A 100-Year-Old Weekly Pay Law Costing Small Businesses Must Go

By Ashley Ranslow

New York State continues to lose small businesses, the institutions that every community relies on for its tax base, jobs, charitable giving and bustling Main Streets. There are a host of challenges facing small, independent businesses, some more difficult to solve than others. But one glaring issue that epitomizes everything that is wrong with doing business in New York continues to go unaddressed: a 100-year-old weekly pay law now used as a hammer by plaintiffs’ attorneys to extort millions out of hardworking small business owners, particularly on Long Island and in New York City.

The 100-year-old law requires “manual workers,” defined as a workingman, laborer, or mechanic, to be paid weekly. A definition that has little relevance in today’s economy has been stretched by plaintiffs’ attorneys to now include a wide range of employees, including those making six-figure salaries. Until 2019, this law was appropriately enforced by the New York State Department of Labor through agency actions and penalties; however, the 2019 Vega mid-level court decision has turned this into a cash cow for plaintiffs’ attorneys, squeezing massive settlements out of small businesses.

Let’s be clear, these are not cases of wage theft. These multi-million-dollar cases are against businesses, large and small, who have paid their workers, but paid them bi-weekly or semi-monthly instead of weekly. Imagine being the owner of a small hardware store, restaurant, or engineering or IT firm, and being hit with a six or seven-figure lawsuit because you pay your employees regularly every two weeks. It defies any sort of reasonableness or logic; it is utterly absurd.

But the tragedy in all of this is that New York State could have fixed this problem last year, but legislators instead remained silent and turned a blind eye. Where was and is the outrage? There is none, only crickets.

Luckily, Gov. Kathy Hochul is once again pushing for a practical solution. It is imperative that the Legislature not repeat its collusion in 2025.

Frustratingly, there is an easy way to end these lawsuits that are ruining small businesses, and that is changing New York’s 100-year-old weekly pay law, but no one wants to do that because of certain politically powerful and well-funded interest groups. The simplest solution would be to allow businesses to pay all employees, regardless of whether they are manual or not, bi-weekly, like government agencies and private employers in every other state. That solution was opposed by so-called “worker advocates” who purported to represent the interests of low wage workers. Mind you, a manual worker is not necessarily a low wage worker, and vice-versa.

Another solution is that legislators could change the definition of manual worker to align with the 21st century or allow small businesses to apply for waivers to the weekly pay law like their big-business counterparts. This was also met with staunch opposition.

The truth is manual-worker weekly pay lawsuits are not about protecting low-wage workers; they are about preserving the opportunity for certain plaintiffs’ attorneys to enrich themselves. In the meantime, more than 500 weekly pay cases have been filed against businesses, large and small. Most small business owners will settle a case because they cannot afford to pay attorneys to fight it or cannot risk losing. The settlements are still astronomical, and there are significant repercussions. Main Street businesses are pushed to the brink of closure, some owners need to mortgage property, cash in retirement savings, or drain all financial resources to keep up with settlement payments – all because they processed payroll every two weeks instead of every week (based on an arbitrary definition). This madness must stop. There is no legitimate reason to continue to turn a blind eye to what is happening.

Legislators frequently proclaim their love of small business, and are quick to say they support Main Street, but their actions must match their rhetoric. These weekly pay lawsuits are an existential threat to small businesses, and are a clear signal that New York is perfectly content with advertising that this state is not only “closed” to business but is explicitly hostile to business, including small businesses.

Enough is enough. Anyone proclaiming to support and love small business must support the governor’s proposal and put a stop to these devastating weekly pay lawsuits now.

Ashley Ranslow is the New York State director at the National Federation of Independent Business (NFIB), a small business advocacy organization representing more than 11,000 small, independent businesses statewide.