As of Jan. 4, 2022, general contractors and construction managers in New York became liable for the failure of subcontractors to pay wages to employees.
Previously, contractors were often not liable for wages due to the employees of subcontractors, unless the contractor had a direct employer-employee relationship. However, a newly enacted Section 198-e to the New York State Labor Law now imposes joint liability for unpaid wages on ”any person, firm, partnership, corporation, association, company, organization or other entity, including a construction manager, general or prime contractor, joint venture, or any combination thereof, which enters into a construction contract with an owner.”
Construction contract is broadly defined. It includes any agreement, oral or written, that “causes a building, structure or improvement, new or existing, to be constructed, altered, repaired, maintained, moved or demolished or that causes land to be excavated or otherwise developed or improved.”
A “construction contract” subject to the statute does not include public works contracts (which have their own obligations), nor home improvement or construction contracts involving a single-family home.
This obligation for unpaid wages extends to any employee of a subcontractor performing work on a project, including sub-subcontractors and subcontractors with whom the general contractor does not have a contract.
The statute further provides that a general contractor’s liability for unpaid wages...
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