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.
                                                                   LBD11736-01-3

        S. 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 all

        S. 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 charge
     4  such  shareholder  for such services, he shall give notice in writing to
     5  such shareholder that he intends to hold him liable under this  section.
     6  Such  notice  shall  be  given  within one hundred and eighty days after
     7  termination of such services, except that if, within  such  period,  the
     8  laborer,  servant  or  employee  demands an examination of the record of
     9  shareholders under paragraph (b) of  section  624  (Books  and  records;
    10  right  of inspection, prima facie evidence) of this article, such notice
    11  may be given within sixty days after he has been given  the  opportunity
    12  to examine the record of shareholders. An action to enforce such liabil-
    13  ity  shall  be  commenced  within  ninety  days  after  the return of an
    14  execution unsatisfied against the corporation upon a judgment  recovered
    15  against  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 been
    36  given 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  such
    54  laborer, servant or employee shall charge such member for such services,
    55  he  or  she  shall  give notice in writing to such member that he or she
    56  intends to hold such member liable under this section. Such notice shall

        S. 7539                             5

     1  be given within one  hundred  eighty  days  after  termination  of  such
     2  services.  An action to enforce such liability shall be commenced within
     3  ninety days after the return of an  execution  unsatisfied  against  the
     4  limited  liability company upon a judgment recovered against it for such
     5  services.] 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.
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