ALLIANCE MEMORANDUM OF OPPOSITION A628 (Rosenthal) / S579 (Peralta) Relates to allegations of wage theft STATUS: On Assembly floor calendar for 01/30/2017 The New York City Hospitality Alliance — representing restaurants, bars, destination hotels and industry suppliers across the five boroughs — opposes S579/A628, which would allow employees to file personal liens against business owners solely upon the allegation of a wage dispute, allow the state to place liens on property on behalf of claimants and make shareholders in limited liability companies personally liable for wage claims. While the Alliance takes the issue of wage theft extremely seriously — and recognizes the proposal's positive intentions — the bill as drafted would have serious negative consequences on small businesses and employment in New York State. As drafted, 5579/A628 would: • Allow any disgruntled employee to file a lien on his current or former employer and its owners based on the employee's mere allegations; • Freeze credit on small businesses, because as soon as a lien is filed banks won't extend credit; • Dissuade employers from incorporating or creating LLCs in New York; • Actually encourage unscrupulous employers to create shell companies to make it difficult for any individual to find out who the real owner is (which is obviously a truly unintended consequence); • Create additional costs and burdens on employers because even if the employer prevails in the lawsuit, it will have to undertake additional costs to have the lien removed; • Decrease the number of investors that businesses can turn to, because the investors may not want to risk their assets or a lien in the event an employee claim that wages were not properly paid; • Give employees/unions total leverage in any negotiations with the employer because employees/unions could threaten wage claims and leveling liens on employers; • Increase bankruptcies by employers and individuals in order to get rid of the liens; • Encourage employees to greatly exaggerate their claims because they can assert larger liens by doing so; • And even put first-line managers and other middle class individuals at risk of financial ruin because such individuals are "employers" under state and federal law and employees could assert liens on their assets. Wage and hour issues are taken seriously by the NYC Hospitality Alliance and our members and we have worked collaboratively with the NYS Department of Labor to ensure that existing laws and regulations both adequately protect employees and employers and are effectively enforced. This proposal has far too many potential negative consequences for small businesses in New York State — with no compelling rationale for such unprecedented new punitive actions — and therefore the NYC Hospitality Alliance strongly opposes this legislation. ABOUT THE NYC HOSPITALITY ALLIANCE The New York City Hospitality Alliance is a broad-based membership association founded in 2012 to foster the growth and vitality of the industry that has made New York City the Hospitality Capital of the World. It is the first association ever formed in New York City representing all facets of this diverse industry: restaurants, bars, lounges, destination hotels and major industry suppliers. Through the support and involvement of its members, The Alliance is committed to advancing -- with a clear and unified voice -- an agenda focused on opportunity, economic investment and job creation. Advocating on behalf of our members at all levels of government, The Alliance supports pro-growth public policy, encourages investment in and promotion of NYC's hospitality industry, and evaluates the development, implementation and fairness of relevant government regulations. Should you have any questions about the NYC Hospitality Alliance's position, please call Executive Director Andrew Rigie at 646-532-2756 or our lobbyists, Yoswein New York, Inc., at 212-233-5700.