What's happening
This bill makes members with the largest ownership in domestic and foreign LLCs personally liable for unpaid employee wages in New York.
Why it matters
Expands accountability to out-of-state LLCs. By including foreign LLCs with employees working in New York, the bill closes a loophole that previously allowed non-NY companies to shield their largest owners from personal liability for unpaid wages.
Targets those with greatest financial stake. The ten members with the largest ownership percentages in an LLC are specifically held liable, increasing pressure on those who benefit most from the company’s profits to ensure fair labor practices.
Creates stronger incentives for wage compliance. Making individuals with significant ownership personally responsible for wage debts is likely to deter wage theft and encourage timely payment, as personal assets could be at risk.
Clarifies process and limits for claims. The bill lays out strict notification and timing requirements for employees seeking payment from LLC members, balancing the interests of workers with protections against open-ended liability for owners.
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Who cares
Headline styles
Hold LLC Owners Liable for Wages
Plain English, a few words. Used as the page title.
Sponsors
Senator · Senate District 39
No co-sponsors yet.
History
- Substituted by A453
- Advanced to third reading
- 2nd report cal.
- 1st report cal.367
- Referred to corporations, authorities and commissions
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Hold LLC Owners Liable for Wages
Signed by Governor · Sponsor Phil Steck
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2734
2019-2020 Regular Sessions
IN SENATE
January 29, 2019
Introduced by Sen. SKOUFIS -- read twice and ordered printed, and when printed to be committed to the Committee on Corporations, Authorities and Commissions
AN ACT to amend the limited liability company law, in relation to liability of members for wages due to laborers, servants or employees by domestic and foreign limited liability companies
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivision (c) of section 609 of the limited liability company law, as added by chapter 537 of the laws of 2014, is amended to read as follows:
(c) Notwithstanding the provisions of subdivisions (a) and (b) of this section, the ten members with the largest percentage ownership interest, as determined as of the beginning of the period during which the unpaid services referred to in this section are performed, of every domestic limited liability company, or of any foreign limited liability company, when the unpaid services were performed in the state, shall jointly and severally be personally liable for all debts, wages or salaries due and owing to any of its laborers, servants or employees, for services performed by them for such limited liability company. Before such laborer, servant or employee shall charge such member for such services, he or she shall give notice in writing to such member that he or she intends to hold such member liable under this section. Such notice shall be given within one hundred eighty days after termination of such services. An action to enforce such liability shall be commenced within ninety days after the return of an execution unsatisfied against the limited liability company upon a judgment recovered against it for such services. A member who has paid more than his or her pro rata share under this section shall be entitled to contribution pro rata from the other members liable under this section with respect to the excess so paid, over and above his or her pro rata share, and may sue them jointly
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03563-01-9
S. 2734 2
or severally or any number of them to recover the amount due from them. Such recovery may be had in a separate action. As used in this subdivision, "pro rata" means in proportion to percentage ownership interest. Before a member may claim contribution from other members under this section, he or she shall give them notice in writing that he or she intends to hold them so liable to him or her.
§ 2. This act shall take effect on the sixtieth day after it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the limited liability company law, in relation to liability of members for wages due to laborers, servants or employees by domestic and foreign limited liability companies
Purpose or general idea of bill
The bill ensures that wage theft from employees of Limited Liability Companies does not occur when the LLC is established in a foreign state but employs workers in the State of New York.
Summary of provisions
Section 1. Amends subdivision (c) of section 609 of the Limited Liabil- ity Company Law, as added by chapter 537 of the laws of 2014.
Section 2. The amendment adds language requiring that the 10 major shareholders be liable for unpaid wages due to laborers, servants or employees for foreign as well as domestic limited liability companies.
Section 3. Effective date.
Justification
Limited Liability Company Law § 609 imposes liability for unpaid wages on the members with the 10 largest ownership interests after a judgment against the corporation has been returned unsatisfied. This bill ensures that all foreign Limited Liability Companies employing workers in New York State are treated the same in the eyes of the law as domestic LLCs. In 2015, legislation was enacted which ended the distinction under which foreign corporations had been exempted by court decision from this rule. Likewise, the law should be clear that foreign LLCs should abide by the same rule as domestic LLCs, thereby eliminating any incentive for an LLC doing business in New York State to form under the laws of a foreign state.
Legislative history
Assembly
2017 - Passed Assembly 2018 - Passed Assembly
Senate 2017 - Referred to Corporations, Authorities, and Commissions 2018 - Referred to Corporations, Authorities, and Commissions
Fiscal implications
None to state.
Effective date
Shall be effective after 60 days.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.