- Published Articles
- In the Press
- Press Releases
Sign Up for Alerts
Sign up to receive receive industry-specific emails from our legal team.
Sign Up for Alerts
We provide tailored, industry-specific legal updates to our clients and other friends of the firm.
Areas of Interest
December 4th, 2015
New New York Law Expands Liability for Non-Payment of Wages
Here's some important news for persons owning interests in companies operating in New York that are registered in other states.
Background. Last year, the New York State legislature passed a law imposing personal liability on certain members of limited liability companies (LLCs) - the members with the ten largest ownership interests - for the failure of the company to pay employee wages. The Wage Theft Prevention Act (WTPA) accomplished this change through an amendment to the New York Limited Liability Company Law. Specifically, the WTPA made the ten members with the largest percentage ownership interest of each New York State LLC personally liable, jointly and severally, "for all debts, wages or salaries due and owing to any of [the LLC's] . . . laborers, servants or employees, for services performed by them for [the LLC]." This LLC provision, which took effect on February 25, 2015, expanded on an existing law that imposed individual liability on the ten largest members of New York corporations. But the WTPA did not apply to corporations incorporated out-of-state.
New provision applies to foreign corporations. On November 20, 2015, Governor Cuomo signed an amendment to the New York Business Corporation Law extending this provision to foreign corporations that operate and have employees in New York. Shareholder liability for foreign corporations is not automatic. For example, before an employee can charge a shareholder for unpaid wages, the employee must first provide written notice to the shareholder that the employee intends to hold the shareholder liable for the employee's unpaid compensation. Employees must provide this notice within 180 days after termination of employment, or within 60 days after the employee has demanded and received the opportunity to examine the corporation's books and records, whichever is later. The employee must also begin a lawsuit seeking a judgment against the corporation or LLC for the unpaid wages, and attempt to execute upon the judgment. Once an execution is returned unsatisfied, the employee must commence a second lawsuit against the shareholders within ninety days. This amendment to the New York Business Corporation Law takes effect on January 19, 2016.
The take-aways. For employers, the issue of liability for non-payment of wages may arise during periods where cash flow is under stress. Employers should minimize exposure by prioritizing payment of employees' compensation. For employees, the notice requirements are paramount: failure to serve required notices can be fatal to a later claim for payment.
If you have questions about how the Wage Theft Prevention Act applies to your business or employment, or if you have other employment law questions, please contact Wendy Stryker (212) 705 4838 or firstname.lastname@example.org, Gavin McElroy at (212) 826 5541 or email@example.com, or any other member of the Frankfurt Kurnit Executive Compensation & Employment Group.
Other Employment Law Alerts
Mandatory Sexual Harassment Training Begins for Certain New York City Employers
April 1, 2019 is an important date for many New York City employers. On that date New York City employers with 15 or more employees (including contractors) who have worked more than 80 hours and at least 90 days in a calendar year, must begin providing mandatory sexual harassment training. Read more.
March 14 2019
California Employment Law Changes You Need to Know
A raft of legislative changes affect hiring practices, employment agreements, employee classification, training, and more. Here’s a handy summary. Read more.
January 28 2019
Are You Ready for New York’s New Anti-Harassment Rules?
Many New York employers are days away from a number of important compliance deadlines relating to the recently enacted New York State anti-sexual harassment laws (a link to our prior alert on these laws is here). We have provided a summary of what covered employers need to do. Read more.
October 1 2018