{"id":538,"date":"2021-10-05T19:51:34","date_gmt":"2021-10-05T19:51:34","guid":{"rendered":"https:\/\/forework.com\/?p=538"},"modified":"2022-12-24T20:03:37","modified_gmt":"2022-12-24T20:03:37","slug":"new-ny-law-creates-strict-wage-liability-for-construction-industry-contractors","status":"publish","type":"post","link":"https:\/\/forework.com\/new-ny-law-creates-strict-wage-liability-for-construction-industry-contractors\/","title":{"rendered":"New NY Law Creates Strict Wage Liability for Construction Industry Contractors"},"content":{"rendered":"\n


New York Gov. Hochul has signed some of the strictest wage and hour legislation in the country, which will make contractors in the construction industry jointly and severally liable for wages owed to employees of its subcontractors.<\/p>\n\n\n

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On September 6, 2021, New York Governor Kathy Hochul signed into law a bill that will make contractors in the construction industry jointly and severally liable for wages owed to employees of its subcontractors. The groundbreaking new law\u2014which adds new section 198-e to the Labor Law (\u201c\u00a7198-e\u201d)\u2014continues the expansion of worker rights under New York\u2019s statutory scheme. Here are the key provisions of the new law:<\/p>\n\n\n\n

Scope of Liability<\/strong>. Any contractor entering into a construction contract will assume liability for any wages or debt owed to a worker \u201cincurred by a subcontractor at any tier acting under, by, or for the contractor or its subcontractors for the [worker\u2019s] performance of labor.\u201d Where an action is filed against a subcontractor, the upstream contractor will be \u201cconsidered jointly and severally liable for any unpaid wages, benefits, wage supplements, and any other remedies\u201d provided under the law. Upstream contractors may be liable not only for the unpaid wages, but also for the claimant\u2019s attorney fees, interest, and liquidated damages under Labor Law Section 198.<\/p>\n\n\n\n

Joint Liability Cannot Be Waived\u2026Except by a Union<\/strong>. A contractor\u2019s joint liability for subcontractor wages cannot be waived by agreement or release, except through a collective bargaining agreement. As stated in Labor Law \u00a7198-e(10), \u201c[t]he provisions of [\u00a7198-e] may be waived by a collective bargaining agreement with a bona fide building and construction trade labor organization which has established itself, and\/or its affiliates, as the collective bargaining representative for persons performing work on a project, provided that for such waiver to be valid, it shall explicitly reference [\u00a7198-e].\u201d<\/p>\n\n\n\n

Who Can Bring a Claim<\/strong>. Claims under \u00a7198-e may be brought by a worker or by a third party on the worker\u2019s behalf, including the New York State Attorney General.<\/p>\n\n\n\n

Indemnity\/Contribution Right<\/strong>. The law makes clear (in Labor Law \u00a7198-e(2)) that a contractor can bring legal action against a subcontractor for amounts that the contractor pays to the subcontractor\u2019s employees under \u00a7198-e. The law also makes clear (in Labor Law \u00a7198-e(7)) that it \u201cshall not be deemed to prohibit a contractor \u2026 from establishing by contract or enforcing any other lawful remedies against a subcontractor it hires for liability created by violation of [\u00a7198-e], provided that such contract or arrangement does not diminish the right of employees to bring an action under [\u00a7198-e].\u201d So while the subcontractor\u2019s employees can sue the upstream contractor directly (in addition to, or instead of, the subcontractor), and while the upstream contractor can be held 100% liable, the upstream contractor can, in turn, sue the subcontractor for anything it is required to pay.<\/p>\n\n\n\n

Statute of Limitations<\/strong>. Contractor liability under \u00a7198-e is limited to claims that occurred within the 3 years preceding the initiation of the claim. This is shorter than the 6-year statute of limitations that apply to wage claims against \u201cdirect\u201d employers.<\/p>\n\n\n\n

Information Requests<\/strong>. The new law also adds new section 756-f to the General Business Law (\u201c\u00a7 756-f\u201d), providing that upon request from the upstream contractor, a subcontractor must provide the following information: (1) certified payroll records; (2) the names of all workers on a given project; (3) the name of the contractor\u2019s subcontractor, where applicable; (4) the anticipated contract start date; (5) the scheduled duration of work; (6) local unions for which the subcontractor is a signatory contractor, where applicable; and (7) the name, address, and phone number of a contact for the subcontractor. Per \u00a7 756-f(1), \u201c[s]uch payroll records shall contain sufficient information to apprise the contractor \u2026 of such subcontractor\u2019s payment status in paying wages and making any applicable fringe or other benefit payments or contributions to a third party on its employee\u2019s behalf.\u201d Under \u00a7 756-f(3), an upstream contractor is entitled to withhold payments owed to a subcontractor that fails to provide this information on a timely basis.<\/p>\n\n\n\n

Employer Takeaways<\/strong><\/p>\n\n\n\n

As a result of this legislation, contractors should avoid subcontracting with any entity that cannot meet its wage obligations. Separately, to protect themselves, contractors should ensure that their contracts with subcontractors address the following:<\/p>\n\n\n\n