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NYS Bill S2766 Will Make Construction Contractors Liable for Wage Violations of Subcontractors

The New York State Senate and Assembly have passed Bill S2766, making construction contractors liable for wage violations committed by subcontractors. It is now awaiting the Governor’s signature.

This bill would provide New York construction workers with a new remedy against wage theft. Currently, a worker may bring a private lawsuit against his/her direct employer to collect any unpaid wages, including overtime and fringe benefits.

Bill S2766 Specifics

Section one of Bill S2766 adds a new section 198-e to the Labor Law about construction industry wage theft. According to this new section, a construction contractor would assume liability for any unpaid wages, benefits, damages, attorney fees related to a civil or administrative action by a wage claimant or the Department of Labor against a subcontractor of such contractor.
 
Section two amends section 756-a of the General Business Law to clarify that a contractor may withhold payment to a subcontractor or lower-tier subcontractor for failure to provide certain payroll records.
 
If this Bill becomes law, Bill S2766 would make construction contractors liable for any debt arising from a wage claim incurred by a subcontractor. The contractor would also be liable for attorney fees related to legal actions taken by the worker or the state labor department against a subcontractor.
 
The bill has been sent to Governor Cuomo for signature and would take effect 120 days after the bill is signed. It will apply to construction contracts entered, renewed, modified, or amended on or after such date.
 
This Bill, if passed into law, would make it more important than ever for Prime Contractors to perform due diligence on all subcontractors to ensure they hold the proper coverages. In addition, insurance protection that would cover the Prime in case their diligence falls short, would be a prudent investment. 
 

Stay tuned for updates.

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Disclaimer: To ensure compliance with requirements imposed by the Department of Treasury, we inform you any U.S. federal tax advice contained in this document or video is not intended for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.

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