What's happening
This bill requires a study on employee and small business protections in the payroll services industry, including possible insurance or regulatory measures.
Why it matters
Protects Workers and Small Businesses. By examining protections for employees and small business employers, the study aims to identify vulnerabilities that could lead to lost wages or business disruptions if a payroll service provider fails or behaves fraudulently.
Addresses Fraud and Misappropriation Risks. The bill prompts a detailed review of how often payroll funds are stolen or misused, and seeks to understand what factors enable such incidents, which could lead to stronger safeguards.
Considers Insurance and Oversight Options. The legislation asks whether requiring payroll providers to carry insurance, post bonds, or be subject to regulatory oversight would better protect payroll funds and reduce risks for both employees and employers.
Supports Evidence-Based Regulation. By mandating a comprehensive report on the industry, the bill ensures that any future laws or regulations affecting payroll service providers will be based on actual data and trends in New York, not assumptions.
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Who cares
Small business employers
The study would assess their protections when using payroll services and examine safeguards against stolen, misappropriated or otherwise unavailable payroll funds.
Employees paid through payroll service providers
The study would review employee protections and potential risk management tools to protect money owed to them.
Third-party payroll service providers
The study would evaluate requiring insurance, bonds or other risk management tools and placing providers under Department of Financial Services oversight.
Department of Financial Services and Department of Taxation and Finance
Financial Services would lead the review in consultation with Taxation and Finance and submit findings and recommendations to the governor and legislative leaders within 120 days of the bill’s effective date.
Headline styles
Study Payroll Service Risks
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to insurance
- Delivered to assembly
- Passed senateVote 61–1
- Advanced to third reading
- 2nd report cal.
- 1st report cal.73
- Referred to insurance
- Referred to rules
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
6728
2019-2020 Regular Sessions
IN SENATE
September 18, 2019
Introduced by Sen. BRESLIN -- read twice and ordered printed, and when printed to be committed to the Committee on Rules
AN ACT in relation to requiring the department of financial services, in consultation with the department of taxation and finance, to conduct a study regarding insurance or other risk mitigation tools and thirdparty payroll service providers
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. 1. The superintendent of financial services, in consultation with the commissioner of taxation and finance, shall review the adequacy of employee protections and small business employer protections in the payroll services industry. The superintendent shall make recommendations regarding the same. Such review shall include but not be limited to:
(a) the present state of employee protections in the payroll services industry;
(b) the present state of small business employer protections in the payroll services industry;
(c) the incidence of fraud or misappropriation of payroll funds in the payroll services industry;
(d) the number of small businesses in New York that use payroll service providers;
(e) the number and size of payroll service providers in New York;
(f) specific causal or facilitative facts regarding instances of fraud or misappropriation by payroll service providers;
(g) the feasibility and advisability of requiring payroll service providers to obtain insurance, post bonds, or utilize other risk management tools to address potential situations in which payroll monies owed to employees on behalf of businesses are stolen, misappropriated, or otherwise rendered unavailable after being transmitted from an employer to a payroll service provider or an affiliated entity; and
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD13784-01-9
S. 6728 2
(h) the feasibility and advisability of the department of financial services having regulatory oversight over third-party payroll service providers.
2. Within one hundred twenty days of the effective date of this act, the superintendent of financial services shall submit a report to the governor, the temporary president of the senate and the speaker of the assembly of the department's findings, conclusions, and recommendations.
§ 2. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act in relation to requiring the department of financial services, in consultation with the department of taxation and finance, to conduct a study regarding insurance or other risk mitigation tools and third-party payroll service providers
Purpose
To require the department of financial services to conduct a study regarding third-party payroll service providers
Summary of provisions
This bill requires the Superintendent of the Department of Financial Services, in consultation with the Commissioner of the Department of Taxation and Finance, to conduct a study in which the Superintendent will review the adequacy of employee protections and small business employer protections in the payroll services industry, The Superinten- dent shall make recommendations regarding the same. The bill requires the review to include an assessment of:
(a) the present state of employee protections in the payroll services industry;
(b) the present. state of small business employer protections in the payroll services industry;
(c) the incidence of fraud or misappropriation of payroll funds in the payroll services industry;
(d) the number of small businesses in New York that use payroll service providers;
(e) the number and size of payroll service providers in New York;
(f) specific causal or facilitative facts regarding instances of fraud or misappropriation by payroll services providers,
(g) the feasibility and advisability of requiring payroll service providers to obtain insurance, post bonds, or utilize other risk manage- ment tools to address potential situations in which payroll monies owed to employees on behalf of businesses are stolen, misappropriated, or otherwise rendered unavailable after being transmitted from an employer to a payroll service provider or an affiliated. entity, and
(h) the feasibility and advisability of the department of financial services having regulatory oversight over third-party payroll service providers.
Within one hundred twenty days of the effective date, the bill requires the superintendent of the department of financial services to submit a report to the governor, temporary president of the senate and speaker of the assembly of the department's findings, conclusions, and recommenda- tions.
Justification
In September 2019, MyPayrollHR, a payroll service provider in upstate New York with clients across the state and nation, abruptly ceased oper- ations and left thousands of employees and small employers without their pay or funds. Employees were left unable to pay bill s and rent, and employers struggled to obtain sufficient funds for outstanding payroll expenses. 'Employees and employers alike were negatively impacted in escalating ways, with employers losing employees and business, and employees losing jobs, assets, and security.
This situation suggests that it is appropriate to look more closely at the payroll services industry in New York state, to assess whether more risk mitigation practices and employee/employer payroll protections are needed. This legislation would serve the interests of consumers, employ- ees, and small businesses in New York.
Legislative history
New Legislation,
Fiscal implications
None to the state.
Effective date
This act shall take effect on the one hundred eightieth day after 14 it shall have become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.