What NY Employers Need to Know About the Latest Wage Theft Bill

What NY Employers Need to Know About the Latest Wage Theft Bill

The New York Legislature recently passed the Securing Wages Earned Against Theft Bill. The legislation aims to increase the likelihood that workers alleging “wage theft” can secure payment of unpaid wages for work already performed.

Senate Bill S2844B, which has been passed by both the Senate and the Assembly, amends several New York laws, including the Lien Law; Labor Law; Attachment under the Civil Practice Law and Rules; the Business Corporations Law; and the Limited Liability Law. A brief summary of its key provisions is provided below.

Employee Lien

Senate Bill S2844B amends New York’s lien law to expand the mechanics’ lien provisions and create an “employee’s lien” that would provide a lien remedy for all employees pursuing wage claims, not just home improvement workers currently protected under the existing law. The legislation defines a “wage claim” as any claim constituting a violation of New York Labor Law § 170 (overtime wage), § 193 (deductions from wages), § 196-d (gratuities), or § 652 and § 673 (minimum wage). Wage claims also include claims arising from employment contract breaches, as well as federal minimum wage claims under 29 U.S.C. § 206 and § 207.

Under the bill, workers alleging wage theft would be able to seek attachment of their employers’ assets during the pendency of a court action for the value of the employee’s wage claim, including liquidated damages. Employees may pursue a lien against the employer’s real property or personal that can be sufficiently described pursuant to Section 9-108 of the Uniform Commercial Code (UCC). The bill contains an exception for an employer’s deposit accounts and goods.

The Securing Wages Earned Against Theft Bill provides that the Department of Labor and the Attorney General may obtain an employee’s lien for the value of the wage claims of employees who are the subjects of their investigations, court actions or administrative agency actions.

The bill imposes a number of procedural requirements. Notice of an employee’s lien must be filed no later than three years following the end of the employment giving rise to the wage claim. With regard to real property, notice must be filed in the clerk’s office of the county where the property is located. When seeking to attach personal property, notice must be filed with a financing statement pursuant to section 9-501 of the UCC. Absent an extension, all liens would last for one year.

Personal Liability for Unpaid Wages

New York law already provides that the ten largest members of a limited liability company (LLC) and shareholders of an unlisted corporation can be held personally liable, jointly and severally, for all debts, wages, and salaries due and owing to a business’s employees.

The Securing Wages Earned Against Theft Bill streamlines the procedures for employees to pursue personal liability for alleged wage theft. The legislation would give the employees of a corporation the right to inspect its books and records to obtain the names, addresses, and value of shareholders’ interests in the corporation. Senate Bill S2844B would similarly amend New York’s limited liability company law to create a similar right to inspect an LLC’s records.

What’s Next?

The bill now heads to Governor Andrew Cuomo’s desk. If the Governor signs the bill into law, it will take effect 30 days later. The procedures and rights created in the law may be used in connection with claims for liabilities that arose prior to the effective date.

The attorneys of the Scarinci Hollenbeck Labor & Employment Group will continue to track the status of the wage theft bill and encourage New York employers to check back for updates.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Scott Heck, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.