Construction GCs beware: New York expands wage theft laws

On Labor Day, Governor Kathy Hochul signed a new law, Senate Bill S2776C, which makes a prime contractor (“prime”), general contractor (GC), and construction manager (CM) on a construction job liable for a subcontractor’s failure to pay wages owed to the subcontractor’s employees. This law takes effect January 25, 2023. What does this mean for the construction industry?

Background

New York Labor Law (NYLL) § 198 was passed to make it more difficult (and expensive) for employers to underpay employees or fail to explain how their pay is calculated. The statute, which includes liquidated damages, penalties, and reasonable attorneys’ fees, is commonly added in an employee’s claims against his immediate employer when suing for the underpayment of wages, including overtime and fringe benefits or the required wage notice and statement.

Expanded wage and hour liability

NYLL § 198, as amended by the new NYLL 198-e(1), now extends the pain to primes, GCs and CMs who employ subcontractors (or “subs”) on construction jobs.

A contractor making or taking a construction contract shall assume liability for any debt resulting from an action under [NYLL § 198], owed to a wage claimant or third party on the wage claimant’s behalf, incurred by a subcontractor at any tier acting under, by, or for the contractor or its subcontractors for the wage claimant’s performance of labor.