New York seems poised to enact a modified version of laws that would create opportunity legal responsibility for general contractors when their subcontractors fail to correctly shell out their staff.

As pointed out in our prior inform, the laws as at first drafted would impose liability for basic contractors if their subcontractors violated the wage and hour provisions of the New York Labor Regulation (NYLL). A drastically amended variation of the law is now on New York’s Senate flooring calendar and is expected to be passed and signed by Gov. Andrew Cuomo.

The amended monthly bill supplies some clarity and procedural safeguards for contractors, but if it becomes law, it will however alter the partnership between basic contractors and subcontractors in the development field. Typical contractors will will need to steadfastly critique their contracts and interactions with subcontractors to stay away from wage violations for which contractors will be joint and severally liable.

As formerly pointed out, New York Senate monthly bill 2766 normally prohibits staff members and subcontractors from waiving liability for unpaid wages, benefits, wage dietary supplements, and any other cures pursuant to NYLL Section 198 (together with attorneys’ expenses and costs incurred by the staff in pursuing these kinds of unpaid wages). The amended monthly bill, 2766c, incorporates an exception, nonetheless, that contractors may perhaps agreement with subcontractors to waive liability for unpaid wages, but these types of contracts cannot diminish the employee’s legal rights. This makes it possible for for contractors to defend them selves from automated liability, but if subcontractors cannot (or do not) pay out their workers, eventually, contractors will be liable for these types of nonpayment of wages. The revisions also carve out an exception for unions who may perhaps waive the need via collective bargaining.

Inspite of creating prospective exposure for common contractors, even where by the contractor has no handle about their subcontractor’s workers, the amended bill limitations the contractor’s liability to a few years. Usually, beneath the NYLL, companies are subject matter to a six-calendar year statute of restrictions for failure to shell out wages. As this kind of, the amended laws cuts contractors’ opportunity publicity in half.

Procedural Safeguards

In addition to limiting the timeframe for publicity, the amended monthly bill also supplies contractors with some procedural safeguards to safeguard by themselves even more. The safeguards spot the burden of subcontractor’s compliance on basic contractors. The legislation would create a new provision to New York’s General Small business Law to permit contractors to withhold payments to a subcontractor if the subcontractor fails to comply with a contractor’s ask for for licensed payroll records containing all lawfully needed payroll information, like info about any fringe advantages paid out to the subcontractor’s staff members.

The legislation also permits a contractor to withhold payments if the subcontractor or its subcontractor’s subcontractor, as the circumstance could be, fails to deliver the next information and facts on ask for:

  • the names of workers, like independent contractors
  • the identify of the subcontractor’s subcontractor, if relevant
  • the contract start off date
  • the period of the function
  • when relevant, regional unions with whom this sort of contractor is a signatory contractor
  • the identify, handle and cellphone number of a speak to for these types of subcontractor

Even more, the laws gives contractors the suitable to inspect subcontractors’ payroll documents. In essence, New York is relying on common contractors to audit their subcontractor’s payroll information. Of program, these “safeguards” do not support a contractor if the subcontractor’s workers assert that they worked off-the-clock or off-the-books as these types of purported wage and hour violations, by their incredibly nature, are not mirrored even if the subcontractor maintains appropriate payroll information.

The laws continues to deliver that the New York Division of Labor and New York Attorney Typical would enforce its necessities, but contractors will be relied upon to enjoy a role in policing their subcontractors. Further, aggrieved folks or their reps could file match in opposition to their employer-subcontractor and the normal contractor in court.

Even immediately after its most recent amendments, the legislation proceeds to position an monumental burden on common contractors to micromanage their subcontractors’ payroll treatments. Basic contractors need to quickly evaluate their agreements and relationships with subcontractors and start out requesting and examining their subcontractors’ accredited payroll records ahead of paying out for providers that could final result in legal responsibility to the basic contractor.

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