In a move that appears to offer some relief to New York employers, Governor Kathy Hochul recently signed budget legislation that included amendments to New York Labor Law (NYLL) which will put limits on the damages available to manual workers who are paid less frequently than weekly — in violation of the NYLL’s pay frequency requirements. Here is what has happened and what employers need to know.
背景
As we previously reported, employers with New York-based employees have been facing a dramatic increase of pay frequency claims, specifically under Section 191(1)(a) of the NYLL, which requires private employers to pay manual workers their wages no less frequently than weekly (in other words, every week, and not every two weeks or bimonthly).
Historically, this pay frequency requirement did not get much attention until 2019, when, in Vega v. CM & Associates Management LLC, a New York state appellate court determined that manual workers: (i) had a private right of action for any pay frequency violation (i.e., enforcement was not reserved solely to the Commissioner of Labor); and (ii) could recover liquidated damages equal to the amount of the untimely paid wages, plus interest, attorneys’ fees, and costs.
The decision set up for plaintiffs’ attorneys a veritable all-you-can-eat litigation buffet — and they have gorged. Easy pickings for them, with the recovery of attorneys’ fees serving as additional manna. Their clients — manual workers who actually have been paid their wages in full, albeit not weekly, but rather every two weeks or bimonthly — could, through the easy proof of untimely scheduled payroll, still recover as liquidated damages an amount equal to 100% of the wages already paid but untimely received. To illustrate: for the worker paid every two weeks, the liquidated damages would equal the amount paid for the late-paid first week of that two-week payroll period.
The smorgasbord was enhanced by the COVID-19 pandemic and the advancement of remote work, as unwitting employers from outside New York, who did not have weekly pay frequency requirements at home, failed to adjust their payroll schedule for manual workers based in New York. Risk for employers also was compounded by the uncertain, fact-intensive inquiry required to determine who qualifies as a “manual worker,” which the New York Labor Law defines as “a mechanic, workingman, or laborer,” and the New York Department of Labor (NYDOL) has broadly interpreted to mean workers who spend at least 25% of their working time engaged in physical labor.
In January 2024, however, the gravy train was rocked by a different New York appellate court (in Grant v. Global Aircraft Dispatch, Inc.), which disagreed with the Vega court and held that the NYLL afforded manual workers no “private right of action to recover liquidated damages, prejudgment interest, and attorneys’ fees where a manual worker is paid all of his or her wages biweekly, rather than weekly[.]”
Legislative Response and Potential Impact
This split in the New York appellate courts remained unresolved, but the New York legislature appears to have tried to address it with the recently enacted amendments (at p. 54) to the NYLL. Specifically, under the amendments, when manual workers are regularly paid no less frequently than semi-monthly, liquidated damages may be recoverable, but are limited, as follows:
- For a first-time violation, the employer will be liable for “no more than 100% of the lost interest” for any late wage payment.
- For untimely payments made after May 9, 2025, the employer may be liable for liquidated damages equal to 100% of any untimely paid wage if, after May 9, 2025, the employer has been “subject to one or more previous findings or orders for violations of [the manual worker pay frequency provision] for which there is no proceeding for administrative or judicial review . . . is pending and the time for initiation of such proceeding [has] expired and relating to employee performing the same work.
This means that in any currently pending action, and on any claim made after May 9, 2025, a manual worker-claimant cannot recover, as liquidated damages, the amount of the wages challenged as untimely paid, unless the employer has one or more fully determined pay frequency violations relating to employees performing the same work as claimant after May 9, 2025.
In short, the amendments do nothing more than eliminate the liquidated damages remedy against first-time violators. As a result, manual workers may be less inclined to litigate only to recover lost interest. However, here is what the amendments did not do:
- They could have gone further. The amendments did not codify Grant, thus suggesting that manual workers (and perhaps non-manual workers) have a private right of action for pay frequency violations. Notably, however, the amendments did not directly address or modify any of the statutory language that prompted the Grant court to hold that no such private right of action actually exists.
- Attorneys’ fees also appear to be recoverable, which will likely keep plaintiffs’ attorneys motivated to pursue pay frequency claims irrespective of the absence of liquidated damages.
- The amendments apply only to manual workers, leaving open the question as to whether non-manual workers have a private right of action for liquidated damages under the NYLL for pay frequency violations.
What Should Employers Do?
With the amendments, New York looks to have given some measurable relief to employers that are confronting (or may confront in the future) Vega-inspired litigation. Employers will certainly appreciate the ability to avoid liquidated damages, but the amendments are unlikely to staunch the flow of manual worker pay frequency claims against them.
Accordingly, employers with New York-based employees still need to be vigilant and take protective measures.
- Any employer currently defending a manual worker’s pay frequency claim should not only invoke the amendments to limit exposure, but also, in the first instance, cite Grant and assert the defense of no private right of action. As noted above, the amendments may not completely defuse that defense (perhaps even more so in any pay frequency claim brought by a non-manual worker).
- Employers should audit their pay practices to ensure that all NYLL pay frequency requirements are met, especially for manual workers. As noted above, the hardest part of any such analysis (which should be done with assistance of legal counsel) is determining whether an employee falls within the broad definition of “manual worker” under the NYLL.
- Large employers also might consult legal counsel to determine whether they are eligible to (and, if so, whether they should) apply to the NYDOL for permission to pay manual workers bi-weekly, rather than weekly, as per the NYLL.
