New York Sharply Curtails Damages for Weekly Pay Violations

Seyfarth Synopsis: The 2025 New York State budget includes a provision that reduces the potential damages available to plaintiffs for violation of the weekly pay requirement of the New York Labor Law.

As discussed here, New York employers have been bedeviled in recent years by class action claims for violation of the Labor Law’s weekly-pay requirement for “manual workers.” 

This flood of litigation resulted from the decision in Vega v. CM & Associates Construction Management, LLC, which held that under Section 198 of the Labor Law, employees had a private right of action to sue their employers for violations of Section 191(1)(a) of the statute.  (See Seyfarth’s report on the decision here.)  That provision requires that “manual workers” be paid their wages no later than weekly. The Vega court further held that manual workers paid in violation of the weekly-pay requirement could recover liquidated damages in the amount of 100% of the late-paid wages. That is, even if manual workers had been paid all their wages in full, they could recover an equal amount if the wages were not paid within a week of the work performed. 

Vega subjected employers to potentially catastrophic class action damages.  If a manual worker was paid bi-weekly and earned $50,000 a year, the potential damages would be $25,000 per year, going back six years (the limitations period under the Labor Law).  For an employer with 100 such employers, the damages could be $2.5 million per year. 

On May 9, 2025, New York Governor Kathy Hochul signed Bill Number A03006C, a statute implementing the State’s fiscal year 2025-2026 budget. Part U of the statute implements a permanent amendment to the Labor Law to significantly limit the potential damages arising from violations of section 191.

Specifically, Part U alters the available damages for pay frequency violations.  Instead of liquidated damages equal to the amount of wages deemed “late,” an employee’s recovery is limited to “no more than one hundred percent of the lost interest found to be due” in accordance with Section 14-a of the Banking Law, which is currently 16 percent per year (approximately 0.3 percent per week).  Thus, if manual workers are paid bi-weekly and have to wait seven days for their paycheck, their damages would be capped at 0.3% of the late wages. 

This limitation on damages takes effect “immediately” and applies “to causes of action pending or commenced” after the effective date of May 9, 2025. 

An important exception to this new statutory restriction is that liquidated damages may still be sought in an amount equal to the “wages found to be due . . . for any employer who, after the effective date of this paragraph, has been subject to one or more previous findings and orders” for pay frequency violations and continues to commit pay frequency violations.  Thus, employers still need to ensure that their manual workers are paid weekly (or obtain authorization from the State Department of Labor to pay less frequently). 

The upshot is that New York employers now have a way to severely limit their exposure to pay frequency claims, if they take steps to ensure that they are now in compliance with the law.

Seyfarth will continue to monitor developments in this space and provide updates when available.

 

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