New York State Moves to End Frequency of Payments Litigation

Reed Smith attorneys writing on the firm’s Employment Law Watch, examine recent attempts to eliminate frequency of payments litigation under Section 191 of the New York Labor Law.

Section 191 requires employers to pay manual workers weekly, and not more than seven days after the end of the week in which the wages were earned.

For over a hundred years, the law was understood to mean that in cases where manual workers were paid their full wages but received them late, for instance, bi-weekly, the only recourse available to the worker was a civil penalty imposed by the state’s Department of Labor.

However, in 2019 a New York State intermediate appellate court decision (the Vega decision) ruled that manual workers could recover liquidated damages, even if they were ultimately paid in full.

This meant that manual workers had a private right of action with potential recovery of damages, attorneys’ fees, and prejudgment interest if they were paid on anything other than a weekly basis. In practice, they could seek 26 extra weeks of pay per year, the amount of the wages that were paid “late.”

The law has a six-year statute of limitations, so the scope of damages is substantial.

There was a rush to file proposed class actions in New York federal court because, unlike New York State court, liquidated damages are recoverable in a class action.

However, two recent developments may stem the litigation tide. In January Governor Kathy Hochul proposed an amendment to New York law clarifying that liquidated damages are not available if the worker is paid “in accordance with the agreed terms of employment, but not less frequently than semi-monthly.” That would end the incentive for the frequency of pay lawsuits.

Then, on January 17, an intermediate appellate court ruled that the “reasoning of Vega” was incorrect and manual workers do not have a private right of action. 

The Reed Smith attorneys say employers can be cautiously optimistic about the future viability of such claims. The state’s highest court will soon provide a final answer on the issue.