New Amendments to the New York Labor Law Limit Certain Pay Frequency Claim Damages

New York State has resolved a recent judicial split regarding pay frequency violation remedies by amending the New York Labor Law (“NYLL”) to limit an employee’s ability to recover sizeable liquidated damages. New York employers will welcome the newfound certainty (and capped damages) provided by this legislative development. 

The change concerns so called “manual workers” – a group defined under NYLL § 190(4) and that the New York State Department of Labor has long recognized as employees who spend more than 25% of their working time performing physical labor. Courts have construed “manual workers” to also include many professions that may not immediately come to mind when one pictures traditional “manual” labor – e.g., drivers, hair stylists, security guards, retail employees, and restaurant wait staff. Where employees qualify as “manual workers,” NYLL § 191(1)(a) creates a stringent requirement for employer pay these “manual workers” at least weekly. Where employers fail to make weekly payments, NYLL § 198 sets forth various recourse available for such violations.

An important 2019 court decision significantly changed the terrain regarding these claims. In its Vega v. CM & Associates Construction Management, LLC decision, the Appellate Division, First Department (the intermediate appellate court covering Manhattan and the Bronx) held that qualifying manual workers had a private right of action to sue their employers for violations of the weekly pay frequency requirement and that successful claimants could recover 100% of their untimely paid wages as liquidated damages for the employer’s failure to pay the employees timely – i.e., even if an employer had paid the worker’s wages in full but perhaps on a biweekly instead of a weekly schedule. Based on this ruling, employees now had the opportunity to receive double their wages simply because they had been untimely paid. The Vega decision had a remarkable effect. Since its issuance, New York trial courts have seen a surge in pay frequency class action claims, many of which have subjected employers to significant amounts in liquidated damages. Employer concerns were further heightened because of the elongated six-year statute of limitations period for NYLL claims.

After several years of employer unease, the Appellate Division, Second Department (the intermediate appellate court covering the remaining New York City boroughs and various Downstate counties) weighed in on this same issue in its 2024 Grant v. Global Aircraft Dispatch, Inc. decision. As we discussed here, the Grant decision disagreed with the First Department’s reasoning in Vega and held that manual workers do not have a private right of action under NYLL § 198 to pursue potential liquidated damages. Employers welcomed the Grant decision, but an appellate split still remained. Now, the State legislature has acted to address this judicial rift. 

The State’s 2026 budget, signed into law by Governor Hochul on May 9, 2025, amends the NYLL to prevent employees raising “manual worker” pay frequency claims (i.e., private action claims alleging that an employer did not timely provide weekly pay to qualifying “manual workers”) from recovering liquidated damages for almost all types of non-repeat violations. Beginning May 9, 2025, and applied to all pending actions or to any actions commenced after May 9, 2025, NYLL § 198 will now provide a two-tiered approach to violations as follows:

• For first violations, and provided employers are still paying employees no less frequently than semi-monthly, employees will only be permitted to recover lost interest due for the delayed payment calculated using a daily interest rate set by New York. In practice, this means that a manual worker who is erroneously paid on a biweekly instead of weekly basis can only recover a much lower amount than the double damages previously available to them under the Vega approach. 
• Where employers engage in repeated unlawful pay frequency practices, however, there is still a chance that successful employee claimants will be able to recover liquidated damages equal to 100% of their late-paid wages. Such may be the case where employees make claims against employers that, following May 9, 2025, have been “subject to one or more previous findings and orders for violations of [NYLL § 191(1)(a)] for which no proceeding for administrative or judicial review is pending and the time for initiation of such proceeding shall have expired and relating to employees performing the same work.” While not a model of clarity, the amendments confirm that plaintiffs can seek liquidated damages only against repeat offender employers that have actually been subject to a final order or determination made by the Commissioner of Labor related to similarly situated employees. 

Though the legislative fix did not explicitly adopt the Grant approach (employees still have a private right of action; their damages are just newly capped in most circumstances), the amendments track much more closely to Grant than to Vega. This development was not completely unexpected. Governor Hochul had previously noted her endorsement of the Grant decision in her 2025 Executive Budget Proposal and had recommended that the State legislature adopt Grant’s holding in the annual budget.

While this is a clear win for employers, the amendment does not completely invalidate Vega; the original 100% of late-paid wages liquidated damages remedy may still be imposed on employers that repeatedly violate the law’s strict pay frequency provision, and further, interest on untimely wages for non-repeat offenders can still add up, particularly, again, as the NYLL boasts a six-year statute of limitations. Accordingly, employers should still exercise caution and ensure compliance to avoid potential consequences.

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