What's happening
This bill makes certain business owners and managers personally liable for unpaid employer contributions, penalties, and interest.
Why it matters
Expands personal financial risk for business leaders. By making individual officers, LLC managers/members, and certain partners personally liable for unpaid employer contributions, penalties, and interest, the bill pierces the traditional shield that usually protects personal assets from business debts, increasing the stakes for those in key decision-making roles.
Aims to improve compliance with employment-related tax and reporting laws. The threat of personal liability is likely intended to deter business owners and managers from neglecting or avoiding their obligations, such as unemployment insurance contributions and wage reporting, thereby strengthening the safety net for workers.
Ensures accountability even after business dissolution. The bill specifies that personal liability is not erased if the business entity dissolves, closing a potential loophole for avoiding payment by simply shutting down or restructuring the business.
Provides due process for those held liable. Individuals determined to be personally liable will receive notice of the basis and amount owed, along with the right to appeal, ensuring some procedural safeguards are in place before personal assets can be targeted.
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Who cares
Headline styles
Make Owners Pay Business Debts
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to labor
- Referred to rules
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
6468
2019-2020 Regular Sessions
IN SENATE
June 12, 2019
Introduced by Sen. RAMOS -- (at request of the Department of Labor) -read twice and ordered printed, and when printed to be committed to the Committee on Rules
AN ACT to amend the labor law, in relation to personal liability for certain contributions, penalties and interest
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The labor law is amended by adding a new section 573-a to read as follows:
§ 573-a. Personal liability for contributions, penalties, and interest regarding corporations, limited liability companies, and partnerships. 1. For purposes of this section, the term "person" shall mean: (a) any officer of a corporation; (b) any manager or member of a limited liability company formed under the limited liability company law or similar statutes in other states or countries, who has an ownership interest in or management authority over the limited liability company; and (c) all partners under the partnership law including: (i) general partners and (ii) any limited partners to the extent that such limited partners are liable to third parties under the partnership law.
2. Notwithstanding any other provision of law, if a corporation, limited liability company or partnership has failed to make employer contributions as required by this article, or has failed to file quarterly combined withholding, wage reporting and unemployment insurance returns as required by paragraph four of subsection (a) of section six hundred seventy-four of the tax law, all persons shall be jointly and severally liable for the total amount of such contributions not collected, penalties and any interest accruing thereon owed by their corporation, limited liability company or partnership. Such persons shall be considered employers for purposes of collecting amounts due pursuant to this subdivision pursuant to the provisions of this article and other provisions of law. The liability of any person shall not be
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09184-01-9
S. 6468 2
relieved by the dissolution of the corporation, limited liability company or partnership.
3. The commissioner, after issuing a determination that a person is liable for amounts due under subdivision two of this section, shall provide notice of the basis for personal liability and the total amount due and unpaid by such corporation, limited liability company or partnership in such determination.
4. A person determined to be personally liable under this section shall have all rights of appeal set forth in title eight of this article solely with respect to such determination of his or her personal liability.
§ 2. This act shall take effect immediately and shall apply to amounts that become due for the quarterly period after the date this act 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 labor law, in relation to personal liability for certain contributions, penalties and interest
Purpose of the bill
The purpose of this bill is to amend the Labor Law to make corporate officers, members and managers of limited liability companies ("LLCs"), general partners, and limited partners personally liable for unpaid unemployment insurance ("ur") contributions.
Summary of provisions
Section 1 of this bill would add a new § 573-a to the Labor Law to impose personal liability for unpaid UI contributions upon: officers of a corporation; managers and members of limited liability companies with an ownership interest in or management authority over the limited liability company; general partners of partnerships; and limited part- ners of partnerships to the extent that such limited partners are liable to third parties under the Partnership Law. The liability of such indi- viduals may not be relieved by the dissolution of the corporation, limited liability company, or partnership. Any person determined to be personally liable under this section would have rights of appeal.
Section 2 of this bill make it would take effect immediately but shall apply to amounts that become due for the quarter after such effective date.
Justification
Under current law, the Department can hold corporations, sole proprie- tors, and some partners liable for unpaid UI contributions, but does not have authority to hold officers of such corporations or members of LLCs individually liable.
Based on historical patterns, approximately $35 million per year in unpaid UI .contributions is assigned inactive collection status due to the inability to collect from outof-business corporations, LLCs, and partnerships who abandon their debt. The ability to collect against corporate officers, members or managers of limited liability companies, and certain partners would significantly decrease this amount and have a positive effect on the UI Trust Fund. Extending this liability would serve as a deterrent against unscrupulous employers who evade paying their fair share of UI contributions by closing a business and setting up a new corporation, limited liability company, or partnership.
Legislative history
This is bill was introduced in both houses in 2016 (A.10443 / S3268; Departmental Bill 112) but did not pass either house.
Fiscal implications
No fiscal support would be required to implement this bill. The enhanced UI collection authority would result in an increase in UI Trust Fund revenues (an estimated increase of up to $20 million per year in UI contributions).
Effective date
This bill would take effect immediately but shall apply to amounts that become due for the quarter after such effective date.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.