers and are paid bi-weekly could seek 26 extra weeks of pay per year – i.e., the amount of the wages that were paid “late.” And because the NYLL has a six-year statute of limitations, the scope of damages is potentially substantial.
Not surprisingly, the Vega decision spurred a rash of frequency-of-pay lawsuits by manual workers seeking to recover liquidated damages under NYLL §§ 191 and 198. Most of these suits are styled as proposed class actions and filed in New York federal court (where, as opposed to New York State court, liquidated damages are recoverable in a class action).[1]
The governor finally closes the loophole
In the biggest frequency-of-pay-related development likely ever, on May 9, 2025, after many months of negotiations with lawmakers, Governor Hochul approved amendments to the NYLL that should, by and large, put an end to the recent surge of such lawsuits. Specifically, the amendment to NYLL § 198(1-a), which was approved as part of the annual statewide budget process, provides that:
- Liquidated damages are not available for frequency-of-pay violations where the employer paid the employee wages on a regular payday that was no less frequent than semi-monthly.
- In such instances, the damages recoverable by plaintiff-employees will instead be limited to the lost interest found to be due for the delayed wage payment. This interest is calculated using a daily interest rate for each day payment was late, based on the annual rate of interest set by the state Department of Financial Services (currently 16%). Under this formula, if, for example, a manual worker was paid $10,000 on a bi-weekly basis – meaning $5,000 was late under NYLL § 191 – the employee’s damages would be just a touch more than $15.
- For conduct occurring after the amendment’s effective date (i.e., May 9, 2025), liquidated damages equal to 100% of the delayed wage payment will be recoverable from any employer who, after said date, has been subject to one or more previous court or New York Department of Labor findings and orders for violating the frequency-of-pay rules.
Perhaps most importantly, the amendment takes effect immediately and applies to “causes of action pending or commenced on or after” May 9, 2025.
What does this mean?
There is no other way to say it: this is extremely welcome news for the New York business community. Any businesses facing pending or threatened frequency-of-pay claims will want to consult with counsel immediately about the available options. Please let us know if a Reed Smith employment lawyer can assist you.
[1] Of note, on January 17, 2024, a New York State intermediate appellate court (the Second Appellate Department) concluded that the “reasoning of Vega” was incorrect and, thus, that NYLL § 191 does not confer a private right of action on manual workers.Specifically, the court found that NYLL § 198(1-a) addresses nonpayment and underpayment of wages – not frequency of payment – and that the payment of full wages bi-weekly (rather than weekly under § 191) does not constitute nonpayment or underpayment of wages. On that basis, the court determined that liquidated damages are not available under § 191 because § 198(1-a) contemplates liquidated damages as recovery for nonpayment and underpayment of wages.