From JDSupra, Eli Freedberg,,Liran Messinger, and Paul Piccigallo discuss a new law in New York which makes general contractors liable for wages of subcontractors without having to prove that the general contractor is a joint employer. If the independent contractor of a subcontractor alleges s/he was misclassified an owed wages, both the subcontractor and contractor might be liable. Eli, Liran and Paul write:
Last month, New York Governor Kathy Hochul signed legislation, S.2766C/A.3350A, that automatically makes general contractors jointly and severally liable for wages, benefits, or wage supplements owed by subcontractors to construction workers. In other words, construction workers who sue the general contractor on a project they work on will not have to prove that the general contractor employed or jointly employed the aggrieved worker; rather, joint employer status is automatically conferred upon the general contractor for the limited purpose of recovering any unpaid wages. The statute permits construction workers to bring a civil or administrative action to recover unpaid wages, liquidated damages, and attorneys’ fees from the general contractors as long as the proceeding to recover the wages was initiated within three years after the alleged nonpayment of wages. In addition, such a wage claim may also be brought by the employee’s collective bargaining agent, the New York State Department of Labor, and/or the attorney general.
Under this law, it will not be a defense for the general contractor to claim that it does not owe the wages owed and it not the “employer” or “joint employer” of the subcontractor’s employees. The general contractor may initiate an action against a subcontractor for indemnification of the debts owed; however, the general contractor may not have much recourse if the subcontractor is insolvent.
The statute also prohibits a contractor from taking any act to evade or negate the requirements of this law, including entering into a prospective agreement with the subcontractors’ employees in which those construction workers promise not to sue the general contractor.
To ensure that contractors have the ability to monitor their subcontractors’ wage practices, the statute grants contractors the authority to demand that their subcontractor produce certified copies of all payroll records that the New York Labor Law and its appurtenant regulations require employers to keep. In addition, a subcontractor is required to produce, upon request from a general contractor: (a) the names of all workers of such subcontractor on the project, including the names of all those designated as independent contractors; (b) when applicable, the name of the contractor’s subcontractor with whom such subcontractor is under contract; (c) the anticipated contract start date; (d) the scheduled duration of work; (e) when applicable, local unions with whom such subcontractor is a signatory contractor; and (f) the name, address and phone number of a contact for such subcontractor. The statute also empowers general contractors to withhold payments to any subcontractor who is unable to timely provide this information concerning employees on a specific project.
This law will go into effect on January 4, 2022 and will apply to new construction contracts entered into as well as to already-existing contracts that are extended, modified or amended after the 2022 date.