New York Reins In "Frequency-of-Pay" Damages Under Amended Labor Law

In a major shift, New York employers will now be subject to significantly reduced damages in "frequency-of-pay" lawsuits due to recent amendments to Section 198(1-a) of the New York Labor Law ("NYLL").

As detailed below, the amendments offer added protection to employers that have proactively attempted to comply with NYLL § 191. Under Section 191, employers must compensate manual workers "not later than seven calendar days after the end of the week in which the wages are earned." The bill amends NYLL § 198(1-a), which prescribes damages for violations of NYLL § 191, to limit the scope of damages available in frequency-of-pay claims. These amendments are expected to significantly impact manual workers, who file the majority of claims under the statute.

Surge of Frequency-of-Pay Litigation Post-Vega

In 2019, the New York State Appellate Division, First Department held that manual workers have a private right of action for frequency-of-pay violations. Vega v. CM & Associates Construction Management, LLC, 175 A.D.3d 1144 (2019). The plaintiff in Vega was a manual worker seeking liquidated damages, as well as interest and reasonable attorneys' fees and costs, because his employer did not pay him on a weekly basis. The First Department deviated from longstanding precedent by holding that employees can bring private lawsuits for frequency-of-pay violations, and that they may be entitled to 100% liquidated damages for late wage payments even if they were paid in full.

The Vega decision, coupled with New York's six-year statute of limitations for unpaid wages, resulted in a surge of litigation for frequency-of-pay claims.

Amendments to NYLL § 198(1-a)

In response to the spike in litigation and concerns from the business community, the amendments to NYLL § 198(1-a), as enacted through the 2025 State Budget, limit remedies available to employees who were paid late but received their full wages on a consistent, regular schedule (Bill Number A03006C).

Specifically, under the amended law, liquidated damages are no longer available for pay frequency violations if the employer paid wages at least semi-monthly on a regular payday, even if the payment schedule technically violated Section 191's requirement for weekly pay. Instead, damages in these cases are limited to interest on the delayed wages, calculated using the daily interest rate set by the Department of Financial Services under Article 14-a of the Banking Law (currently 16% annually).

For example, under the previous interpretation, an employer who paid a manual worker $5,000 on a biweekly basis could face liquidated damages of $2,500 per week—totaling up to $130,000 annually for a single employee—regardless of whether the employer paid the employee their wages in full. This would be in addition to damages recoverable for the length of the six-year statute of limitations period, as well as interest and attorneys' fees and costs. Under the amended law, that same employer's liability would be limited to the interest lost on the delayed payment: $7.67 for one week, or roughly $400 annually.

It is not all good news, however, for employers with a history of noncompliance. If an employer has one or more prior findings and "orders for violations" of Section 191(1)(a) after the effective date of the amendment, the employee may still recover liquidated damages equal to 100% of the late wages.

The amendments clarify that "order" means a single final order or determination made by the Commissioner of the New York State Department of Labor or a court of competent jurisdiction, regardless of the number of employees or the time period that was subject to such an order. Furthermore, the amendments also state the enhanced penalties only apply if the previous violation is no longer subject to appeal or judicial review. Finally, the amendments provide that enhanced penalties apply only if the prior violation involved employees performing the same type of work as the current plaintiff.

Main Takeaways

Although the amendments to NYLL § 198(1-a) provide relief for employers facing frequency-of-pay claims, it is still recommended that companies review their pay practices to ensure compliance with the law given the enhanced risks for repeat offenders. Additionally, as the amendments are effective as of May 9, 2025, and expressly apply to pending matters, employers who are currently facing frequency-of-pay claims are encouraged to consult with counsel to determine litigation strategy in light of the amendments.

For help in navigating any of your wage-and-hour concerns, do not hesitate to reach out to your DWT employment attorney.