New Law Affecting Contractors in 2022

New York Governor Kathy Hochul recently signed into law New York Senate Bill S2766C. This new law, which goes into effect January 4, 2022, makes contractors in the construction industry jointly and severally liable for wages owed to employees of its subcontractors. This 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. All general contractors, prime contractors, construction managers, and other “upstream” contractors in the industry should take immediate steps to ensure their future contracts with subcontractors are drafted to minimize potential wage liability.

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 State Labor Law requires 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.

If you have any questions, please reach out to Patrick Sacchetti at psacchetti@citrincooperman.com or Kenneth Laks at klaks@citrincooperman.com.