On May 9, 2025, Governor Hochul signed a budget bill into law that includes an amendment (“the Amendment”) to the New York Labor Law (NYLL).

This Amendment took immediate effect, applies to pending and future actions, and dramatically changes the relief employees can seek for first-time violations the pay frequency provisions for “manual workers” found in NYLL Section 191.

The Amendment substantially reduces potential damages from 100% liquidated damages to lost interest on delayed payments for first-time violations of the NYLL’s frequency of pay requirements where employers otherwise paid manual workers’ wages on regular pay days, no less frequently than semi-monthly. For future violations, liquidated damages will only be available for a second or subsequent violation if there is a finding and order by the New York State Department of Labor (“NYS DOL”) or court of competent jurisdiction of a prior violation for employees performing the same work.

What is a “Manual Worker”?

NYLL Section 191(1)(a) requires that employers pay “manual workers” on a weekly basis, with limited exceptions. The Labor Law defines a manual worker as a “mechanic, workingman or laborer.” The NYS DOL takes a long-standing position that “individuals who spend more than 25% of working time engaged in ‘physical labor’ fit within the definition of ‘manual worker.’” The term “physical labor” has likewise been interpreted broadly to include “countless physical tasks performed by employees.”

The New York Industrial Board of Appeals, the independent body within the NYS DOL that reviews petitions concerning orders, determinations, rules, and regulations issued by the Commissioner of Labor, looks at not only the time spent performing the physical labor, but also the type of labor performed (i.e., whether it is the type of interchangeable physical labor that can be done by multiple individuals with little to no skill or practice). In short, the determination of whether an employee is considered a “manual worker” is a fact intensive inquiry that must be determined on a case-by-case basis, making it difficult for employers to ensure compliance with the law’s requirements.

If a business’ workforce is large enough[1], it can seek an authorization from the NYS DOL to pay manual workers less frequently than weekly. To obtain the authorization for this variance, employers must submit an application to the NYS DOL with specific documentation. The NYS DOL considers a number of factors, including documents related to the financial stability of the employer and a history of compliance under the Labor Law. Where the manual workers are represented by a labor organization, a variance will not be granted without consent from that organization.

Background on Frequency of Pay Claims

As we have reported previously, New York’s appellate courts have been divided as to whether NYLL § 191 was intended to provide litigants with a private right of action for pay frequency claims. On September 10, 2019, the Appellate Division of the New York Supreme Court for the First Department held in Vega v. CM & Associates Construction Management, LLC that a private right of action does exist for NYLL’s frequency of pay provisions and that employees could seek to recover liquidated damages equal to all late-paid wages for violations of the law. The decision in Vega prompted the filing of hundreds of private court actions claiming companies failed to pay “manual workers” on time pursuant to Section 191.

On January 17, 2024, the Appellate Division of the New York Supreme Court for the Second Department held in Grant v. Global Aircraft Dispatch, Inc. that no private right of action exists, thereby creating a split between New York State Appellate Divisions. A request for review of the Grant decision by the New York Court of Appeals (New York’s highest court) is pending.

The confusion created by these conflicting decisions and the potential for employers’ significant exposure to damages set the backdrop for the legislative action.

What the Amendment Does

The budget bill (SB 3006C)[2] adds language to NYLL Section 198(1-a), which provides for the costs, remedies, and recoverable damages an employee or the New York Commissioner of Labor can seek for wage claims. The new language substantially reduces the amount of potential damages from 100% liquidated damages to lost interest (currently at an interest rate of 16% per annum) on delayed payments for first-time violations where employers otherwise paid manual workers wages on regular pay days, no less frequently than semi-monthly.

For future violations, liquidated damages equal to 100% of late-paid wages will only be available for a second or subsequent violation if there is a finding and order by the NYS DOL or a court of competent jurisdiction of a prior violation for manual workers performing the same work.

Although the Amendment is not the panacea employers wished for,[3] it is welcome news for the hundreds of employers subject to litigation or threatened litigation that have otherwise paid their manual workers’ wages on a regular basis, albeit not weekly.

What Employers Should Do Now

The Amendment is by no means the end of pay frequency litigation, and the potential for significant exposure is still possible, particularly if an employer has a finding and order issued against it and is found to have subsequently violated the frequency of pay requirements for the same group of workers again. As such, there are steps employers can take immediately to ensure compliance with the Labor Law’s frequency of pay requirements.

In addition, because of the fact intensive nature of determining whether an employee is a “manual worker,” it is important that employers ensure they are complying with the frequency of pay requirements in the first instance by auditing their pay practices, ideally with the assistance of counsel, to analyze whether certain categories of employees fall within the broad definition of “manual worker,” and, if so, to ensure that all manual workers are paid properly. Employers should also take this opportunity to consult with counsel to determine whether they meet the requirements to obtain a variance from the NYSDOL in order to pay manual workers less frequently than weekly.

ENDNOTES

[1] i.e., has an average of 1,000 employees in New York for the three years preceding the application, or an average of 3,000 out of state employees for the three years preceding, and an average of 1,000 employee in New York for the year preceding the application.

[2] The relevant text of the amendment to the NYLL can be found in Part U of the NYS Budget Bill, S3006-C. 

[3] Governor Hochul’s Executive Budget Proposal for fiscal year 2025 (see “Part K”) had included proposed language that would have eliminated liquidated damages as a remedy altogether for manual worker frequency of pay claims.