New York’s Construction Industry Wage Theft Bill: Prime Contractors in New York Now Liable for Unpaid Wages Owed To Subcontractors’ Employees
On September 6, 2021, NY Governor Hochul signed into law the Construction Industry Wage Theft bill (S2766C), imposing joint and several liability on prime contractors for the wage and benefit claims of their subcontractors’ employees. Effective January 4, 2022, the new law covers claims for unpaid wages, benefits and wage supplements as defined by NY Labor Law § 198, and thus covers not only wages but also reimbursable expenses, health and retirement benefits, and vacation, separation and holiday pay.
The law also incorporates and applies to prime contractors all other remedies available to employees under NYLL § 198, including liability for an additional amount, up to 100% of the unpaid wages, as liquidated damages (and up to 300% where a willful violation is shown); attorneys’ fees; prejudgment interest; and other potential penalties. It bears noting that contractors may contract for indemnification by subcontractors and may maintain an action against a subcontractor to recover owed wages that are paid by the contractor. The law applies to all non-union contracts and employees.
The obligations imposed by this new law may already exist for those general contractors who are deemed to be a “joint employer” under applicable federal and NYS wage and hour laws. However it effectively expands “joint employer” liability to include employers beyond those currently recognized under these wage and hour laws, and provides remedies which may not in any event be available under federal law.
In light of the risks of liability created by this new law, prime contractors in New York would be well advised to develop strong indemnification provisions for their subcontracts, as well as auditing and other contract management practices to ensure that their subcontractors’ non-union employees are receiving all wages and benefits to which they are entitled.
Bleakley Platt’s employment and construction law attorneys are continuously monitoring legal developments relevant to their clients’ interests. If you have any questions regarding this alert, please contact Joseph DeGiuseppe at jdegiuseppe@bpslaw.com | 914-287-6144, or Jonathan Murphy at jamurphy@bpslaw.com | 914-287-6165.