Amd 6201, 6210 & 6211, R6212, CPLR; amd 624 & 630, BC L; amd 609 & 1102, Lim Lil L; amd 218 & 219, Lab L
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.
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.
