On January 25, 2022, New York Governor Kathy Hochul signed a bill into law that dramatically alters wage payment obligations for contractors and subcontractors. The stated purpose of the law is to alter the current wage theft law to expand the probability that exploited workers in the construction industry will be allowed to attain payment, collect unpaid wages, and collect benefits from work already performed.
Key Changes to Wage Theft Law
The new law has two main sections that alter the construction industry’s approach to wage theft:
Increased Liability for Construction Contractors: Construction contractors are now liable for any unpaid wages, benefits, damages, and attorney fees related to a civil or administrative action against a subtractor.
Additional Payment Clarification: Clarifications that a contractor can withhold payment to a subcontractor or lower tier subcontractor for failing to provide certain payroll records.
These two new sections increase liability for prime contractors of a construction project, making them liable for all subcontractors that they choose to use on the jobsite for up to three years.
Helpful Tips for Prime Contractors
Prime contractors can take-charge by self-policing themselves to avoid costly claims by:
- Developing programs to allow all works on their projects to be paid timely and adequately.
- Amending their contracts with subcontractors and lower tier contractors to incorporate expanded indemnity, extra insured provisions for wage theft actions, compliance provisions, and incorporating a vetting process to ensure compliance and adequate financial coverage for the prime contractor.
- Providing training to their employees to allow for the acceptable inspection of subcontractor payroll records and apply the withholding of payments to their subcontractors if there is a potential violation.