For years in New York, construction workers struggled to receive proper payment when the failure to pay was traced to a subcontractor. This struggle was due to the fact that general contractors were not liable for a subcontractor’s failure to provide timely payment, assuming there is no direct relationship between the general contractor and the construction worker. As of the start of 2022, however, employees and construction workers can now claim a failed payment by a subcontractor directly from the general contractor.
On January 4, 2022, New York State updated the New York Labor Law (NYLL) to cover “Construction industry wage theft.” NYLL §198-E now reads that any contractor “shall assume liability for any debt” created by wages owed to construction worker employees. Specifically, the liability covered and incurred means that “the contractor shall be considered jointly and severally liable for any unpaid wages, benefits, wage supplements, and any other remedies.” Stated differently, construction workers who are unpaid because a subcontractor’s business failed can now recover directly from the general contractor the wages they were owed.
The size of construction projects in New York are massive, and that necessitates a three, or sometimes more, tier structure of contract. At the top is the general contract holder, the person or business who owns the right to build, say, a skyscraper. In the middle tier are subcontractors, people and businesses who take on parts of the general contract. For example, a general contractor may subcontract scaffolding to business X, window making to business Y, and office space design to business Z.
The construction workers make up the final tier; the women and men who actually do the various jobs outlined in the contracts. Before January 4, 2022, the workers were out of luck if a subcontractor did not or could not pay them. This is, unfortunately, not uncommon as subcontractors often work on thin financial margins and unexpected costs can be devastating. This often falls on the shoulders of the workers, who cannot collect payment simply because there is no money left to pay.
Now, there is a greater level of protection for construction workers. The general contractors, the top of the tier, are liable to construction workers when subcontractors fail to pay them. This largely removes the primary barrier imposed by a subcontractor going under. This will certainly have ramifications for construction work generally, but workers can appreciate a new protection. If you are struggling to receive payment for your hard work, contact one of our employment attorneys today.
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