New York Governor Kathy Hochul and the New York State Legislature have reached an agreement to amend the state’s labor laws, aiming to limit the damages plaintiffs can recover for violations related to the frequency of wage payments.
Under New York Labor Law Section 191, employers are mandated to pay manual workers on a weekly basis. However, a 2019 appellate court decision in Vega v. CM & Associates Construction Management, LLC allowed employees to seek liquidated damages equal to the amount of delayed wages, even if the wages were eventually paid. This ruling led to a surge in lawsuits against employers for pay frequency violations.
Upon the Governor’s signature, the change will result in an amendment to Section 198 of the Labor Law to clarify that liquidated damages are not applicable when employees are paid in accordance with agreed terms, provided the payment frequency is at least semi-monthly. This amendment aims to protect employers from substantial financial penalties for administrative oversights, while still ensuring employees receive their due wages. Liability for violations will now be limited to “lost interest found to be due for delayed payment of wages,” subject to certain exceptions.
The proposal aligns with a January 2024 decision by the Appellate Division, Second Department, in Grant v. Global Aircraft Dispatch, Inc., which held that there is no private right of action for frequency of pay violations under Section 191. This decision contrasts with the earlier Vega ruling, creating a split in appellate authority that may have eventually required resolution by the New York Court of Appeals.
Business groups welcomed the proposed amendment, viewing it as a necessary clarification to prevent excessive litigation over technical pay frequency violations. Companies should review their payroll practices to insure protections from this new law.
At Certilman Balin, we help companies comply with the labor and employment laws and avoid liability due to non-compliance. Doug Rowe is a partner at Certilman Balin’s Labor & Employment Practice Group and can be contacted at drowe@certilmanbalin.com