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NY Wage Theft Bill Headed to Cuomo's Desk

Thursday, June 10, 2021

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The New York State Senate and State Assembly have passed legislation that would impact general contractors in the event of wage theft.

The bill, S2766-C, adds a new section to NY Labor Law 198 that extends full and complete liability to the general contractor or construction manager on a project for any non-payment of wages by any subcontractor on private construction projects.

Typically, a worker for a subcontractor, for example, would file a suit with the subcontractor they worked for to recover unpaid wages. With this bill, however, the general contractor would also be directly liable.

This liability does not extend to any intermediate subcontractors, construction managers who do not hold the trade subcontracts or to project owners.

ventdusud / Getty Images

The New York State Senate and State Assembly have passed legislation that would impact general contractors in the event of wage theft.

Moreover, the general contractor’s liability cannot be waived except through collective bargaining.

The legislation also amends General Business Law 756 to say that even without specific contractual provisions, subcontractors must submit employee names and contact information as well as wage benefit details.

If Gov. Andrew Cuomo signs the bill, it would make New York the sixth state, in addition to Washington, D.C., to adopt this type of wage theft protection.

Other NY Wage Decisions

This time last year, Cuomo signed a FY 2021 Enacted Budget that includes a directive to expand the state’s prevailing wage rules. The decision echoed a proposal put forth by Cuomo in January, with a few tweaks.

New York’s prevailing wage laws have now been expanded to include private projects worth at least $5 million that have received public subsidies of at least 30% of total construction costs.

Public subsidies are monies that include direct or indirect payments by a public entity to contractors, subcontractors, developers or owners that do not have to be repaid; savings from fees, rents, interest rates, loan costs or insurance costs that are below market rate; savings from tax credits, abatements, exemptions, increment financing and payments in lieu of taxes; any cost savings because of the involvement of a public entity; and loans that are to be repaid on a contingency plan.

Projects not covered under the new regulations include owner-occupied single- or two-family residencies; properties limited to four dwellings; certain not-for-profit projects; pre-hire collective-bargaining agreements; projects for the Urban Development Corporation Act or Downtown Revitalization Initiative; as well as certain school, historic and renewable energy projects.

The entity—a representative board—in charge of determining what is exempt and what’s not was one of the few changes that Cuomo made from his original proposal.

Under the final plan, the board will consist of 13 members making it the “largest statewide organization representing building owners and developers” along with another owner/develop group that represents the state (likely the Real Estate Board of New York).

This board will have discretion to exempt projects as well as the ability to delay the new prevailing wage rules. Regulations also mandate that most of its proceedings will be made public.

Industry reaction to the wage provisions is split, with the Associated Builders and Contractors criticizing the move.

“Even in the midst of one of the greatest economic challenges in the history of our great state, the majority conferences in Albany couldn’t stop themselves from stomping on our recovery,” said Brian Sampson, President of the New York chapter of ABC, whose members largely do non-union construction.

“Investors and builders need predictability and a strong commitment from the government to do no harm. Forcing them into the hands of an unelected public subsidy board that can determine current and future thresholds as well as creating an inconsistent definition of construction is unconscionable. They can, and will, take their investment opportunities elsewhere.”

Union groups, meanwhile, praised the decision.

“By including the expansion of prevailing wage in the budget, especially during such trying times nationwide, Governor Cuomo, our Assembly, and our Senate have proved their commitment to the backbone of our state – the men and women who build it and keep it running,” Sam Fresina, business manager of the Eastern New York Laborers District Council, said in a statement. “This is an outstanding example of responsible legislating that uplifts New York’s middle class.”

Outside of reaction to the wages themselves, others still argued that the board was given too much authority.

The new rules are slated to take effect in January 2022.

   

Tagged categories: General contractors; Good Technical Practice; Government; Laws and litigation; NA; North America; Subcontractors

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