Bill Text: NY S07539 | 2023-2024 | General Assembly | Introduced
Bill Title: Provides grounds for attachment; relates to procedures where employees may hold shareholders of non-publicly traded corporations personally liable for wage theft; relates to rights for victims of wage theft to hold the ten members with the largest ownership interests in a company personally liable for wage theft; relates to penalties for certain wage violations.
Spectrum: Partisan Bill (Democrat 18-0)
Status: (Engrossed) 2024-04-02 - referred to judiciary [S07539 Detail]
Download: New_York-2023-S07539-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 7539 2023-2024 Regular Sessions IN SENATE June 5, 2023 ___________ Introduced by Sen. RAMOS -- read twice and ordered printed, and when printed to be committed to the Committee on Rules AN ACT to amend the civil practice law and rules, in relation to grounds for attachment; to amend the business corporation law, in relation to streamlining procedures where employees may hold shareholders of non- publicly traded corporations personally liable for wage theft; to amend the limited liability company law, in relation to creating a right for victims of wage theft to hold the ten members with the larg- est ownership interests in a company personally liable for wage theft; and to amend the labor law, in relation to penalties for certain wage violations The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subdivision 5 of section 6201 of the civil practice law and 2 rules, as amended by chapter 860 of the laws of 1977 and as renumbered 3 by chapter 618 of the laws of 1992, is amended and a new subdivision 6 4 is added to read as follows: 5 5. the cause of action is based on a judgment, decree or order of a 6 court of the United States or of any other court which is entitled to 7 full faith and credit in this state, or on a judgment which qualifies 8 for recognition under the provisions of article 53[.] of this chapter; 9 or 10 6. the cause of action is based on wage claims. "Wage claims," when 11 used in this chapter, shall include any claims of violations of articles 12 five, six, and nineteen of the labor law, section two hundred fifteen of 13 the labor law, and the related regulations or wage orders promulgated by 14 the commissioner of labor, including but not limited to any claims of 15 unpaid, minimum, overtime, and spread-of-hours pay, unlawfully retained 16 gratuities, unlawful deductions from wages, unpaid commissions, unpaid 17 benefits and wage supplements, and retaliation, and any claims pursuant 18 to 18 U.S.C. § 1595, 29 U.S.C. § 201 et seq., and/or employment contract EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD11736-01-3S. 7539 2 1 as well as the concomitant liquidated damages and penalties authorized 2 pursuant to the labor law, the Fair Labor Standards Act, or any employ- 3 ment contract. 4 § 2. Section 6210 of the civil practice law and rules, as added by 5 chapter 860 of the laws of 1977, is amended to read as follows: 6 § 6210. Order of attachment on notice; temporary restraining order; 7 contents. Upon a motion on notice for an order of attachment, the court 8 may, without notice to the defendant, grant a temporary restraining 9 order prohibiting the transfer of assets by a garnishee as provided in 10 subdivision (b) of section 6214. When attachment is sought pursuant to 11 subdivision six of section 6201, and if the employer contests the 12 motion, the court shall hold a hearing within ten days of when the 13 employer's response to plaintiffs' motion for attachment is due. The 14 contents of the order of attachment granted pursuant to this section 15 shall be as provided in subdivision (a) of section 6211. 16 § 3. Subdivision (b) of section 6211 of the civil practice law and 17 rules, as amended by chapter 566 of the laws of 1985, is amended to read 18 as follows: 19 (b) Confirmation of order. Except where an order of attachment is 20 granted on the ground specified in subdivision one or six of section 21 6201, an order of attachment granted without notice shall provide that 22 within a period not to exceed five days after levy, the plaintiff shall 23 move, on such notice as the court shall direct to the defendant, the 24 garnishee, if any, and the sheriff, for an order confirming the order of 25 attachment. Where an order of attachment without notice is granted on 26 the ground specified in subdivision one or six of section 6201, the 27 court shall direct that the statement required by section 6219 be served 28 within five days, that a copy thereof be served upon the plaintiff, and 29 the plaintiff shall move within ten days after levy for an order 30 confirming the order of attachment. If the plaintiff upon such motion 31 shall show that the statement has not been served and that the plaintiff 32 will be unable to satisfy the requirement of subdivision (b) of section 33 6223 until the statement has been served, the court may grant one exten- 34 sion of the time to move for confirmation for a period not to exceed ten 35 days. If plaintiff fails to make such motion within the required period, 36 the order of attachment and any levy thereunder shall have no further 37 effect and shall be vacated upon motion. Upon the motion to confirm, the 38 provisions of subdivision (b) of section 6223 shall apply. An order of 39 attachment granted without notice may provide that the sheriff refrain 40 from taking any property levied upon into his or her actual custody, 41 pending further order of the court. 