New York Legislature Passes Bill That Would Allow Liens Against Employers For Unpaid Wage Claims

July 9, 2019

By: Shari A. Alexander

New York has joined 10 other states in passing a bill to allow employees to obtain liens on the assets of their employer, its officers and large shareholders upon the mere allegation of a wage claim.  If signed by Governor Cuomo, the Securing Wages Earned Against Theft (SWEAT) bill would allow employees who allege a “wage claim” to file an employee’s lien, similar to a mechanic’s lien, on property located in New York State.

Key Provisions of the Bill:

  • An “employer” includes not just the corporate entity that employs an individual, but could also include managers, executives, supervisors, owners, shareholders, human resources professionals and any other person or entity who has control over employees’ working conditions.
  • A “wage claim” includes claims under the New York Labor Law and the Fair Labor Standards Act for unpaid wages, overtime, spread of hours, call-in pay, uniform maintenance pay, withheld gratuities, unlawful deductions from wages, unpaid charges that purport to be gratuities, or improperly taken meal and tip credits, as well as unpaid compensation pursuant to an employment contract or any claim that the employer violated a wage order promulgated by the Commissioner of Labor.    
  • Liens may be filed by the employee or the New York State Department of Labor and the New York Attorney General for wage claims that are the subject of their investigations, court actions or administrative agency actions.
  • Potential liability for the 10 largest shareholders of non-public corporations is expanded from unpaid wages to include liquidated damages, penalties, interest, attorneys’ fees and costs included in a judgment for unpaid wages.
  • Employees and their agents (i.e., attorneys) will have access to the minutes of shareholder meetings and records of shareholders, as well as certain information about members of LLCs, related to their claims.

The bill’s sponsors, in support of enactment, noted that employees in states that have enacted similar legislation have been substantially more successful in obtaining full or substantial satisfaction of judgments against employers for wages and attorneys’ fees than employees in other states.  Should the bill become law, employers must be diligent in ensuring that they are in compliance with all wage and hour laws, and must be prepared to deal with improperly filed liens in frivolous cases.  Attorneys at Moses & Singer are available to counsel employers with respect to any specific concerns.