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Legislative Memo

Frank Kerbein
Director, Center for Human Resources
T 518.465.7511
www.bcnys.org

BILL:

S.579 (Peralta) /A.628 (Rosenthal)

Support

SUBJECT:

Relates to securing payment of wages for work already performed; creates an employee lien

 

DATE:

March 3, 2017

 

The Business Council opposes this legislation that would allow for an “employee lien” as a remedy for failure to pay wages owed to employees in violation of certain provisions of the labor law.

Both State and Federal labor law provide opportunities for employees to be compensated by rogue employers who ignore wage and hour requirements.

Allowing employees to put liens on personal or company property merely on a claim of wage and hour violations – as done under this bill - will create confusion and redundancy that is not needed. It will also discourage new businesses from operating in the State – challenging the contention that “New York is open for business.”

In addition to the obvious chilling effect on current and future New York business development, a lien based merely on allegations would have other serious consequences for NY’s business community: limitations on the availability of credit; discouraging private business investors who fear such liens; and encourage personal and business bankruptcies to remove liens.

New York’s Wage Theft Prevention Act, as amended, provides both civil and criminal penalties on employers and individuals (including managers and supervisors) responsible for employee wage violations.  The act imposes personal liability on the members of a limited liability company having the ten largest ownership interests for the failure of the company to pay the wages of its employees.

Likewise, the state’s Labor Law already requires the state Department of Labor to pursue wage theft claims on behalf of impacted employees.

This proposed legislation is also in addition to provisions already in the Business Corporation Law which imposed personal liability on the ten largest shareholders of a corporation (other than publicly-traded corporation) for the unpaid wages of employees of the corporation. In November 2015 the Business Corporation Law was amended to apply this provision to foreign corporations, when the unpaid services were performed within New York.

The bill has other flaws as well. It cites four separate Labor Law definitions of employer, which results in contradictory definitions (e.g., when a public sector entity can be an employer under this proposed lien law amendment); it also would result in an expansive definition of “employer,” meaning that many parties with no control over a business’ pay practices could be impacted by a wage theft lien, including an employer’s agent or manager.

For these reasons, The Business Council strongly opposes adoption of this bill.