42 § 4. Subdivisions (b) and (e) of rule 6212 of the civil practice law 43 and rules, subdivision (b) as separately amended by chapters 15 and 860 44 of the laws of 1977 and subdivision (e) as added by chapter 860 of the 45 laws of 1977, are amended to read as follows: 46 (b) Undertaking. [On] 1. Except where an order of attachment is sought 47 on the ground specified in subdivision six of section 6201, on a motion 48 for an order of attachment, the plaintiff shall give an undertaking, in 49 a total amount fixed by the court, but not less than five hundred 50 dollars, a specified part thereof conditioned that the plaintiff shall 51 pay to the defendant all costs and damages, including reasonable attor- 52 ney's fees, which may be sustained by reason of the attachment if the 53 defendant recovers judgment or if it is finally decided that the plain- 54 tiff was not entitled to an attachment of the defendant's property, and 55 the balance conditioned that the plaintiff shall pay to the sheriff all 56 of his or her allowable fees.S. 7539 3 1 2. On a motion for an attachment pursuant to subdivision six of 2 section 6201, the court shall order that the plaintiff give an accessi- 3 ble undertaking of no more than five hundred dollars, or in the alterna- 4 tive, may waive the undertaking altogether. The attorney for the plain- 5 tiff shall not be liable to the sheriff for such fees. The surety on the 6 undertaking shall not be discharged except upon notice to the sheriff. 7 (e) Damages. [The] Except where an order of attachment is sought on 8 the ground specified in subdivision six of section 6201, the plaintiff 9 shall be liable to the defendant for all costs and damages, including 10 reasonable attorney's fees, which may be sustained by reason of the 11 attachment if the defendant recovers judgment, or if it is finally 12 decided that the plaintiff was not entitled to an attachment of the 13 defendant's property. Plaintiff's liability shall not be limited by the 14 amount of the undertaking. 15 § 5. Paragraph (b) of section 624 of the business corporation law, as 16 amended by chapter 449 of the laws of 1997, is amended to read as 17 follows: 18 (b) Any person who shall have been a shareholder of record of a corpo- 19 ration, or who is or shall have been a laborer, servant or employee, 20 upon at least five days' written demand shall have the right to examine 21 in person or by agent or attorney, during usual business hours, its 22 minutes of the proceedings of its shareholders and record of sharehold- 23 ers and to make extracts therefrom for any purpose reasonably related to 24 such person's interest as a shareholder, laborer, servant or employee, 25 provided the purpose reasonably related to a person's interest as a 26 laborer, servant or employee shall be to obtain the names, addresses, 27 and value of shareholders' interests in the corporation. Holders of 28 voting trust certificates representing shares of the corporation shall 29 be regarded as shareholders for the purpose of this section. Any such 30 agent or attorney shall be authorized in a writing that satisfies the 31 requirements of a writing under paragraph (b) of section 609 (Proxies). 32 A corporation requested to provide information pursuant to this para- 33 graph shall make available such information in written form and in any 34 other format in which such information is maintained by the corporation 35 and shall not be required to provide such information in any other 36 format. If a request made pursuant to this paragraph includes a request 37 to furnish information regarding beneficial owners, the corporation 38 shall make available such information in its possession regarding bene- 39 ficial owners as is provided to the corporation by a registered broker 40 or dealer or a bank, association or other entity that exercises fiduci- 41 ary powers in connection with the forwarding of information to such 42 owners. The corporation shall not be required to obtain information 43 about beneficial owners not in its possession. 