Key Takeaways:

• New York amends pay frequency law through budget process

• Under the amendment, damages in pay frequency law claims are significantly limited

• The amendment applies immediately to cases currently pending and future cases

New York Labor Law (NYLL) Section 191 mandates that employers pay employees their wages within a certain frequency depending on the classification of employees. For employees that meet the definition of a “manual worker,” the law requires payment of wages “weekly and not later than seven calendar days after the end of the week in which the wages are earned.”  The law also expressly provides for an exception, whereby employers of a certain size are able to apply to the New York State Department of Labor (NYSDOL) seeking permission to pay manual workers on a bi-monthly basis. A list of the employers, 200 employers as of May 1, 2025, that have been approved for the exemption is listed on the NYSDOL’s website (https://dol.ny.gov/frequency-pay).

In 2019, the New York Appellate Division, First Department issued a seven-paragraph decision Vega v. CM & Associates Construction Management, LLC, which relied on Merriam-Webster’s dictionary definition of the term “underpay” to conclude that employees could pursue a private right of action under NYLL Section 191 based on the allegation that wages were paid to manual workers on a biweekly, as opposed to weekly, basis (without pre-approval from the NYSDOL). Following Vega, New York federal courts have been flooded with class action lawsuits alleging violations of NYLL Section 191, in which plaintiffs regularly seek astronomical amounts of liquidated damages, along with attorneys’ fees under NYLL Section 198(1-a), despite an over 100-year history of the statute only allowing public enforcement by the NYSDOL. By way of example, a manual worker who earned $35,000 a year for the entire six-year statute of limitations period (i.e. $210,000) would be entitled to recover $105,000 since half of their total wages was technically paid “late.”

However, in 2024, the New York Appellate Division, Second Department issued its decision in Grant v. Glob. Aircraft Dispatch, Inc., wherein the Second Department “disagree[d] with the reasoning of Vega and decline[d] to follow it.” In Grant, the Second Department did not look to a dictionary to define the term “underpayment,” but instead focused its analysis on the plain text of the statute, and the statutory purpose and legislative history of the NYLL. Based on these factors, the Second Department concluded the statute does not permit plaintiffs to pursue a private right of action and seek liquidated damages for alleged pay frequency violations of NYLL Section 191.

The split between Grant and Vega has yet to be resolved by New York’s highest court, the New York Court of Appeals, which created significant uncertainty and risks for New York employers. Now, the New York State Legislature and governor have intervened and included within the NYS budget for 2026 (NY State Assembly Bill 2025-A3006C)(see Part U), an amendment to the NYLL to significantly limit the damages available to employees in pay frequency claims.

Under the amended version of the law, penalties are significantly limited for first time violators to “no more than one hundred percent of the lost interest found to be due for the delayed payment of wages calculated using a daily interest rate for each day payment is late based on the annual rate of interest then in effect, as prescribed by the superintendent of financial services pursuant to section 14-a of the banking law” (which is currently 16%). In applying this to the same example above, the potential damages shrink under the amendment from $105,000 to $322.20. Under the amendment, the recoverable damages increase significantly for employers that commit subsequent pay frequency violations. Importantly, the amendment expressly states that it applies immediately to “causes of action pending or commenced” thereafter.

The amendment to New York’s pay frequency law provides much needed relief to employers. However, federal and state wage and hour laws are complex, and employers are well advised to engage experienced employment counsel to proactively audit their pay practices for compliance.

For more information or immediate guidance, contact:

• Christopher P. Maugans
• Cali L. Chandiramani
• Scott R. Green
• Caroline J. Berdzik
• Or another member of the Employment and Labor practice