The scope for liability related to employee wage claims has changed dramatically for contractors and subcontractors operating in New York under a new law that shifts wage payment obligations to prime contractors.
New York Governor Kathy Hochul signed into law NY State Senate Bill S2766C, which is intended to reduce wage theft claims and amend wage theft prevention and enforcement in the construction industry within the state, on January 25, 2022, and the new law is effective retroactively to January 4, 2022.
The Legislature proposed this amendment to existing wage theft law to increase the likelihood that allegedly exploited workers in the construction industry will be able to secure payment and collect unpaid wages and benefits for work already performed by shifting the ultimate payment obligation to prime contractors.
Prior to the new law, a worker could only bring a private lawsuit for alleged unpaid wages (including overtime and fringe benefits) against their direct employer. The New York State Assembly asserted that this was a major issue in the construction industry and that subcontractors hid assets, changed their corporate identities, or took part in other alleged unscrupulous practices to avoid liability and make themselves judgment-proof from a potential wage theft action.
There are two sections to the new law. Section one pertains to construction industry wage theft and is codified under NY CLS Labor § 198-e. Pursuant to this new section, a...
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