44 § 6. Section 630 of the business corporation law, paragraph (a) as 45 amended by chapter 5 of the laws of 2016, paragraph (c) as amended by 46 chapter 746 of the laws of 1963, is amended to read as follows: 47 § 630. Liability of shareholders for wages due to laborers, servants or 48 employees. 49 (a) The ten largest shareholders, as determined by the fair value of 50 their beneficial interest as of the beginning of the period during which 51 the unpaid services referred to in this section are performed, of every 52 domestic corporation or of any foreign corporation, when the unpaid 53 services were performed in the state, no shares of which are listed on a 54 national securities exchange or regularly quoted in an over-the-counter 55 market by one or more members of a national or an affiliated securities 56 association, shall jointly and severally be personally liable for allS. 7539 4 1 debts, wages or salaries due and owing to any of its laborers, servants 2 or employees other than contractors, for services performed by them for 3 such corporation. [Before such laborer, servant or employee shall charge4such shareholder for such services, he shall give notice in writing to5such shareholder that he intends to hold him liable under this section.6Such notice shall be given within one hundred and eighty days after7termination of such services, except that if, within such period, the8laborer, servant or employee demands an examination of the record of9shareholders under paragraph (b) of section 624 (Books and records;10right of inspection, prima facie evidence) of this article, such notice11may be given within sixty days after he has been given the opportunity12to examine the record of shareholders. An action to enforce such liabil-13ity shall be commenced within ninety days after the return of an14execution unsatisfied against the corporation upon a judgment recovered15against it for such services.] The provisions of this paragraph shall 16 not apply to an investment company registered as such under an act of 17 congress entitled "Investment Company Act of 1940." 18 (b) For the purposes of this section, wages or salaries shall mean all 19 compensation and benefits payable by an employer to or for the account 20 of the employee for personal services rendered by such employee includ- 21 ing any concomitant liquidated damages, penalties, interest, attorney's 22 fees or costs. These shall specifically include but not be limited to 23 salaries, overtime, vacation, holiday and severance pay; employer 24 contributions to or payments of insurance or welfare benefits; employer 25 contributions to pension or annuity funds; and any other moneys properly 26 due or payable for services rendered by such employee. 27 (c) A shareholder who has paid more than his or her pro rata share 28 under this section shall be entitled to contribution pro rata from the 29 other shareholders liable under this section with respect to the excess 30 so paid, over and above his or her pro rata share, and may sue them 31 jointly or severally or any number of them to recover the amount due 32 from them. Such recovery may be had in a separate action. As used in 33 this paragraph, "pro rata" means in proportion to beneficial share 34 interest. Before a shareholder may claim contribution from other share- 35 holders under this paragraph, he or she shall[, unless they have been36given notice by a laborer, servant or employee under paragraph (a),] 37 give them notice in writing that he or she intends to hold them so 38 liable to him or her. Such notice shall be given by him or her within 39 twenty days after the date that [notice was given to him by] he or she 40 became aware that a laborer, servant or employee may seek to hold him or 41 her liable under paragraph (a). 42 § 7. Subdivision (c) of section 609 of the limited liability company 43 law, as amended by chapter 620 of the laws of 2019, is amended to read 44 as follows: 45 (c) Notwithstanding the provisions of subdivisions (a) and (b) of this 46 section, the ten members with the largest percentage ownership interest, 47 as determined as of the beginning of the period during which the unpaid 48 services referred to in this section are performed, of every domestic 49 limited liability company, or of any foreign limited liability company, 50 when the unpaid services were performed in the state, shall jointly and 51 severally be personally liable for all debts, wages or salaries due and 52 owing to any of its laborers, servants or employees, for services 53 performed by them for such limited liability company. [Before such54laborer, servant or employee shall charge such member for such services,55he or she shall give notice in writing to such member that he or she56intends to hold such member liable under this section. Such notice shallS. 