New York Governor Kathy Hochul’s proposed budget for fiscal year 2025 includes proposed legislation that would amend New York Labor Law to make clear that liquidated damages are not available as a remedy for certain pay frequency violations. The legislation would align with a recent New York Appellate Division case that found there was no private right of action for pay frequency claims.

New York’s weekly pay law provides that absent authorization from the Commissioner of Labor, employers must pay a “manual worker” (workers who spend 25% or more of their working time engaged in physical labor) weekly and no more than seven days after the end of the week in which the wages were earned.

In 2019, a decision from the New York Appellate Division held that New York’s weekly pay law provided for a private right of action for plaintiffs and allowed plaintiffs to seek liquidated damages equal to the amount of the late-paid wages. This decision resulted in an increase in class action litigation by employees and former employees for allegedly late paid wages, even if paid in full. Previously, only the New York Department of Labor could bring such claims. Many of these new lawsuits involved facts where the employees were paid in full, but on a semi-monthly or monthly basis, rather than weekly.

The proposed legislation would amend New York’s weekly pay law to make clear that liquidated damages are “not applicable where the employee was paid in accordance with agreed terms of employment” and paid not less frequently than semi-monthly. The legislation is in line with a recent 2024 decision from the New York Appellate Division that held that the full payment of wages on a regular bi-weekly schedule does not constitute grounds for liquidated damages. The 2024 decision from the New York Appellate Division created a split that could result in the New York Court of Appeals resolving the split.

Polsinelli will continue to monitor the legislation and any other judicial developments.