A bill that would make New York state general contractors jointly responsible for wage theft violations committed by subcontractors won legislative approval on June 2 and is set to be signed by Gov. Andrew Cuomo.
New York Senate bill 2766c would impose liability—limited to three years—on contractors if their subs violate state labor law wage and hour provisions. An Individual or a representatives could file a lawsuit against the employer-subcontractor and the general contractor.
The bill generally prohibits employees and subcontractors from waiving liability for unpaid wages, benefits, wage supplements and any other remedies including attorneys’ fees and costs incurred by an employee pursuing unpaid wages.
But it includes an exception that contractors may contract with subcontractors to waive liability for unpaid wages, which can allow contractors to protect themselves from automatic liability, according to Fox Rothschild LLP attorneys Glenn S. Grindlinger, regional practice lead for the firm’s labor and employment department in New York City, and Bryn Goodman, a partner who focuses on employment law. If subcontractors don’t pay their employees, contractors still will be liable for such nonpayment, they said.
There’s also an exception for unions who may waive the requirement through collective bargaining.
The legislation will create a provision to the state’s general business law to permit contractors to withhold payments to a subcontractor if the sub fails to comply with the contractor’s request for certified payroll records containing all lawfully required information.
“In essence, New York is relying on general contractors to audit their subcontractor’s payroll records,” Grindlinger and Goodman said in the alert.
“It will definitely be an additional burden on general contractors. It’s a huge administrative headache,” Goodman told ENR.
Bill 2766c says the New York Dept. of Labor and New York Attorney General would enforce its requirements, “but contractors will be relied upon to play a role in policing their subcontractors,” according to the attorneys.
“Wage theft protection legislation is proven to broaden the legal pathways for workers to recover ... wages, hold contractors accountable, and create the conditions on construction sites that ensure both the safety and dignity of workers is respected,” Gary LaBarbera, president of the New York State Building and Construction Trades Council, said in a statement.
The New York City Council passed similar legislation in 2012 affecting projects that receive city funding. It required the Dept. of Housing Preservation and Development to report detailed information on subsidies awarded to projects, and to provide data on the wages of every person working for a developer or a contractor on the project.
