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Lien Bill Passes

By NYC Hospitality Alliance

As we've reported, the NYS Legislature introduced legislation that if enacted would allow a business and personal lien to be placed on the owners, top 10 investors, and managers of a business based solely on the accusation of a wage violation.

As we've reported, the NYS Legislature introduced legislation that if enacted would allow a business and personal lien to be placed on the owners, top 10 investors, and managers of a business based solely on the accusation of a wage violation. You may click here to read our original analysis of the proposal, which has since been amended. While we were successful in stopping passage of this legislation over the past several years, this was no longer realistic within the new dynamic in Albany, and so despite best efforts, the legislation was recently passed by the state Senate and Assembly.

With that being said, due to the work of the NYC Hospitality Alliance team, and the incredible engagement of our members who emailed and called their elected representatives, we were able to secure important amendments to the legislation that will reduce some of the negative consequences. This was due in part to the NYS Senate's willingness to work with us, even though we hold disparate positions on the legislation. 

You may read a list of ways the bill was amended below.  

We still have concerns with the premise of this legislation and know that its passage is a very unwelcome outcome.  

Next steps: The legislation will be sent to Governor Cuomo who will decide to sign the legislation into law or veto it. We will obviously be engaging with the Governor's office on this matter and will keep you updated.

Amendments to the legislation that were secured:

  • The definition of Employee Lien limits the lien to the particular employee and not to a putative class.  
  • Removes Labor Law section 191 from the definition of a "wage claim." This is good because it will prevent employees from filing liens when they allege that they were not paid on a weekly basis and instead were paid on a bi-weekly or semi-monthly basis.  
  • Makes it more difficult to obtain a lien based on wage related paperwork errors.
  • Clarifies that liens are automatically extinguished if the employer prevails or the employee fails to pursue the underlying wage claim.  
  • Provides for penalties for a willful exaggeration of a claim.
  • Removes the provision that the burden of proof for wage claim attachments rests with the defendant.
  • Employee liens can now only be filed within three years after the cessation of employment. 
  • Limits an employee's ability to inspect the records of a non-public corporation to only obtaining names, addresses, and value of the shareholder's interest in the corporation. Therefore, the employee cannot obtain the financial records of the corporation as was in the original bill.
  • Limits an employee's ability to inspect the records of an LLC to only obtaining names, addresses, and value of the member's interest in the LLC. Therefore, the employee cannot obtain the financial records of the LLC as was in the original bill.

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