New York Reforms Penalty Rules for Pay Frequency Violations — A Win for Employers

On May 9, 2025, the State of New York enacted significant amendments to the New York Labor Law (NYLL), many of which have already taken effect. These changes are particularly relevant to wage and hour litigation and provide meaningful relief for employers.

If your business operates in New York, California, or other jurisdictions and needs guidance on wage and hour compliance, please contact the ILS legal team at contact@consultils.com. We provide strategic, efficient legal solutions to help you manage risk and stay compliant.

Key Highlights

Limits on Penalties for First-Time Pay Frequency Violations

Under NYLL, manual workers must be paid weekly. In the past, even if employees were paid in full and on time, simply paying manual workers biweekly instead of weekly could result in 100% liquidated damages—plus 9% interest and attorneys’ fees. This led to a surge in class actions targeting pay frequency alone.

The new law changes this. If an employer pays manual workers biweekly in violation of the rule for the first time, and has a good faith basis, the only penalty is interest for the delay, calculated at an annual rate of 16% (per New York Banking Law §14-a). However, if the employer had a prior final ruling for the same violation and did not appeal, subsequent violations will still trigger full liquidated damages.

Expanded Enforcement Powers for the NY Department of Labor

The New York State Department of Labor (NYSDOL) has been granted broader enforcement authority, including the ability to:

• Convert wage orders into automatic liens (judgment liens);

• Impose an additional 15% penalty on unpaid wage orders;

• Allow employees to enforce wage orders directly, including garnishing property and freezing accounts.

These changes significantly improve the enforceability of wage claims.

What This Means for Employers

This reform is generally viewed as favorable to employers. It reduces the risk of class-action lawsuits based solely on pay frequency. If an employer can show a good faith basis for a first-time violation, the exposure is limited to interest—rather than double damages.

That said, repeat violations may still trigger full penalties. Employers should maintain proper pay practices and retain documentation—such as legal opinions, industry norms, or agency guidance—to support good faith if challenged.

The strengthened enforcement provisions also mean employers must be more responsive to wage orders. Failing to act quickly could now result in liens and a 15% surcharge.

Recommended Next Steps

To reduce risk and ensure compliance under the new framework, employers should:

• Review payroll frequency policies, especially for manual workers, and make adjustments if necessary;

• Maintain a “good faith” file, including legal memos, internal reviews, and industry practices to justify decisions;

• Improve wage order response procedures to avoid enforcement penalties;

• Train HR and payroll teams to understand the new risk structure and avoid repeat violations.

If your business operates in New York, California, or other jurisdictions and needs guidance on wage and hour compliance, please contact the ILS legal team at contact@consultils.com. We provide strategic, efficient legal solutions to help you manage risk and stay compliant.

Disclaimer: The materials provided on this website are for general informational purposes only and do not, and are not intended to, constitute legal advice. You should not act or refrain from acting based on any information provided here. Please consult with your own legal counsel regarding your specific situation and legal questions.

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As Managing Partner at ILS, Richard Liu ranks among the leading U.S. attorneys in corporate, employment, and regulatory law. He is known for crafting legal strategies aligned with clients’ business objectives and advising Fortune 500 companies, startups, and executives on corporate transactions, financing, privacy, and employment matters across the technology, healthcare, and financial sectors.

Before founding ILS, Richard practiced at top defense firms, where he developed a reputation for anticipating risks and designing strategies that balance protection with growth. He has secured favorable outcomes in contract and intellectual property disputes, represented clients in state and federal courts, and is recognized for combining large-firm expertise with boutique-firm agility. Richard is also a frequent speaker at industry and legal conferences.

Email: contact@consultils.com | Phone: 626-344-8949

Susan is specialized in employment law and compliance, with additional experience in cross-border investments. With years of experience advising multinational clients, Susan focuses on employment-related matters, including workforce structuring, employee transfers, terminations, compensation and benefits, and workplace policies. She has extensive experience assisting companies in navigating complex labor regulations, managing cross-border employment issues, and resolving workplace disputes.

In addition to her employment law practice, Susan advises on M&A, private equity, venture capital, and cross-border investments. She has assisted international investors with complex deal structures, including VIE frameworks, and prepared due diligence reports and transaction documents.

Email:  contact@consultils.com | Phone: 626-344-8949