7539 5 1be given within one hundred eighty days after termination of such2services. An action to enforce such liability shall be commenced within3ninety days after the return of an execution unsatisfied against the4limited liability company upon a judgment recovered against it for such5services.] A member who has paid more than his or her pro rata share 6 under this section shall be entitled to contribution pro rata from the 7 other members liable under this section with respect to the excess so 8 paid, over and above his or her pro rata share, and may sue them jointly 9 or severally or any number of them to recover the amount due from them. 10 Such recovery may be had in a separate action. As used in this subdivi- 11 sion, "pro rata" means in proportion to percentage ownership interest. 12 Before a member may claim contribution from other members under this 13 section, he or she shall give them notice in writing that he or she 14 intends to hold them so liable to him or her. 15 § 8. Section 1102 of the limited liability company law is amended by 16 adding a new subdivision (e) to read as follows: 17 (e) Any person who is or shall have been a laborer, servant or employ- 18 ee of a limited liability company, upon at least five days' written 19 demand shall have the right to examine in person or by agent or attor- 20 ney, during usual business hours, records described in paragraph two of 21 subdivision (a) of this section throughout the period of time during 22 which such laborer, servant or employee provided services to such compa- 23 ny. A company requested to provide information pursuant to this subdivi- 24 sion shall make available such records in written form and in any other 25 format in which such information is maintained by the company and shall 26 not be required to provide such information in any other format. Upon 27 refusal by the company or by an officer or agent of the company to 28 permit an inspection of the records described in this subdivision, the 29 person making the demand for inspection may apply to the supreme court 30 in the judicial district where the office of the company is located, 31 upon such notice as the court may direct, for an order directing the 32 company, its members or managers to show cause why an order should not 33 be granted permitting such inspection by the applicant. Upon the return 34 day of the order to show cause, the court shall hear the parties summar- 35 ily, by affidavit or otherwise, and if it appears that the applicant is 36 qualified and entitled to such inspection, the court shall grant an 37 order compelling such inspection and awarding such further relief as to 38 the court may seem just and proper. If the applicant is found to be 39 qualified and entitled to such inspection, the company shall pay all 40 reasonable attorney's fees and costs of said applicant related to the 41 demand for inspection of the records. 42 § 9. Subdivision 5 of section 218 of the labor law, as added by chap- 43 ter 537 of the laws of 2014, is amended to read as follows: 44 5. An employer similar in operation and ownership to a prior employer 45 which had been found in violation of article six, nineteen or nineteen-A 46 of this chapter, shall be deemed the same employer for the purposes of 47 this section and articles six, nineteen, and nineteen-A of this chapter 48 if the employees of the new employer are engaged in substantially the 49 same work in substantially the same working conditions under substan- 50 tially the same supervisors, or if the subsequent employer has substan- 51 tially the same production process, produces substantially the same 52 products and has substantially the same body of customers. Such subse- 53 quent employer shall continue to be subject to this section and liable 54 for the acts of the prior employer under this section. 55 § 10. Subdivision 4 of section 219 of the labor law, as added by chap- 56 ter 537 of the laws of 2014, is amended to read as follows:S. 7539 6 1 4. An employer similar in operation and ownership to a prior employer 2 found to be in violation of article six, nineteen or nineteen-A of this 3 chapter, shall be deemed the same employer for the purposes of this 4 section and articles six, nineteen, nineteen-A of this chapter if the 5 employees of the subsequent employer are engaged in substantially the 6 same work in substantially the same working conditions under substan- 7 tially the same supervisors, or if the new entity has substantially the 8 same production process, produces substantially the same products and 9 has substantially the same body of customers. Such a subsequent employer 10 will continue to be subject to this section and shall be liable for the 11 acts of the prior employer under this section. 12 § 11. This act shall take effect on the thirtieth day after it shall 13 have become a law. The procedures and rights created in this act may be 14 used by employees, laborers or servants in connection with claims for 15 liabilities that arose prior to the effective date of this act.
