SUMMARY OF PROVISIONS OF BILL A5501

By the Securing Wages Earned Against Theft Coalition (SWEAT)

Legislation introduced by Assemblymember Linda B. Rosenthal (D-WF/ Manhattan) to provide additional
tools to employees victimized by wage theft but whose employers may seek to evade responsibility by
transferring corporate or personal assets to frustrate a judgment.

1.

EXPAND THE LIEN LAW TO PROVIDE A REMEDY TO MORE EMPLOYEES

The bill would expand the New York Lien Law so that more workers can establish liens on their employers
property and reduce the likelihood that the property will be transferred prior to the issuance of a judgment.
Currently, only workers who suffer wage theft violations while working on a project to improve real property
can obtain a lien (called a mechanics lien), and that lien is on the property they have improved rather than
property owned by their employer. The bill would allow all employees not just employees working on
projects to improve real property to obtain a lien against their employers real or personal property, prior to
or during litigation, so that the employer cannot frustrate a judgment by disposing of that property. As with
mechanics liens, existing due process protections and other safeguards would be in place to prevent misuse
of the lien law.

2. MODIFY THE STANDARD THAT COURTS USE TO DETERMINE WHETHER TO

HOLD AN EMPLOYERS ASSETS DURING LITIGATION
Current New York law allows a judge to attach a defendants assets during the pendency of litigation. A
court order of attachment holds the assets so the owner cannot transfer them without court approval. It is a
critical tool to prevent employers from disposing of property after being sued and before a court renders a
judgment. However, New Yorks court practice rules currently impose on employeeswho are usually not
privy to their employers financial informationan unduly high burden to obtain attachment. The current
standard requires the employee to show that the employer has an intent to defraud the employees by
transferring or hiding property. Proving intend to defraud is almost impossible under these circumstances,
and employers who have successfully defeated motions for attachment have then proceeded to transfer their
assets during litigation. This bill would adopt the standard currently in place in Connecticut and allow
plaintiffs to obtain an attachment if they are likely to succeed with their claims, removing the requirement in
wage theft cases that an employee prove an intent to defraud. The bill does not alter any existing due
process protections.

3. REMOVE UNNECESSARY ROADBLOCKS TO HOLD THE LARGEST OWNERS OF

PRIVATELY HELD CORPORATIONS LIABLE FOR WAGE THEFT
The ten largest shareholders of privately held corporations and the ten largest owners of limited liability
companies can be held personally liable for wage theft, but existing laws contain several hurdles that make it
unnecessarily difficult for workers to hold the owners liable. Current law requires employees to give notice
to the owners within 180 days of the end of their employment but provides no mechanism for the employees
to learn the identity of the owners. In addition, current law requires an employee to get a final judgment
against the corporate entity, and for the corporate entity to fail to pay the judgment, before the employee can
even begin a case against the individual owners. The requirement of two successive lawsuits is inefficient
and unaffordable for low-wage workers. This bill removes these unnecessary hurdles by providing that wage
theft victims can pursue remedies against the largest owners of non-publicly traded business corporations
and LLCs at the same time that they pursue remedies against the corporate entity, and without advance
notice.